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On Holiday Group collapses but consumers shouldn’t be affected

Travel company On Holiday Group has entered administration with debts of around £7 million and forward bookings worth £18 million, leaving thousands of travellers uncertain about their holiday.

The On Holiday Group (OHG) was the UK’s largest “bed bank”, which is a bit like a wholesaler for accommodation; buying in bulk and selling beds onto travel agencies. This allows them to be able to offer customers cheaper rates and include rooms into package holidays.

With experience as Airtours commercial director and MyTravel tour operations managing director, Steve Endacott established OHG in 2003. It was thought that another bed bank was willing to take on the group’s bookings, but negotiations have broken down due to leaks to the press and the group has been forced to close.

The collapse comes as the bitter row about VAT liability on bed bank bookings continues to roll on. OHG has paid £4.5 million to HMRC and believes it to be unfairly withheld. Without this money, the group has been unable to pay its debts, which are mainly to overseas hoteliers. As OHG does its business with the travel agencies, rather than consumers, many travellers may not even know if their holiday is affected.

Forward bookings are also unlikely to be affected, with most travel agencies being refunded by OHG and sourcing accommodation through another wholesaler. The only problem facing some people is that those currently on holiday could be asked to pay for accommodation again in-resort, but they will be refunded by their travel agency.

Steve Endacott, CEO of On Holiday Group said: “Customers will have to pay their bills in resort and reclaim the funds from our travel agency partners”. The collapse of OHG should be a reminder of just how important it is for holidaymakers to protect their booking by investing in a good travel insurance policy.

Date Created: 11 March 2014

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