Restructuring and recovery specialists from Smith & Williamson LLP and CMB Partners UK have been appointed as joint administrators to Lowcosttravelgroup and other companies in its group.
The group ceased trading earlier following attempts by the group’s directors to rescue the group, which has been hampered by the recent and ongoing turbulent financial environment.
The group operated a travel agency business from headquarters in the UK and offices in Spain, Switzerland and Poland, selling hotel accommodation through it wholesale (Lowcostbeds) and retail (Lowcostholidays) businesses.
It also sold holidays to consumers in Europe and Scandinavia using technology to enable customer to choose from a variety of flights and hotels for their chosen destination globally.
The failure will affect many customers who have purchased flights or holidays, some of whom are on holiday in resorts and some of whom have not travelled as yet.
All flights as regards those currently in resorts have been paid for and hence customers will be able to fly home when their holidays are over.
There are approximately 27,000 customers currently in resorts and 110,000 customers who have booked travel/holidays through the group who have not travelled as yet.
Unfortunately, as regards customers who have not travelled as yet a small number will have problems as regards their flights not having been paid for and many will have problems as regards their hotel rooms not having been paid for.
A range of factors contributed to the group’s demise, including increased competition in the sector and the more recent Brexit referendum.
Directors are the firm indicated the latter point both caused some customers to delay holiday decisions in the build-up and made trips more expensive following the fall of the pound in its aftermath.
The directors have also highlighted the negative effects of the terror threat on the travel industry with a number of destinations now much less attractive for travel.
Finbarr O’Connell of Smith & Williamson said: “The group experienced significant market headwinds in the run up to the EU referendum as holidaymakers delayed decisions.
“This was compounded by the leave vote itself and the subsequent fall in value of the pound. Regrettably, in these extraordinary conditions, the directors had no option but to place Lowcosttravelgroup Limited into administration.
“While we have not been appointed over the foreign subsidiaries which deal with the group’s customers we are aware that the directors of those companies are making all efforts to put useful and relevant information on the group website to assist customers to understand their individual positions.”
The group’s subsidiaries in Spain and Switzerland, which ran the travel agency and hotel booking businesses have also ceased trading.
In due course, these companies will be placed into formal insolvency processes.
The group’s turnover in the last year was circa £500 million.