Far from relaxing on the beach, for thousands of tourists there is concern because of the Low Cost collapse.

02-07-2008Angel Jimenez

The collapse of the Low Cost Travel Group has affected some 20,000 British tourists who have been left with trying to solve how payments are to be made to hotels and with filing claims with the Balearic government, which is responsible for handling these demands.

The Balearic association of travel agencies, Aviba, says that Low Cost was not a member of Aviba but adds that the association will do all it can and is therefore in constant communication with the tourism ministry. Its president, Toni Abrines, says that it is worrying that this type of business failure can occur at the height of the season, but suggests that it is also a clear example of what can happen when cheap holidays are being booked through an online agency which does not have insurance.

Pilar Carbonell, the tourism director-general, points out that the Lostcostholidays Spain company had a bond with the tourism administration valued at 1.24 million euros. This can be used, she says, to meet obligations provided that they relate to services for package bookings, i.e. flight and hotel.

The ministry has confirmed that it has received numerous calls from tourists currently in the Balearics but is unsure quite how many are affected by being here at present. In addition to the direct impact on tourists, it is estimated that Low Cost has a combined debt of some 50 million euros with businesses in the Balearics.

When Low Cost moved its operations to Palma in 2013 it ceased to be covered by Abta's coverage in the UK. The ministry, with only the 1.24 million to play with, has been tweeting messages in various languages advising travellers to contact their travel agency and, assuming that payments have been made by credit card, their card providers. But contacting travel agencies sounds somewhat futile, if it was Low Cost.

Of the businesses affected locally, there have been rumours that Hotelbeds was owed some 30 million euros, but this has been denied by a former Low Cost employee who says that the debt is around four million. Hotelbeds is, though, believed to be more affected than some hotel chains. What is also emerging is the fact that certain chains ceased to have anything to do with Low Cost because of fears that the business wasn't secure and also because of delays to their being paid: these include the likes of THB, Marina and Garden.

Fears that other online agencies might be dragged down because of the Low Cost collapse are being dismissed. Hotelbeds and Jumbobeds, for example, are both said to be financially strong and should be able to deal with any debts.

While the industry takes stock of the impact of the collapse, there is also the human side. Around 500 people have lost their jobs, to say nothing of the tourists who have been left in awkward situations. The general view of the industry locally is that, regardless of what has been suggested, the collapse of Low Cost had nothing to do with Brexit.

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