Customers told bookings safe as top travel agent ceases trading

ONE of the biggest travel agents in the country moved last night to reassure customers their holiday bookings were safe after it became the latest casualty of the crisis facing the travel industry.

City Travel, on Oliver Plunkett Street in Cork, best known for its expertise in long-haul travel, ceased trading on Monday after 23 years in business.

It blamed the economic downturn and the “dramatic changes in the travel trade” for the decision, citing a 50% drop in holiday bookings this year.

So far this year, up to 40 travel agents and chains nationwide have opted not to renew their trading licences with the Commission for Aviation Regulation, many because of the bleak trade environment.

City Travel managing director, Mary O’Grady, said all bookings with City Travel were safe as she is a bonded travel agent but admitted the closure of the shop was a “sad day” for her personally.

“It appears the cost of doing this type of business on the high street is no longer a viable proposition. The product life cycle of the independent travel agent looks very poor and approaching the end.

“City Travel has undergone many changes in recent years to reinvent itself in a changing market environment. However, the macro environment of lower commissions, internet bookings and large multinational corporations volume purchasing has led to reducing bottom lines. Processing costs on the other hand had increased dramatically. World airport charges, for example, are collected in advance by us and of no benefit to the agents.”

Ms O’Grady said she believes large numbers of people decided to holiday at home this year while others had been holding out for last-minute deals that never materialised as tour operators and airlines had sharply reduced passenger seat numbers.

She said this reduced seat capacity would continue next year when agents would also be hit by VAT at 13.5%.

According to Irish Travel Agents Association president, Jim Vaughan, independent travel agents are also hugely concerned about high rents and rates that they can’t afford in light of falling passenger numbers. They are also worried about their ability to pay a bond to the commission, a legal obligation to ensure that if they become bankrupt customer bookings proceed. Travel agents can’t renew their annual licence without paying such a bond.

“This September, many of our members will also be called upon to pay their bond to the Commission for Aviation Regulation whereby they have to pay 4% of their projected turnover,” he said.

“Falling property prices mean their buildings aren’t worth as much and so they can’t pay it on the strength of this asset. In general, we are expecting it will be difficult to get a bond from the banks this year.

“The bond at 4% of turnover is far too high and while we managed payment when times were good, it can’t be sustained now.”