Travel Trust Accounts
Navigating the complexities of travel trust accounts is a critical challenge for travel companies. While these accounts are essential for building customer trust and ensuring regulatory compliance, managing them can be a significant administrative burden. At Xeinadin, we take away the stress of travel escrow account compliance, allowing you to focus on growing your business with confidence.
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Hear directly from our travel industry clients and partners, senior leaders shaping the future of the sector, as they share how working with Xeinadin has strengthened their businesses for the long term, and why partnering with specialist travel advisers can help unlock sustainable growth.
What is a travel trust account?
Trust accounts are specialised financial accounts used to hold funds on behalf of clients, ensuring that these funds are separated from the business’s operating accounts. For travel and tourism businesses, trust accounts are commonly used to manage advance payments, deposits, and other funds that must be held until the company delivers the service. This separation provides a layer of security for clients, demonstrating that their funds are protected and will be used appropriately.
There are two types of Trust Accounts:
- Full CAA Trust
- CAA Escrow account.
How the travel trust account process works:
- The customer pays for their holiday
- The money goes into a travel escrow account. If flights are included, it must be an ATOL-protected air travel trust fund
- The sum is held safely in the account until the time of the customer’s trip
- When the holiday has been taken, the money will be paid to the tour operator. In the event of any issues, such as a provider going out of business before the holiday, the money is secure and can be returned to the customer.
Benefits and challenges of a travel trust account
Benefits: A travel escrow account provides a secure and regulated way to manage client funds.
- Impartial security: A third party controls the account, so neither the travel company nor the customer has direct access to the funds. This separation ensures the money is protected until the service is delivered.
- Better financial planning and stability: By keeping client payments in a separate account, you get a clear picture of your company’s available operating capital. This helps you budget and manage your finances more effectively.
- Customer trust: Using a trust account demonstrates a commitment to meeting strict UK travel regulations, which can build credibility with customers.
- Refunds and cancellations: If a trip is cancelled, the refund process is quick and ensures the customer gets paid quickly as the liquidity has been held in the account.
- Earn interest on account balances.
Challenges: While beneficial, a travel trust account may present some obstacles for your business.
- Cash flow: You can’t access the money until the customer has returned from their holiday. Which can lead to a working capital need in some months.
- Complexity: The process involves specific regulations and procedures that can be difficult for a business to navigate on its own.
Contact us today to learn how we can help you with travel trust account solutions.
UK travel trust account regulations
The account is governed by a Trust Deed. The Trustees managing the trust account, like our team at Xeinadin, must meet strict requirements, such as:
- The customer funds must be handled by a trustee with no relation to the business
- The account must be clearly identified as holding the funds only
- The funds must remain in the account until the services are provided
- The money can only be used for the payment of the intended service
- The travel trust account must undergo regular audits to comply with standards.
Need help complying with UK travel trust account regulations? Book a meeting to discuss your obligations as a travel business and how we can help you meet them.
Our Travel & Tourism experts
“At Xeinadin, we understand the critical role trust accounts play in the travel and tourism industry. By safeguarding client funds and ensuring compliance with industry regulations, we help businesses build trust and ensure financial stability. Our expertise in managing these accounts allows companies to focus on delivering exceptional experiences, knowing their financial integrity is in safe hands.” – Zoe Powell, Director – Travel, Hospitality & Leisure
Liz Maher OBE
VAT PartnerVAT ServicesBristol
Zoe Powell
Director - Travel, Hospitality & LeisureHospitality, Travel & TourismLondon
How Xeinadin supports travel trust account management
Xeinadin provides specialised travel and tourism accounting services, including expert trust account management. Our team understands the unique financial challenges and regulatory requirements of the industry, offering tailored solutions that help businesses stay compliant and operate with integrity. We take away the stress of understanding financial compliance so that you can focus on what you do best.
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Are you looking for travel accountants and advisors you can rely on to oversee your travel trust accounts? Arrange a no-obligation chat with one of our travel finance experts to explore your options and learn more about how we can help you.
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Travel trust accounts FAQs
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A trust account is used when instructed by the regulators. They can also be entered into voluntarily.
The Air Travel Organisers Licensing (ATOL) is a scheme introduced by the UK Civil Aviation Authority (CAA). It was put in place in 1973 to protect people who purchase package holidays (paying for hotels and flights together). ATOL provides travel consumer protection, ensuring you won’t lose money if anything goes wrong with your holiday before you go or whilst you’re away. ATOL escrow trust accounts follow the same premise: if a holiday is cancelled or affected in any way, the customer’s funds are secure and returned to them.
The main difference is the percentage of funds you have to put into the account. In the Full CAA trust, you have to put in 100% of the booking value but are allowed early release for flights. Whereas the ATOL Escrow account is typically a percentage of funds that is deposited into the account, usually 70% of the bookings value.
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With over 25 years of experience and expertise in the travel industry, effective and pragmatic processes and extraordinary commitment to service, you can be sure that your travel business is in good hands with Xeinadin.
