The Lowcosttravelgroup, which includes the Lowcostholidays and the bedbank Lowcostbeds brands, has entered administration.
In a statement the company said “exhaustive attempts” to rescue the group were “hampered by the recent and ongoing turbulent financial environment”.
It is understood there will be considerable financial implications for travel agents in Ireland where the group has annual turnover of around €50m worth of business, mainly through Lowcostholidays and Lowcostbeds.
It is believed that of this business, only the tour operator turnover of around €35-€40m will be bonded, as the bonding system in operation does not cover bed bank failures.
Editor of Travel Extra Eoghan Corry said his magazine has already been contacted by a number of Irish families who have paid for their holidays are arriving in hotels to find their bookings are not being honoured because the hotel has not been paid by the Lowcosttravelgroup.
The company has advised customers affected to pay any outstanding hotel bills themselves and attempt to reclaim the money from their travel insurance provider or credit card company.
The business model of bedbanks sees them buy guest rooms from hotels and other providers in bulk, before selling them on to travel agents with a small margin.
Mr Corry said: “It’s a disaster for the consumers involved. It will cause serious problems for the Irish travel trade, who have sent paid-up clients to these hotels where payments have not been made by the Lowcostgroup.”
He added the issue also raises “big questions about our the bonding system for travel companies”.
This follows two other bedbanks with a strong presence in Ireland that have gone out of business in recent years.
In 2010 1800Hotels.com was liquidated, followed by Chase Travel around a year later.
