p12 oct24 22/10/08 20:06 Page 12
news youtravel
ttglive.com
Youtravel.com says it should break even this year, but admits it is re-evaluating
the cost of being principal. Charlotte Walsh reports on the bed bank specialist
Youtravel ‘can’t sustain
principal disadvantage’
YOUTRAVEL.COM could be the next bed bank to Kent explained that the decision to act as
drop principal status due to the “huge” costs it a principal was made originally because of
incurs. demand from agents. He said that just before the
Group managing director Graham Nichols said company was due to launch, in 2006, he read a
the firm was considering whether to change its TTG story in which several agents said they would
stance and would make a decision soon. work only with bed banks acting as principal.
Managing director John Kent said the VAT “I saw this as an opportunity,” he added.
costs associated with acting as principal cost The firm is now adamant that agents won’t
the company 1.5% of its turnover in its first year, oppose a move away from principal status.
equivalent to £600,000. Nichols added: “They say as long as we have
Youtravel made a loss of £907,000 in its first the health and safety insurance they are fine
year, to the end of October 2007, according to with it. One or two said they would welcome it.”
accounts filed last month (TTG October 3). Paul Riches, John Kent and Graham Nichols: the Youtravel If Youtravel does opt to drop principal status
Nichols said: “Some of our competitors in their bosses claim principal status costs them £600,000 in tax it would be following Medhotels.com, which
fourth year have been announcing profits of reverted to an agent business model in July.
£300,000 and that’s with a VAT advantage. we can’t continue to sustain that disadvantage.” The Advantage consortium works only with
“If we can break even without that VAT advan- Youtravel claimed it expected to break even principals but has indicated it could review this if
tage, then we feel we are doing very well. But for the year to the end of October 2008. other bed banks followed Medhotels.
Company turns down
Bed bank enters
city break market
sale suitors – for now
AGENTS will soon be able to book city accommo-
dation with Youtravel.com, alongside more
long-haul products and possibly ski properties.
YOUTRAVEL.COM said it had received three Youtravel is due to post second-year results on Worldwide cities will go live at the end of
acquisition offers, but does not plan to sell for October 31, and Kent said he expected the bed October, and existing long-haul destinations are
several years. bank to break even this year after a loss of being expanded. In the Caribbean the number of
The first offer came two days after the £907,000 in its first year, to October 2007. properties will increase from 30 to 400 for 2009.
accommodation specialist’s launch in October This year turnover has doubled to ¤112 million, Paul Riches, UK sales and marketing director,
2006, but managing director John Kent said it while for next year the company is targeting said he could see the potential in the ski market:
was for “peanuts” so was rejected. a 25% increase in turnover and a move into “Other suppliers provide it, but not properly. You
A second offer from the same suitor was also “substantial profit” on the back of an increase in need the right product mix and destinations.”
rejected, along with a third from another international sales and an expanded product
interested party. range.
None of the offers came from the big two, he Graham Nichols, group managing director,
said, but from “traditional firms and the big said the business was looking to grow sales from
online” players. However, Kent said the firm other markets, which currently contribute
might accept an offer in “a few years” although 10% of all sales. It already operates in Italy,
there was “nothing on the horizon”. Ireland, Germany and Greece. See next week’s TTG for a report on the state
“We have Barclays as a major shareholder, so “We want a bigger percentage [of interna- of the industry according to Youtravel’s key
the aim is to make good money and sell, float or tional sales], as the margins can be double those agents and suppliers. Plus: Out & about, p24
merge. This is not a family business.” in the UK,” he said,
12 24.10.2008
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