Can you get your money back if a package holiday is cancelled – and what does ATOL protection mean?

If you’ve spent months planning the perfect trip away it can be stressful, upsetting and downright painful to find out that your provider has cancelled it at the last minute. 

Luckily, if you’ve booked a package trip, you should be able to claw back the cash you forked out for two weeks relaxing on a beach. 

With holiday season in full swing, This is Money explains what you can do to get your money back if your trip is cancelled or your provider goes bust without warning. 

No time to relax: Having your trip cancelled by your travel company can cause major stress

What is a package holiday and what are the perks?

While booking a package holiday might conjure images of lounging by a pool in sunny Spain, any holiday where two elements are booked with the same company at the same time, such as flights and accommodation, counts as a package.

This means that you could just as easily find yourself on a river cruise in Egypt or a snowboarding trip to the Alps on a package holiday.

The benefit of booking a package is that you will be covered by package travel regulations. 

You will have both legal and financial protection for your trip, with the provider responsible if something goes wrong and they are at fault.

In order to qualify, the trip must also be longer than 24 hours.

If the different elements of the trip are sold to you through separate selection and payment for each part, though still by the same company, they will be classed as a linked travel arrangement. This means that you have individual contracts for each element.

Unlike a package holiday, a linked travel arrangement only comes with financial protection, which only helps you if the travel company you booked through goes out of business.

In either case, you can only benefit from package travel regulations if you have booked your trip with a UK travel agent or operator.

If you book your own flights and hotel direct from the airline and accommodation provider, you aren’t protected.  

Do I need to get travel insurance for package holidays?

Yes, it’s a very good idea. A considerable number of holidaymakers head abroad every year without the protection of travel insurance. While your package holiday will afford you a partial safety net, this protection only goes so far.

Package Travel Regulations will cover you if you are injured, through no fault of your own, at your accommodation.

It will also pay out if your trip is significantly changed, your flight is cancelled or your hotel is below the standard promised.

However, these regulations will do nothing to protect you in medical emergencies or injuries you are at fault for, or cover if your luggage is lost or damaged.

A spokesperson for ABTA told This is Money: ‘Whatever kind of holiday you take you should ensure that you have good quality travel insurance cover. You should also take out cover at the time of booking since you never know if your circumstances could change such as falling ill or losing your job, which may force you to cancel your trip, subsequent cancellation charges would be covered by your insurance.’

Similarly, a spokesperson for Thomas Cook said: ‘We would always recommend people take out travel insurance as soon as they book so if the unexpected happens before they travel or while they are away they will be protected. 

‘When you book a package holiday you have extra protection and if the hotel or flight is cancelled, we will do our best to help find an alternative or if we can’t then you can get a refund.’

What if one part of my package holiday is cancelled?

If your provider cancels part of your trip, such as your flights or your accommodation, then you are entitled to have your holiday refunded.

However, the provider may offer alternative arrangements, whether this is a different flight or a chance to rebook your trip for a later date.

ABTA said: ‘If your tour operator can no longer provide part or all of your trip because one of their suppliers, such as an airline or accommodation provider, has cancelled their service, they must offer you a suitable alternative, or, if this is not possible, a refund of the full cost of the package.’

Refund promise: When booking package trips, keep an eye out for the ATOL logo to ensure that you are protected

If the operator has overbooked your flight or accommodation, then you should be offered an alternative arrangement.

If this option isn’t as good as the original, or you accept it because you have little choice but to do so, then you should be able to claim compensation.

In unavoidable circumstances, such as war, adverse weather or industrial disputes, providers do not have to offer compensation.

ABTA added: ‘If your tour operator is an ABTA member, they will have to abide by our code of conduct, which is intended to help provide high standards of customer service. 

‘If your package holiday, or part of it, has been cancelled and you are not happy with how the tour operator has dealt with the problem, you can contact ABTA and we will help you to resolve the matter with our member.’

What if I want to cancel my trip?

Other than in some extreme circumstances, such as war or natural disaster, cancelling your package holiday will likely mean paying a cancellation fee.

This means that if you have simply changed your mind, you are unlikely to be able to cancel a trip without losing out.

However, cancellation fees will likely vary depending on when you cancel the trip, The less notice you give, the higher percentage of your total holiday costs you will be expected to pay.

If the company make significant changes to the trip after you booked, or increases prices, you will likely be able to cancel the trip without having to pay a fee to do so.

In this case, you should receive a refund within 14 days of making the cancellation.

The price of the trip will have to have increased by around 10 per cent or more for you to be able to cancel free of charge.

Many providers will allow you to transfer your trip to someone else, if you find someone who is willing to pay. You will be charged to transfer the booking, but it would save you far more than cancelling the trip.

What if my travel company goes bust?

If your travel company goes bankrupt, your trip may still be going ahead.

Contact your provider to see if your booking is affected. If you can’t get through to them, speak to your airline and accommodation provider to check your booking.

The good news is that with your package holiday booking comes protection from either ATOL or ABTA.

For land and sea-based trips, ABTA will protect your money if the provider folds. ATOL, meanwhile, protects customers who have booked trips that include flights.

When booking your holiday, you should ensure that the travel company is ATOL or ABTA protected, and that you keep hold of any invoices or ATOL certificates that you receive when you make your purchase.

In the unlikely event that your provider does go bust, ABTA and ATOL aim to process your claim within 28 days of it being made.