Travel Weekly editor Lucy Huxley secured the interview everyone wanted when she spoke to the chief executive of the failed OTA and trade supplier who explained why the firm collapsed despite efforts to save it and said he was ‘profoundly sorry’
Paul Evans says he is “profoundly sorry” for the collapse of Lowcost Travel Group, which has thrown tens of thousands of customers’ holidays into chaos.
But in a frank and at times tearful interview, Evans, founder and chief executive of the global online agency and bed bank, insists it was a “perfect storm” of economic headwinds that pushed the company over the edge.
Speaking just over a week after administrators confirmed the group had ceased trading, he says: “I am devastated for the customers, travel agents, my staff and their families. We failed at an incredibly unfortunate time and I am terribly sorry.
“But it’s not because of a lack of effort. We did everything we could. But in the end, there were things that were not in my control and we were overwhelmed.”
The timing of the group’s failure has been questioned, with industry commentators pointing out revenue should have been at its highest just a week before the summer holidays.
Evans insists the group suffered “really poor trading” as a result of terrorism rendering certain destinations off limits and a 15% drop in the value of the pound following the vote to leave the EU. But he admits the situation was not helped by the company’s relatively weak balance sheet, significant overheads, global exposure and lack of Atol protection.
“We never raised money, so we didn’t have the strength of balance sheet of others,” says Evans. “We tried hard to get an investor right up to the end, but it was too late. We looked at selling part or all of the group, including Lowcost Holidays and Lowcost Beds, and we were in talks with over 12 travel companies over the last year.
“We had two offers, but then Brexit happened and the negative sentiment meant these disappeared. We were talking to one big, credible buyer until 4pm the afternoon before we ceased trading, but with everything considered in terms of trading, currency, terrorism and Brexit, they decided the risk was too big.”
Evans says trading in more than 50 markets, including the UK, Ireland, Australia, the US, Germany and Spain, had contributed to Lowcost Travel Group’s problems.
“This wasn’t just a UK thing. It was all compounded by the international aspect”, Evans says.
He says Lowcost had invested heavily in TV advertising to try to reduce its dependence on Google.
“We had large overheads. We were trying to cut costs, by moving operations to Poland, for example. With hindsight, some of the investment was a mistake. But we didn’t know at the time that trading would be so weak and that the impact of Brexit on currency would be so great.
Asked if withdrawing from the Civil Aviation Authority’s Atol scheme and moving the business to Spain and Switzerland had an adverse effect on trading, Evans concedes:
“I don’t honestly know, but it certainly didn’t help. I’m sure it was a contributory factor.”
Of the estimated 290,000 customers who have lost out through the collapse of Lowcost Travel Group, about 150,000 are British holidaymakers.
A bond of €1.2 million lodged with the Balearics government is available to refund customers. Many will have to rely on refunds from card providers but this is not automatic.
Asked if he regretted the fact customers had no Atol protection to repatriate them, or to recoup financial losses, Evans says: “Everybody in resort had a flight home so the whole repatriation part at least was covered.
“98% of forward bookings have their flights. Customers will have to pay for and reclaim their accommodation and transfers via other methods and there is availability for rebooking. It is a massive operational headache that we regret. But there are methods of rebooking accommodation with other bed banks.
“We took out a voluntary bond of €1.2 million. The maximum bond you can take out is €2 million. People will at least be able to reclaim their money back in other ways,” Evans adds.
Asked if the rumours were true that Lowcost had been collecting balances right up to the eleventh hour before it went bust, Evans says: “We were optimistic of getting a deal done, so you have to keep trading. We still believed that we could get a deal completed right up until the last moment.”
Evans maintains he has not gained personally in any way.
“Anybody that knows me, knows I didn’t do this for any personal gain. I wanted to build a really great company and have devoted 12 years of my life to this, employing over 1,000 people and taking between 12 and 15 million people away on holiday. We have failed, obviously, but it’s not because we didn’t try.
“I was earning less at Lowcost than I was 12 years ago. In 12 years I only ever took a salary, set by the board, not by me. I once took a tiny bonus, and never a dividend.”
Evans strongly denies any suggestion that he is already planning his next move.
“I’m only interested in one thing, which is helping the administrators,” he says. “Anything else is speculative rubbish and incorrect.” Evans says he has no plans for the future at this stage. “My reputation after 12 years and 100‑plus hours a week of service has been damaged. I accept that.”
Evans says his current task is to try to sell Lowcosts’ assets, such as the databases, brands, offices and forward bookings, to release some funds for the creditors. And he says he is confident these will be snapped up, having received “multiple expressions of interest”.
The group made 460 staff across four offices redundant on the same day, which Evans says he fronted in person at the Gatwick office.
Evans adds: “I’m absolutely sure many of the team will get new jobs and I wish them all the best of luck and thank them for their support.”
And he acknowledged the large number of agents who had offered support, despite suffering from the collapse. “I want to thank them for their support,” he says.
But referencing the travails of other OTAs in Europe, Evans warned that more companies could fail, adding: “I don’t think this is finished yet.”