Budget Travel, the Irish travel company which sold one out of three vacations in Ireland, suddenly went bankrupt this week. Travel experts see this as a sign of things to come, with many other European, and global, travel companies up to the wire with revenues going down and costs staying the same.
Travel company failures have been increasing rapidly, causing the European Commission to propose further safeguards for travelers in the EU region. The failure of such a large company could cause another wave of bankruptcies. Last year, UK travel giant XL went to the wall.
Ian Oakley-Smith, director, PricewaterhouseCoopers LLP, said:
“Despite an increase in failures this year, the travel sector has experienced a relatively low rate of insolvency, compared to other Hospitality and Leisure sectors, so far.”
“This is starting to change as we see big names such as Budget Travel fall foul of the recession.”
“While the weak pound and domestic holidaymaker benefitted many travel companies there is also an element of lenders not wishing to add to the company casualty list and propping up loss making business.”
“Ski slopes will be desolate this season, as will early summer bookings, and inevitably this may mean a ticking timebomb for some struggling travel companies currently being valiantly assisted by financial stakeholders.”
For you as a traveler, it means that good travel insurance with bankruptcy cover is becoming even more important.
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