Jump to content
House Price Crash Forum
Sign in to follow this  
Fairyland

Lowcostholidays Goes Into Administration With Warning To Travellers

Recommended Posts

Link: https://www.theguardian.com/business/2016/jul/15/lowcostholidays-administration-warning-travellers

The budget tour operator Lowcostholidays has gone bust, warning customers already on holiday that they could be asked to pay their hotel bills again and potentially ruining the summer plans of tens of thousands of Britons yet to travel.

Smith & Williamson, which has been appointed as administrator, said in a statement that there were approximately 27,000 customers currently at resorts and 110,000 who had booked trips but were yet to set off. About 55% of the groups customers are British.

In 2013, the Civil Aviation Authority had warned holidaymakers to avoid booking with Lowcostholidays after the company relocated to Spain, which meant that its holidays were no longer protected under the Atol scheme run by the CAA. This ensures that customers can return home and get their money back if a company goes bust. Lowcostholidays had dismissed these warnings, stating that holidaymakers had protection under a Spanish scheme.

Advertisement

A message on the companys website on Friday night said: We deeply regret to announce that the lowcosttravelgroup ceased to trade on 15 July 2016, following exhaustive attempts by the groups directors to rescue the group, which has been hampered by the recent and ongoing turbulent financial environment.

The operator told holidaymakers via its website that their flights home would be still be valid, but warned that hotel owners, as well as companies offering services such as airport transfers, may ask them to settle their bills before leaving.

On its website, the company advises customers to claim for any extra payments that they are asked to make to their travel insurer, credit card company or the government of the Balearic Islands, which licensed Lowcostholidays.

Share this post


Link to post
Share on other sites

From the beeb :


The mass holidays business and especially selling hotel beds all over the world is a tough one. The margins are negligible. Often - as appears to be the case with Lowcost Holidays - the cash earned for future holidays was used to pay for people that were already away.


So if there's a relatively sudden dip in confidence leading up to the Brexit referendum and then the pound plunges against the euro after the vote, that can be enough to tip the financial house of cards that some holiday companies have erected.


So basically a PONZI scheme then!


How can it be legal to trade openly in the UK like this? no ATOL protection :


"The company was therefore not part of the UK's Atol scheme and the Balearic Islands authorities are responsible for the holiday protection arrangements for the company's customers.


thanks UK regulators! pathetic as usual. Still I'm sure all the bosses walked away with massive payouts so that's OK.

Share this post


Link to post
Share on other sites

The lack of ATOL protection always deterred me despite their very attractive hotel prices in comparison with the other big players, probably the reason why.

Share this post


Link to post
Share on other sites

sometime last decade the pound and euro were on parity - we are not there yet.

mumsnet has an hysterical thread about 'leave voters what have you done' :o with regard to this story - apparently warnings were put out about this company (no Atol protection) 3 years ago. But the BBC cannot miss a good 'blame it on brexit news story.

I am sure the trouble in any areas of the 'cossetted generation' lives that makes life difficult will be blamed on brexit and 17million ignorant people!

Share this post


Link to post
Share on other sites

Ever since I was young, I always hear about holiday companies going bust, people losing money etc. They never seem to be solid like "bricks and mortar" (tongue in cheek).

Share this post


Link to post
Share on other sites

Ever since I was young, I always hear about holiday companies going bust, people losing money etc. They never seem to be solid like "bricks and mortar" (tongue in cheek).

Yes. Package companies do seem to be dodgy as fck.

Share this post


Link to post
Share on other sites

It is unusual for holiday companies to go bust at the height of the Summer season which suggests that the story of them suffering from Brexit vote jitters are correct.

No, this is when they go bankrupt.

The money comes in Nov - May, and quite of bit of it just sits in their account. Then, come summer, they have to start actually paying for stuff. Account empty? Go bankrupt. It is fairly common that they get this accounting wrong, which is why ATOL has to exist.

It is a bit early in the season though. Potential for a few more in the weeks to come...?

Edited by dgul

Share this post


Link to post
Share on other sites

Checked out their rates a few months ago on a new venture that they had launched. Much much cheaper than anywhere else. Couldn't work out how they actually did it. At the time reviews were good too but being based in Malaga was a red flag.

Looks like they were taking bookings right up until the last minute.

Super

Published 5 hours ago
Great way to book rooms
Good deal
Published 10 hours ago
I had no problems getting my reservation at a better price than other sites.
Edited by AvoidDebt

Share this post


Link to post
Share on other sites

No, this is when they go bankrupt.

The money comes in Nov - May, and quite of bit of it just sits in their account. Then, come summer, they have to start actually paying for stuff. Account empty? Go bankrupt. It is fairly common that they get this accounting wrong, which is why ATOL has to exist.

It is a bit early in the season though. Potential for a few more in the weeks to come...?

In the WEEK to come :lol:

Share this post


Link to post
Share on other sites

BBC claims everything is due to BREXIT :rolleyes:

Revenues in Sterling, costs in Euros and $. And a timing mismatch.

That kind of suggests that in this particular case it may well be due to Brexit!

Makes sense - prices lag currency movements. And I guess the operation was not big enough to hedge against pound dropping.

Therefore, now is probably the time to book a holiday! Just not in Turkey, or France.

Share this post


Link to post
Share on other sites

Checked out their rates a few months ago on a new venture that they had launched. Much much cheaper than anywhere else. Couldn't work out how they actually did it. At the time reviews were good too but being based in Malaga was a red flag.

Looks like they were taking bookings right up until the last minute.

Super

Published 5 hours ago

Great way to book rooms

Good deal

Published 10 hours ago

I had no problems getting my reservation at a better price than other sites.

Don't actually write the hreview until you have consumed the product!!

They had to be called 'low cost holidays' for a reason!!

I tend to find with the web when costing things up, most sites offer fairly similar prices for the same product (unless it is a genuine special offer). So if one thing comes under cost, quite noticeably for no reason, that is usually at least an amber flag for me.

Edited by reddog

Share this post


Link to post
Share on other sites

Mumsnet partner lowcostholidays.com is offering Mumsnetters a 5% discount off all bookings until 31 December.

lowcostholidays.com is the fast, smart & easy way to book your holiday. Put together your perfect getaway at the lowest price available. With an extensive range of over 350 airlines and 300,000 hotels you can be sure to find what you’re looking for.

http://www.mumsnet.com/partner-offers/lowcostholidays-discount

Share this post


Link to post
Share on other sites

In the WEEK to come :lol:

No, this is when they go bankrupt.

The money comes in Nov - May, and quite of bit of it just sits in their account. Then, come summer, they have to start actually paying for stuff. Account empty? Go bankrupt. It is fairly common that they get this accounting wrong, which is why ATOL has to exist.

It is a bit early in the season though. Potential for a few more in the weeks to come...?

+1 nothing to see here move on. If I remember correctly their settlement date for airline tickets is mid month hence they always seem to go bust mid month

Share this post


Link to post
Share on other sites

It's all unwinding here in a pretty messy, first world type of way. Some interesting comments from hoteliers too stating that they haven't been paid by LCH for several months for past bookings. Looks like they've hammered people on the supply side too. Also, one of their subsidiaries Lowcostbeds is an intermediary supplier to lots of others OTAs and TA's. These will need to rebook their clients at new higher rates (plus currency hit) incurring costs. How close to the edge are these guys? This thing could be unraveling for weeks. I'd be surprised if others don't hit the wall too, the business model is essentially just a ponzi isn't it? Must find new holidaymakers in order to pay for existing holidaymakers that are currently on holiday.

I think this will be an interesting test case for the chargeback rules on Visa Debit as most people in comments have paid by Visa Debit not Credit Card (apparently travel insurance won't cover supplier failure (WTF?)). Personally, I've never had a credit card and did ask the bank once if it was worthwhile to get one just to pay for big items online and they said not really as the Visa Debit offers you same level of protection (not sure if that advise is actually true now).

I think we'll opt for a weekend at Thorpe Park on Tesco Clubcard Vouchers. Can't get much more lowcost than that.

Edited by AvoidDebt

Share this post


Link to post
Share on other sites

AvoidDebt: thanks for the tip re. Visa Debit. If it's still valid, it will save us a lot of pain.

Ironically we didn't use our credit card to book our holiday because the price was greater than our credit limit. What could go wrong, eh?

Share this post


Link to post
Share on other sites

btd1981: There's a lot of people panicking in the comments at MSE but I'd be very surprised if Visa Debit did not honour the chargeback although the terms do seem to give them some wiggle room. These companies make a packet on CC processing so this will most likely be chicken feed to them. Besides, LCH did have around 140'000 live bookings and a host of different companies under its umbrella so I'm pretty sure the administrators will be able to recuperate something. Good luck with the claim, these type of consumer protections really are the jewels of our financial system (something that quite rightly gets slated here daily).

Edited by AvoidDebt

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   94 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.