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(26 August 2004)
THE collapse of city-break operator Travelscene has exposed widespread confusion in the trade on the lack of consumer protection on accommodation-only products.
It has emerged that Travelscene’s accommodation-only brand Citybedz, which traded under subsidiary company Austro Tours, operated outside Travelscene’s ABTA bond.
It remains to be seen how many agents will be forced to pay out to customers over unfulfilled bookings, but ABTA said there are no grounds for Newman Street to offer refunds.
The revelation, which comes with the loss of 61 jobs at Travelscene, leaves a bitter aftertaste following the resignation of ABTA president John Harding, Travelscene sales director, who campaigned for bonding loopholes to be closed. When he first took the role of president, Harding controversially called for the failure of a no-frills carrier to highlight the dangers of DIY packaging (Travel Weekly May 26 2003).
New Monarch Scheduled managing director Tim Jeans said: "It’s a rich irony that John Harding’s company has gone bust. I have every sympathy for all his staff, but I was incandescent with rage when that comment was made because it was so irresponsible."
It’s believed the reason to leave Citybedz – which offered agents up to 50% commission – out of Travelscene’s ABTA bond was to cut costs and reflects the demanding state of the market.
An ABTA spokeswoman said: "John is within his rights to operate an unbonded company. It signifies how tough the market is."
Association of Independent Tour Operators chairman Martin Garland said the revelation left ABTA in a "tricky position". "It highlights a significant loophole in the law that AITO has been campaigning for. We don’t want to say ‘we told you so’, but it demonstrates this issue."
Questions have been raised over whether agents knew Citybedz was unbonded. The brand represented 25% of the operator’s business, or 3,750 passengers. At the time of Travelscene’s failure there were more than 5,000 clients booked, with £1.5 million owed to 1,000 creditors – 75% of which are hotels.
Harding said he did not regret the fact Citybedz was unbonded. "A greater percentage of the short-breaks business was moving towards accommodation-only, and we were having to compete with the majority of suppliers who were non-bonded," he said. "I’m sorry we went before a low-cost carrier did, but it’s still true. The playing field is still not level."
