Youtravel is FTI’s trade accommodation supplier, offering agents and operators in the UK and almost 100 other countries access to more than 27,000 properties.

FTI, Germany’s third-biggest operator, filed for insolvency on 3 June, having failed to recover from the effects of the pandemic and with cash flow issues.

Earlier this week, Youtravel stressed it was a separate entity and said: “It is important to note that currently, only the tour operator brand FTI Touristik is directly affected by this situation.”

However, it then cancelled all bookings for seven days from 4 June.

Julia Lo Bue-Said, Advantage Travel Partnership chief executive, said the consortium was “shocked” by the news, which followed the Thomas Cook collapse in 2019. It had affected members in the UK, she said.

“We know of a very small number of our members who have been impacted and we are offering our support.”

She added there would be “a knock on impact across the supply chain across Europe and beyond”.

Loveholidays, the third-biggest Atol holder, said a “small proportion” of its customers were affected. A spokesperson said: “We’re working hard to honour their bookings with alternative providers.

“We have contacted all affected customers who are in-resort or due to travel imminently to let them know about the situation. This is a fast moving situation, so we will remain in touch with affected customers as it progresses and are very sorry for the inconvenience.”

Youtravel’s trade customers can surcharge clients up to 10% if their small print highlights it, but most will be reluctant to ask customers for more cash or unable to make up the shortfall in full themselves.

Alan Bowen, legal advisor to the Association of Atol Companies, said: “It’s quite a substantial bed bank for quite a lot of agents that dynamically packaged with flights. Now they have to give a full refund or replace the accommodation and they can’t do that very easily. It has the potential to cause considerable distress for some agents.”

The fall-out from the FTI collapse will be felt heavily among hoteliers in Turkey, where the operator had a big presence. German trade media FVW quoted Hamit Kuk from Turkish travel agency association Tursab, who said:

“We have to prepare ourselves for longer-term problems, because there are liabilities to hoteliers in Antalya and the Aegean region."

Bowen added one factor in FTI’s difficulties had been limits imposed on collecting balances following the collapse of Thomas Cook. The German government was forced to refund many Cook customers when its financial protection scheme, which was limited to €110 million per operator, fell short.

Following this, Germany restricted final balance collection to four weeks before departure and is urging the European Union to adopt a similar rule. However, Bowen said: “It really is a killer of cash flow. Germany is proposing the EU adopts this, but it has unintended consequences.”

He added the UK was unlikely to introduce a similar system, but operators selling in the EU would be subject to it.

TTG has contacted Youtravel for a response.