The collapse of online travel agency Low Cost Travel could cost Maltese hotel operators hundreds of thousands of euros, according to the hoteliers’ association.
Operators are also braced for the possibility of other international travel agencies following Low Cost Travel into collapse due to the financial upheaval after last month’s Brexit referendum.
Low Cost Travel Group went into administration on Friday, with those hit including 27,000 people already on holiday and a further 110,000 who have booked but not yet travelled. There are potentially hundreds either in Malta already or due to travel in the coming weeks.
Malta Hotels and Restaurants Association president Tony Zahra told the Times of Malta the association was in the process of assessing the impact on local establishments, with a meeting scheduled for Friday to determine the way forward.
However, eight hotels that had passed on information to the MHRA all reported losses in the five-figure range. The final tally is expected to be significantly higher, as data collection is hampered by the fact that Low Cost Travel operated through a number of agencies in different countries.
We’re worried that Low Cost Travel might not be the last one to go under
Hotel operators are out of pocket for all guests who booked through the agency in the last few weeks, with only slim hopes of claiming the money from Low Cost Travel, which had not passed on payment before going into administration.
Guests already in Malta have had to pay the amounts themselves, hoping to reclaim the money from travel insurance or their credit card providers. Those who have booked but not yet travelled had to rebook at significantly higher rates.
This newspaper reported on Monday that some guests had been asked to vacate their hotel rooms when they were unable to pay for accommodation again, having already paid Low Cost Travel for their rooms.
Mr Zahra said hotels were well within their rights to ask for payment from guests if they had not received the money from the agency. “It’s unfortunate, but the hotel is not there to act as insurance for the operator,” he said.
He played down fears that hotels might be stuck with empty rooms if guests scheduled to arrive in the coming weeks opted not to rebook, saying demand in the high season was expected to be enough to cover the shortfall.
“Unfortunately, we’re worried that Low Cost Travel might not be the last one to go under,” Mr Zahra said. “This is a trade with very small margins. The devaluation of the sterling has had a large effect; there are no 10 per cent margins with these things.”
Tourism Minister Edward Zammit Lewis said that the ministry had not yet received any reports of serious problems ahead, but he acknowledged that the situation was “unpleasant”.
“The ministry and all national tourism entities are actively engaging with the private sector and parties involved to ensure the least inconvenience for any affected tourists and local hoteliers alike,” Dr Zammit Lewis said.
The Malta Tourism Authority is in contact with the operator’s local agents, as well as with the MHRA and other stakeholders “to monitor the situation and ensure that inconvenience to holidaymakers is minimised”.
A spokesman told this newspaper: “The information we have is that most LCTG customers in Malta have made alternative arrangements and that hotels are honouring their obligations.”