On Holiday Group collapse: Q&A

The UK's largest independent 'bed bank' has gone into administration. How could it affect your trip?

Thousands of holidaymakers face uncertainty after the collapse of a leading travel company. The On Holiday Group, whose main business was acting as an accommodation wholesaler or “bed bank”, has gone into administration with debts of around £7m. Here's how it could affect you.

What exactly is a bed bank?

Basically, a middle man who strikes deals with hoteliers, predominantly in Mediterranean resorts. The beds are sold on to travel agencies – based on the High Street, or online – who put them together with flights and sell them to customers as bespoke holidays or “dynamic packages”.

The value a bed bank brings to the transaction is to provide a much wider range of choice than an individual agent can hope to muster, and to negotiate better rates by buying in bulk.

The On Holiday Group was the UK’s largest independent “bed bank”.

Why did it collapse?

For several years a rather arcane row has been rumbling on about where the VAT liability lies on such bookings. During that time the On Holiday Group says £4.5m owed to it by HMRC has been unfairly withheld. Given the very slim margins in the travel industry, that has led the company to declare it can’t pay its bills – mostly money owed to hoteliers – and has no choice but to close, with the loss of 65 staff.

Where does that leave people who have bought hotels from the On Holiday Group?

Many holidaymakers won’t know that they are affected. As far as they’re concerned, they’ve gone through a travel agent and bought flights and accommodation, without getting involved in any complexities about the involvement of a middle man. But anyone in the middle of a holiday could be faced with a demand to pay again for accommodation. On Holiday Group says: “Customers will have to pay their bills in resort and reclaim the funds from our travel agency partners”.

What about forward bookings?

Most customers are likely to remain blissfully unaware that their bookings are involved. The failed company says that “All monies received from agents is held in ring-fenced client accounts and will be returned by the On Holiday Group to agents in the next few days”. More nimble agents are already sourcing alternative accommodation – which is quite likely to be the same hotel, just booked through a different bed bank.

This is not a “normal” travel company failure of the sort that The Independent Traveller has reported on rather too frequently over the years. At this stage the message is “don’t panic” – if you’ve booked a “dynamically packaged” holiday, the travel agent will let you know if anything is different as a result of this failure. But no-one should lose money – except the hoteliers who are owed £7m.

If one big company goes bust – does that mean other failures are likely?

No. In fact the spring is normally a financially optimistic time for travel firms, since it’s a “cash positive” period with bookings and money coming in. So the millions of us with holidays booked can be reasonably confident that the trips will go ahead as planned.

Have you tried new the Independent Digital Edition apps?
Travel
ebookHow to enjoy the perfect short break in 20 great cities
Independent Travel Videos
Independent Travel Videos
Simon Calder in Amsterdam
Independent Travel Videos
Simon Calder in Giverny
Independent Travel Videos
Simon Calder in St John's
Independent Travel Videos
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Travel

    Recruitment Genius: Technical Supervisor

    £24800 - £29000 per annum: Recruitment Genius: As one of London's leading Muse...

    Recruitment Genius: Centre Manager

    £14000 - £18000 per annum: Recruitment Genius: This is an exciting opportunity...

    Guru Careers: Accountant

    £28 - 45k (DOE): Guru Careers: An Accountant is needed to take control of the ...

    Recruitment Genius: Hotel Assistant Manager

    £18000 - £20000 per annum: Recruitment Genius: This hotel in Chadderton is a p...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before