Holiday cancellations are not only disappointing, but could also leave you out of pocket if you don’t understand your refund rights. Recent travel chaos and passport waiting times coupled with financial pressure from higher energy bills and rising food costs mean it’s crucial for holidaymakers to know how to recover costs for holiday cancellations.
Chris Webber, head of holidays and deals at the Ice Travel Group, told us: “Because the cost of living has increased so substantially, it’s important to know what rights you have and what compensation you might be entitled to. If a holiday or flight is cancelled, be sure to keep all receipts and notifications to back up any claims.
“Also be aware of what constitutes an extraordinary circumstance as many problems aren’t included in this category. It’s so important to do this as there are a host of reasons and scenarios where the customer is entitled to financial compensation – so it’s always worth exploring.”
Here, we take a detailed look at your rights to getting your money back if your holiday is cancelled.
(If only your flight has been cancelled, our flight cancellations guide will give you full details on how you could get your money back.)
Holiday cancellations - am I entitled to a refund?
Whether you’ll be entitled to a refund if your holiday is cancelled or if the provider makes changes to your trip will depend on the situation. It will be different if you booked a package holiday, for example, than if you booked your flights and accommodation separately.
If you booked at least two parts of your holiday with the same company at the same time, it’s most likely a package holiday and this will give you the most protection through the ATOL scheme. The ATOL scheme exists to protect consumers if their travel organiser should fail. As well as making sure that consumers don’t lose money for cancelled flights or holidays, it also makes sure holidaymakers are not left stranded abroad.
Vicki Moses, director of marketing at NOW Travel, told us: “Should your tour operator make significant changes to your holiday, you do not have to accept, and have the right to cancel and get a full refund without incurring any cancellation fee. Changes could be putting the price up after you have booked or changing the resort.”
If the cost of your holiday goes up, the increase must be more than 8% to be able to claim your money back. Price rises are only permitted as a result of:
- Rising fuel prices
- Changes to taxes or fees by third parties
- Exchange rates which affect the price of the holiday
Your travel operator must inform you of any significant changes in writing, including a date change, and give you a reasonable time in which to let them know if you want to cancel. The provider should then give you a refund within 14 days of cancellation. This also applies if your holiday company decides to cancel the trip altogether.
If you’ve booked your flights and accommodation separately, getting a refund for cancellations might not be as straightforward, but check with your hotel and airline to find out whether it’s possible.
James Andrews, personal finance expert at money.co.uk, says: “If your flight is cancelled outright, you can choose between a refund for all the parts of the ticket you've not used or an alternate flight.
“Sadly, compensation is not automatic, so you need to contact the airline directly to make your claim.”
Can I cancel my holiday without losing any money?
Whether you can get your money back if you need to cancel your holiday for personal reasons will depend on the terms of your package holiday or airline and accommodation provider. If you’re cancelling simply because you’ve changed your mind, it’s unlikely you will get all of your money back.
Should you need to cancel your holiday due to serious illness, family bereavement or redundancy, it’s best to talk to your tour operator, airline or accommodation provider to see whether they will refund you. Some will be more flexible than others.
Brean Horne, personal finance expert at Nerdwallet, explains: “If a holidaymaker needs to cancel a trip for personal reasons, they’ll need to check whether they can claim through their travel insurance first.
“This will ensure that they can recover some of their holiday costs if they are not eligible for a refund from the holiday provider. It may also be possible to reclaim the money under Section 75 if the holiday was booked using a credit card or the chargeback scheme if a debit card was used.” Find out more about credit card refunds on our sister site The Money Edit.
Failing that, check whether you can claim through your travel insurance. NOW Travel’s Vicki Moses says: “Travel insurance that includes cancellation cover entitles policyholders to recoup the cost of the holiday or money paid towards it, up to the policy limit and minus any excess, in the event of having to cancel, right up to the departure date. Of course, terms and conditions will apply and you will need to have a valid reason for making a cancellation claim, such as unforeseen illness or accidental injury.”
Alternatively, you may be able to get your money back through Section 75 protection if you paid for all or a part of your holiday with a credit card. This protects purchases of more than £100 and up to £30,000 if something goes wrong.
How much money could I lose when cancelling a holiday?
If you need to cancel a holiday, it’s likely you’ll need to pay a cancellation fee - check the small print of your booking to find out how much this will be.
Personal finance expert Brean Horne says: “It’s really important to make a note of any deadlines for a full refund if you need to cancel your trip.
“Some travel and accommodation providers charge fees for cancelling after a certain date, while others may take full payment.”
The cost of the fee is usually a percentage of what you paid but it tends to get higher the closer to the departure date, simply because the provider is less likely to be able to sell the holiday to someone else. However, the fee should only reflect the amount the company will actually lose. The table below gives you an example of how this might work.
|Days before trip starts
|Loss of full deposit
|30% of total booking price
|50% of total booking price
|70% of total booking price
|90% of total booking price
|100% of total booking price
You could consider asking a family member or friend to take your holiday instead, as this could be cheaper than cancelling it. You’ll need to write to the holiday provider to inform them you want to transfer the holiday at least seven days before the trip begins. It’s likely you’ll pay a transfer fee but this should be a lot lower than the cancellation fee.
What if my holiday is cancelled due to Covid?
If your travel operator cancels your holiday due to Covid, including if the UK Foreign and Commonwealth and Development Office (FCDO) has warned against travelling to your holiday destination, you will be entitled to a refund within 14 days of the cancellation date. You have the right to a cash refund, which means you don’t have to accept a credit note.
If you need to cancel your holiday due to catching the virus, many travel insurance policies now include cover for this.
Why might holiday companies cancel?
There are a number of reasons why a holiday company might want to cancel.
Vicki Moses from NOW Travel says: “A tour operator may cancel bookings should they or a third party they rely on go into administration, such as an airline or accommodation provider. There are other reasons a holiday company may be forced to cancel your trip - take the global Covid pandemic, for example. Natural catastrophes and acts of terrorism are also a threat.”
If your ATOL-protected tour operator goes bust, you’ll be able to get your money back. If you’re unable to travel due to a major incident such as extreme weather, a natural disaster or terrorism, and the FCDO has warned against all essential travel to your destination, your holiday company should offer you an alternative holiday or a full refund.
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Mum of two, Rachel is a freelance personal finance journalist who has been writing about everything from mortgages to car insurance for over a decade. Having previously worked at Shares Magazine, where she specialised in small-cap stocks, Rachel developed a passion for consumer finance and saving money when she moved to lovemoney.com. She later spent more than 8 years as an editor at price comparison site MoneySuperMarket, often acting as spokesperson. Rachel went freelance in 2020, just as the pandemic hit, and has since written for numerous websites and national newspapers, including The Mail on Sunday, The Observer, The Sun and Forbes. She is passionate about helping families become more confident with their finances, giving them the tools they need to take control of their money and make savings. In her spare time, Rachel is a keen traveller and baker.