Brighton-based Holidays 4U ceased trading in early August at a point when a summer-sun tour operator’s coffers would normally be full.
The Turkey specialist failed with almost 13,000 clients abroad and holidays for 50,000 more on the books. The timing of the failure prompted questions about what went wrong. After all, Holidays 4U was not the first to fail at this time of year. Goldtrail Travel went down in July last year and Kiss Flights followed in August.
Holidays 4U director Mete Faks is keen to dismiss any comparison with Goldtrail.
He blames the failure solely on problems with cashflow and says the company reached a critical point in March, at the time of its Atol renewal, when the Civil Aviation Authority (CAA) requested it provide £4.5 million in security.
Holidays 4U had been trading since 1994 and the CAA usually requires a bond only when a company is relatively new or the regulator has financial concerns.
However, the CAA required an insurance bond of £1.2 million and a further £3.3 million in escrow – similar to a trust arrangement.
At the same time, Barclaycard Merchant Services placed Holidays 4U on a 45-day deferral scheme for card payments, which led to the card provider holding about £2 million in payments to the operator when the latter failed.
Faks said: “I understand where the CAA was coming from. After Goldtrail went down they were in a bad position. But this company failed because of cashflow.”
He said: “It is galling when people compare us to Goldtrail. There are no similarities – we had a bond and paid the £2.50 Atol Protection Contribution (APC) – Goldtrail had nothing.”
Goldtrail remains the subject of an investigation by administrators.
Holidays 4U was set up in 1994 by Faks’ uncle, Vedat Demren, and business partner Jennifer Prince. Faks travelled to the UK in 2003 with the aim of learning the business.
He recalled: “I started from the bottom, printing tickets. The point was that my uncle would teach me how to run the business and I would take it over.”
Difficult to compete
Demren was diagnosed with cancer in 2007 and died four months later, leaving Faks to take the helm along with general manager Karen Vyse. “When we started there were few Turkey specialists around, and with Onur Air’s support we had a nice place in the market,” he said.
However, after the pound weakened against the euro, Thomas Cook and Tui substantially increased capacity to Turkey, making it difficult for smaller players to compete. Faks said: “They had 40-50 flights a week. There were too many flights and prices were too cheap.”
These factors were compounded last year, first by the ash cloud crisis and then by the rising cost of fuel. By the beginning of this month Faks could no longer see a future for the company and he was forced to call in administrators.
When the company failed on August 4, TV and newspaper reports inevitably focused on images of angry and disappointed customers. Faks is critical of the media, asking why there were headlines about clients stranded abroad when everyone completed their holidays as planned.
“Everyone is speaking without thinking,” he said. “Some papers even used images of Goldtrail. There is nothing I’m ashamed of – I did everything I could over the last five years. The team was like a family – they are devastated.”
Faks falters when asked about his next step, but says he is certain his future lies outside travel. “Turkey is my home country,” he said. “But I’d like to stay in the UK and do anything but work in travel, because it has cost me my family, my health, everything.”