25 January 2010

More companies to follow Apartments Abroad collapse

More travel industry failures are "inevitable" in 2010 following the demise of Apartments Abroad.

The warning came from Matt Stuart, managing director of accommodation-only firm getabed.co.uk, who admitted being on the look-out for potential acquisition targets in the economic downturn.

"It’s sad to see that the recession has claimed another victim," said Stuart.

"Apartments Abroad’s focus was in the increasingly cut throat traditional European beach markets where, margins are in many cases, bordering on unsustainable, without significant volume.

"The business saw early success but in recent years one has heard less of them. There is a clear dividing line forming between winners and losers of the recent economic downturn."

He added: "We saw a dramatic rebound in sales from July 2009 and are currently trading 138% up year on year.

"Others are still trading down and regrettably, it is inevitable that in 2010, we will continue to see travel industry failures."

Stuart predicted yet further consolidation in the bedbank sector as a result of excess capacity in mainstream overseas resorts.

"The accommodation-only sector has already seen huge consolidation in recent years with both Hotels4u and Medhotels being brought under Thomas Cook umbrella. I believe this sector may still see further consolidation before the year is out, as in many European beach destinations, there is still oversupply," he said.

"Plus, companies with large reliance on western Mediterranean destinations will continue to suffer this year as the pound will not strengthen a great deal, and could actually weaken back to near parity if UK loses its AAA credit rating or there is a hung parliament after the general election.

"We are keeping a keen eye out for any potential acquisition opportunities, as there may be some bargains to be had as companies fail to recover from the downturn."

by Phil Davies