Travel businesses need the stability that a trust account provides

We all know just how much things have gone up in value over the past five years, from milk to our mortgages.

 

Just looking at the last month alone, 59% of UK households have reported increased expenses, but we must remember that it’s not just us in the travel industry feeling these pinches on our wallets, it’s our customers too - the very people we rely on to book holidays and travel with us year on year.

 

Financial distress in 2025 is reaching a peak for both travel businesses and their customers. With a 39% year-on-year jump among businesses alone, and 50,000 now reaching their breaking point, it is time to make some vital changes for our industry.

 

Inflation over the last four years has created a vicious cycle in travel. Customers no longer have the funds for the holidays they used to take, and businesses don’t have the funds to adjust prices accordingly.

 

It’s no surprise that we see articles in Travel Weekly stating that companies are having a hard time with cash flow. But it’s more than just the cost of the holiday, it is also the cost of running a business in travel, marketing costs, staff wages, rents, and business rates are all only going one way and that’s up.

 

Next to this, businesses using bonds and insurance are becoming “higher-risk” and in return, the price of bonding is increasing, and both insurance and card acquiring services are turning more and more businesses away after balance sheets start to fluctuate downwards.  

 

With so many travel businesses hyper focused on surviving the short term, it’s easy to ignore everything else going on in the face of financial distress.

 

If you’re in a position where you are using a thirty party for services, you might think “this doesn’t apply to me”, and to a degree you’re right. However, with the cost of a holiday going up, so does the profit, and if you’re giving 30-40% of this to someone else then they are winning just by the cost of the holidays increasing.

 

It appears that as an industry we are moving more towards a separation of consumer money with companies like Jet2 and Trailfinders separating this from working capital. And while it may seem trivial to these businesses, the ongoing Atol reform is shining a light on a vital solution that could give 50,000 businesses the space to breath and love their businesses again.

 

The CAA’s draft Atol reform focuses on segregation of customer funds in trust accounts as the preferred protection model and a decisive move away from traditional bonds.

 

This does not have to be another daunting change being put upon businesses. The move to more protective financial models is the opportunity businesses need to be taking. Because, while the CAA is changing compliance to require businesses to segregate funds and separate client monies, PTS members have been doing just that for years and riding this wave of financial distress with relative ease.

 

Now may seem like the worst time to make big changes to a business, but if any time has proved the need for the stability of a travel trust account, it is now.

 

Separating client money from working capital isn’t just about protecting the customer it’s about protecting you, the person working in travel, card companies don’t carry the risk, so the rates are low and more importantly stable. No bonding each year or insurance to worry about. Paying suppliers when you want and cash flow being your profit not customer funds.

 

In a bonding or insurance solution, you will inevitably be paying out your hard-earned money to sustain your business and retain your clients.

 

You will not lose money in a trust account. Client funds will go in, suppliers will be paid, you will receive your profits, and if anything happens, the client funds will be released back to the client.

 

You will not spend money on your business, only to wish you hadn’t when a client needs a refund. You will not pay out of pocket to keep yourself afloat if your balance sheets fluctuate.

 

Now more than ever, travel businesses need the opportunity to stabilise that a trust account can provide.

 

You shouldn’t be fighting fires every day, and even now, you don’t have to be. And while the CAA are um-ing and ah-ing over the Atol reform, now is the time to get ahead, to not only work on the short-term solution, but the long-term one as well.

 

It may not be PTS or the TTA you chose but there are some amazing trust providers out there offering solutions for all types of business so whilst we have been through the peak booking period in 2025 and are nearing the end of the peak travel period, take the opportunity to look at every option in front of you, even you may be surprised.

 

Financial distress in 2025 is real, but so is the solution.