The Cheltenham-based company’s board of directors confirmed it had collapsed on 7 September in a statement on the firm’s website.
"The business started in September 2000, and we have had an incredible 20 years developing and growing Cities Direct in an ever-evolving industry," it read.
"We have very much enjoyed the experience, and would like to thank our staff, travel industry partners and many loyal customers for all their support over the years.
"We had so many exciting plans for the future of the business, but the impact of Covid-19 travel restrictions has been devastating."
Cities Direct said the majority of its bookings were Atol-protected flight-based packages, with "a small number" of rail and ferry packages, as well as single-element bookings, financially insured by International Passenger Protection.
The operator had been a member of Aito for nearly nine years at the time of its failure.
Reacting to its collapse, Aito executive director Martyn Sumners said after speaking with the company’s management they felt a lack of consumer demand would have meant "throwing good money after bad if they battled on and borrowed money".
He said Aito was "hugely sorry" about Cities Direct’s demise.
"Jace [managing director Jace Quick] and his team will be missed, and we wish them well for the future, whatever they each decide to do as individuals.
"In such problematic times, while Aito battles to convey to the many government departments to which we report the myriad problems that our SMEs are encountering – without much in the way of reaction or assistance to date – this is a clear indication of the desperate straits that many formerly vibrant companies find themselves in, through no fault of their own," added Sumners.
"We hope that this first Aito Covid casualty signals clearly to government that the many U-turns it has taken over the past six months have severely shaken consumer confidence when it comes to booking overseas holidays. The entire outbound travel market is under intense pressure.
"We need government support to enable us to survive and to continue to pay our usual enormous amounts of tax into the Exchequer for the greater good.
"The alternative is too depressing for words and involves heavy demands for government assistance via claims for social security and housing assistance from the industry’s hundreds of thousands of employees."
