Youhotels to ditch principal status

Accommodation-only trade supplier has announced it is to switch away from acting as a principal early in 2012.

The bed bank has staunchly remained a principal while all of its main rivals moved to act as agents or gave third party retailers a choice as to how they worked with them. managing director Matt Cheevers said the move reflected changing attitudes in the sector about principal status and came after discussions with partners.

“ is one of the last remaining bed banks to operate as a principal and it no longer makes business sense to continue to do so,” he said.

“We can’t continue to offer our clients fantastic prices if we have to absorb the costs associated with principal status.”

Acting as a principal has meant is subject to the Tour Operators Margin Scheme and liable to pay VAT.

Her Majesty’s Revenue and Customs recently lost a case in the High Court against Medhotels in which it argued the bed bank was liable for VAT during a period when it switched from agent to principal and back again.

Changes to the Atol consumer protection scheme due to be brought in next April will also see more travel agents that sell components having to obtain a licence to protect their own sales.

The change comes after the firm announced a significant 30% reduction in the properties it offers to place a greater emphasis on quality over quantity.

The three month review assessed hotels on the basis of sales performance, consumer and agent feedback, and health and safety records. will still hold principal status for all bookings made prior to the switchover.

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