Accountants said travel management companies in particular were rushing to consolidate to enable them to cope with the changes, which are likely to place a huge financial burden on businesses.
It follows Iata’s decision to move from monthly to fortnightly payments, after the association suffered huge losses from the failure of online travel agency Airfasttickets in 2014.
One expert said he believed the number of travel management companies with a turnover of around £20 million had almost halved, from around 20 a year ago to now only 10.
At the time, Iata placed the OTA’s UK, Greece and Germany offices in default when it failed to make payments. And in November last year, TTG learned that creditors who were owed more than £20 million had been left in limbo following the demise of its US parent company.
In a bid to try and avoid a similar scenario happening again, Iata announced last year that it would be introducing a fortnightly billing and settlement plan (BSP) from June 1, 2016. The changes mean that those with an Iata licence will have to make payments on the 2nd and 17th day of every month.
The industry will have had a year to prepare for the changes by the time they come into force, however Andrew Burnham, partner at MHA MacIntyre Hudson, said they had already shifted the TMC landscape.
“I believe there is a rush to consolidate in the TMC market as a result of the impending Iata fortnightly settlements,” he told TTG.
“It has led to a large number of mergers and acquisitions in the last 12 months since the changes were announced.
“The smaller TMCs have suffered a greater impact – we have seen the number of businesses that have a turnover of up to £20 million decrease as people accelerate their retirement plans or seek to merge their business with a larger company because they don’t want to be part of the changes. Size matters in the TMC space; it’s about volume,” he added.
Alan Bowen, legal advisor to the Association of Atol Companies, agreed.
“We have seen a lot of consolidation in the market, and I think we will see some more before June 1,” he said.
“The bigger agents are in a better position to offer credit, but smaller agents can’t do that. There are leisure agents that have business clients – these are some of the more vulnerable ones because of their size. Some of their business clients may look elsewhere for a better
credit deal – the smaller agencies are unlikely to be able to offer them the same deals the larger businesses do.”
