Simon Cooper, chief executive of On the Beach Group, told the Financial Times (FT) that travel companies must change their business models in time for the post-coronavirus world.
He said tour operators and airlines will not be able to ask for cash deposits any more.
The industry has been grappling with mass refund requests under Package Travel Regulation (PTR) laws, which require customers to receive a cash refund within 14 days of a trip cancellation.
Numerous bodies, such as Abta, have urged the government to allow travel sellers to offer temporary credit notes instead.
Cooper told the FT: "It’s painful enough being in an environment of zero revenue without being in an environment of zero revenue and having to pay money out."
Customer money should be put in a ringfenced account which is separate from day-to-day running costs, Cooper added.
