As thousands of holidaymakers began making their way home after the failure of Land Travel, of Bath, industry sources said they were bracing themselves for more bad news. 'The word is that a big one is going to go under,' one said. The sources named two operators - one large, one medium-sized - but the Association of British Travel Agents dismissed the claims as 'rubbish'.
Land Travel, which collapsed on Friday, was not bonded. The 2,500 customers who were on coaches throughout Europe and the 30,000 people due to travel next month will not get refunds. Keith Betton, an Abta spokesman, urged people to book only with operators belonging to organisations with bond schemes.
The Consumers Association, which publishes Holiday Which?, also recommended paying by credit card. In many cases where goods are not supplied, credit card companies are obliged under the Consumer Credit Act to refund money.
Large tour companies have been locked in a price-cutting war in recent weeks. Thomson, the largest, has slashed the price of some flights to pounds 49. Others have been forced to follow.
After last year's collapse of the International Leisure Group, which included Intasun, the big operators increased capacity in the hope of picking up business. Last year was poor because of the recession and the aftermath of the Gulf war.
Tour operators believed sales this year would pick up after the general election but they did not. They now have millions of holidays to dispose of.
Patricia Yates, editor of Holiday Which?, said the price war would put some small companies out of business. 'The large operators are trading on price but the smaller companies, which trade on quality, cannot cut. Inevitably, they will be unable to compete,' she said.
Mr Betton said that, if companies were going to collapse, 'this would be a strange time for it to happen, when their bank accounts are at their fullest'. He said the number of companies that had gone into liquidation this year was 50 per cent down on last.
Yesterday, hundreds of Land Travel clients were stranded at Dover after coach drivers refused to take them further or demanded money. At Dover, 47 people from Nuneaton and Derby were asked for pounds 20 each to be taken home. The driver eventually left them behind. The passengers ended up squabbling because some were prepared to pay.