Late Rooms collapses

[Paul Lupp]

Following today's sad news that Late Rooms and another provider have gone under, I'm prompted to ask a question that I've felt like asking before when travel agents etc go under:

They want all our money up front well in advance of the date of travel, so haven't they paid the providers - airlines, hotels etc already? If they have, why can't the people who have paid take their holidays, and if they haven't, why do the holidaymakers have to stump up all the money so far in advance of travel?

[krismiler]

Margins are razor thin and the interest on the money they receive in February but only pay out in June can mean the difference between profit and loss.

[parabellum]

What Krismiler said, plus, by having the money in their account the travel agent can make firm bookings on your behalf.

[Hotel Tango]

Are these travel agencies going down because people don't use them as much? I haven't used a travel agency in 25 years or more.

[krismiler]

Late Rooms was an internet booking site where hotels could dump their unsold rooms at the last minute with a big discount as opposed to having them empty. The two most perishable products are hotel rooms and airline seats.

Being a last minute thing, they wouldn’t have been able to sit on the customers money for very long as bookings would only be made a day or two in advance.

Travel agencies are useful as they may have access to deals not generally available to the public so it’s worth asking if they can beat the best price you’ve found online. Business class airfares and 5* hotels have a lot of padding in their price and large discounts can often be found. A ticket on a low cost airline and a room at a Travelodge have very little margin and you’re usually better off booking for yourself. Specialist holidays such as safaris or train trips through Russia should be booked through an appropriate agent.

[Hotel Tango]

Specialist holidays such as safaris or train trips through Russia should be booked through an appropriate agent.

China and a few other countries too. Yes, of course, but I was excluding specialist type of travel. As for price difference in standard type leisure travel I find that I prefer to book direct. I may (sometimes) pay a little more but I'm in control so to speak.

[Hartington]

The answer to the OP is surprisingly complex because different products have different payment cycles. An agency with an IATA licence pays for issued atickets as much as 45 days and as little as 15 days after issuance but pay 46 days later and the kicence is suspended. When does the ticket have to be issued? That's sometimes different to the default position and depends on the contract with the airline but many tickets have to be issued within 24 hours of booking.

Now, add to that the requirements of an ATOL licence requiring various documents to be issued within a very limited timescale shwoing very specific pieces of information particularly when full payment for the ticket is not taken at the time of booking. Adding accomodation adds different requirements.

Now consider booking an hotel online with the hotel chain. Several of the higher end chains have advance booking rates but whether you get charged in advance has always seemed like a lottery to me. Move that scenario into the agency world and you will realise that how they negotiate the contract can make a significant difference to their cash flow.

It is true that agencies will do their utmost to delay payment and their negotiating position can lead to them paying after the service has been provided but that isn't the default position.