Industry leaders have renewed calls for holiday protection to be reformed after the failure of Lowcost Travel Group.

The company has 27,000 customers overseas and around 110,000 forward bookings. The CAA confirmed the company was not Atol-protected as it was based in Majorca and therefore came under Spanish regulation.

It is unknown what percentage of bookings were made through the trade.

Julia Lo-Bue Said, managing director of Advantage Travel Partnership, said: “This seems to be a clear example of the importance of being protected in the UK. It demonstrates the importance of being financially protected under an Atol.

“Customers need more clarity on things like this when they make a booking and it’s crazy that there isn’t a greater understanding of the importance of protection so this must be addressed.

“I’m very shocked by the news. It’s always sad when a company fails. The time of year surprised and shocked me because it’s not often this happens during the peak season.”

She said her members had a “handful of bookings”, but the volume was not significant and the implications “should be limited”.

Miles Morgan, owner of independent agency chain Miles Morgan Travel, said Lowcost’s failure would “shake” the industry and should prompt a change in the current rules.

“This will shake the tree because Lowcost has gone when the cash flow was at its highest,” he said.

“If they can go bust at this time then it must be in a mess. Any business that is teetering on the edge or lacking profit has to be one that is at risk.

“It raises huge questions for the industry but one positive that could come out of this is that finally we might get clarity on how customer reassurance and bonding works because it’s a joke. I hope somebody in government looks at this and says ‘this is ridiculous’ and sorts it out. It wouldn’t happen in any other industry.”

Morgan said it was “yet another sign” that a company’s success must be measured on profit, not growth.

“So often you hear about people investing because of the growth but they are forgetting the fundamentals of business.

“One incident like a terror attack or Brexit can be enough to end them. A lot of old-fashioned businesses have a core infrastructure, success and a loyal customer base.”