Case Studies - Failed Hotel Upgrade Companies
HotelQuickly went down on 8 December 2018 leaving customers disgruntled after not being refunded their bookings. Late Rooms and Super Break collapsed after their parent company, Malvern Group, went into administration on 1 August 2019.
Market strategy overview
- Founded in 2012, HotelQuickly was an Asian based travel agency that grew into international prominence.
- It promoted discounted hotel booking rates through its website, iOS app, and Android app that were accessible in 17 languages.
- Primarily, the company received customer referrals from hotel search comparison sites Trivago and TripAdvisor.
Evaluation of HotelQuickly collapse
- On 8 December 2018, HotelQuickly customers began receiving emails notifying them that their reservations were canceled. The travel agency claims that its supplier locked it out from their supplier's system resulting in the booking cancellations.
- The only redemption that clients had for the cancellation was a 5% to 15% voucher off their next reservation. When the affected customers went to redeem the vouchers they found that they had already been used or no hotels were available for the vouchers. Further investigation by Trivago indicated that HotelQuickly was offering a voucher through crediting the customer's account rather than refunding through the original payment method.
- Unfortunately, no reservation had been made through HotelQuickly at customers' intended destination, which required clients to start over the booking process having been defrauded their cash.
- Trivago and TripAdvisor advised their customers to approach their payment card company and bank to dispute their booking payment as fraudulent to receive a refund.
LATE ROOMS AND SUPER BREAK
Market strategy overview
- Malvern Group is a UK based company that owns travel agency Late Rooms in Manchester and Super Break in York.
- Primarily, Late Rooms and Super Break generate customer bookings from their website. Both companies are active on social media.
- At the time of their collapse, Late Rooms and Super Break had 53,000 customers including 20,000 bookings of customers waiting to go on vacation.
Evaluation of Late Rooms and Super Break collapse
- Malvern Group owners are Cox & Kings, an Indian tour operator that owns 49% of the company, and Adiuvat Investment Fund, a Cayman Islands-based fund. Cox & Kings defaulted on an unsecured loan, commercial paper, and bonds worth over £15 million in July 2019. The financial shortfall resulted in Cox & Kings' engaging lenders to optimize its assets globally that generally was about potential asset sales to meet its financing requirements.
- Despite Malvern Group having a loss of £2.3 million after a 10% revenue fall to £90 million in its financial year ending March 2018, it credits the financial problems of Cox and Kings for getting into administration on 1 August 2019. Particularly, Malvern Group went into administration as a result of failing to secure funding or finding a buyer of the Cox & Kings stake.
- Hours before going into administration, Late Rooms and Super Break were actively promoting vacations on social media that attracted backlash on news that it was going on administration.
- Unfortunately, Super Break, was an Abta listed travel agency. As such, it could receive customer payments for its bookings. News of Malvern Group going into administration led to some of its 400 customers on holidays facing requests from their hotels to pay again or leave.
- Customers became wary of their bookings at Super Break leading to refund requests, especially at Super Break. Abta assured customers that an Abta member, Super Break refunds were guaranteed. Despite the assurances, customers requested their funds whereas hotels rejected Super Break customers leading to its collapse.
- As the upheaval accelerated at Super Break, customers were notified that gift vouchers issued by Super Break had become invalid.
- Late Rooms was not an Abta listed company, as such, could not receive customer payments for their bookings but could only act as an agent. As such, its customers' bookings were safe. However, customers were notified to contact their hotels to confirm their accommodations.
- Late Room's collapse was engineered by the fears that their bookings had complications similar to Super Break. Considerably, these fears were unfounded as the company did not accept client payments but was an agent of the hotels.