It’s chilly and the days are short, so, to beat the January blues, many people’s thoughts are turning to holidays.
Although the high cost of living is continuing to put a strain on household finances, for many the annual getaway to somewhere sunny is sacrosanct, with travel companies predicting a 5% rise in bookings this year.
If you haven’t yet booked a break, but are sizing up your options, here is what to do to make sure you get your money back if something goes wrong.
Package or DIY?
While it can feel more adventurous to put together your own itinerary via different websites, it is hard to beat a package holiday for the peace of mind it provides.
All UK companies selling holidays including flights must be signed up to the Air Travel Organisers’ Licensing (Atol) scheme. To get its protection, you need to book a combined flight and hotel package with a UK-based firm. (Atol is not travel insurance, so it will not cover you if you fall ill and cannot travel).
Guy Hobbs, a travel expert at consumer group Which?, says: “There is nothing wrong with putting your own itinerary together, but it is good to be aware of risks.”
He adds: “In the summer of 2024 and spring 2025 we searched Booking.com reviews for the word ‘scam’ and found hundreds of people from the past few months complaining that they’d paid for accommodation that didn’t exist.” (Booking.com provided a detailed response to the allegations and said cybersecurity was a top priority.)
Says Hobbs: “We always recommend booking a package holiday as the Atol scheme ensures you won’t be left out of pocket or, worse, stranded abroad if your holiday company were to go bust.”
If you opt for a package, you will be covered financially and legally by the Package Travel Regulations, which means the holiday operator is responsible for sorting out any problems, from disruption caused by wildfires, to the hotel not being up to scratch.
Some people turn their noses up at the idea of a package holiday, but if you buy two big elements of a holiday – flights and accommodation, for example – in a single transaction, from the same travel company, it’s a package. How adventurous that package is, is up to you – it could be cruising the Med from the safety of a sun lounger or cycling across Sri Lanka on a guided tour.
This means you can book an Atol-protected break though an online travel agent such as Expedia or Lastminute.com, but be careful when you put together the itinerary, and read through the site’s policy carefully.
The Lastminute.com site spells out its policy. Your “booking is protected under the Atol scheme when it includes flights and accommodation booked together as a flight + hotel package (ie, a city break or a holiday). Additionally, flight and car rental bookings are also covered, when both of these products are booked in the same transaction. If you do receive an Atol certificate, but not all of the products you have booked in the transaction are listed on it, then the missing products are not Atol-protected.”
For cruises and package holidays without a flight, look for the safety net provided by a travel association such as Abta. The operating name of the Association of British Travel Agents, it provides some financial protection if you make a booking and the travel company goes bust. Another option is the Travel Trust Association.
Abta members sign up to a code of conduct, and if you have a complaint and can’t resolve it directly with the company, you can turn to its dispute resolution service.
For those who prefer to book the different elements of a holiday – flights, transfers, accommodation – themselves for flexibility, you can get extra protection, mainly by using a credit card to pay (more on this later).
What it will cost
A consumer poll issued by Nationwide this month found that despite more than half (54%) being concerned about the cost of living, travel is a “top priority” for Britons in 2026.
They plan to spend, on average, £5,517 a year on longer trips and £2,348 on short trips, according to the survey.
If cost is the deciding factor, then Spain’s Costa Blanca, best-known for its sandy beaches and resorts such as Benidorm and Alicante, is the cheapest choice for a peak-summer holiday in Europe, according to Which? Travel’s price check of more than 5,000 holidays.
It is the only trip that costs less than £900 a person, on average, for a week in August, it found. But two other regions of mainland Spain – the Costa Brava and Costa Dorada – made its top 10, at £1,125 pp and £1,133 pp, respectively. Six of the 10 locations are in Spain.
It’s hard to avoid the January sales hype, but the consumer organisation says it may pay to wait. It tracked more than 40,000 summer package holiday prices this time last year and found that, on average, they actually came down after January. July was the cheapest month to book in August for popular destinations, including France and Turkey.
There is no certainty the same will happen this year – not least because of the apparent increased demand – and if you wait, the risk is that there might be less choice.
How to pay
If you can, the best option is to use a credit card. Although holiday firms and hotel chains increasingly offer buy now, pay later (BNPL), using this option can mean missing out on vital financial protection.
If you pay with a credit card, section 75 of the Consumer Credit Act means that if a purchase between £100 and £30,000 goes wrong, the credit card provider is jointly liable with the retailer.
This cover is not there if you pay by debit card, though you may be able to get a refund via the chargeback scheme. If you make a bank transfer, neither applies.With BNPL, if there is a problem, you will usually have to chase the retailer or travel company yourself. It is worth checking if the firm has a dispute process, but these aren’t as robust or guaranteed as section 75.
If an airline goes bust, and you have booked directly with it, you can at least get your money back from the card company. But to get section 75 protection, you have to have paid the supplier directly.
You don’t get it if you used an online travel agent to make a flight-only booking.
Is it refundable?
Most package holidays are refundable, but there is a sliding scale in terms of how much money you will get back depending on how close to the departure date it is.
For example, with Jet2holidays if you cancel 70 days or more before departure you lose the deposit. However, the firm keeps a bigger percentage of the holiday cost the closer it gets, and if it is under a fortnight, you lose all your money.
If you have booked the flight yourself, the flight will often be non-refundable if you do not travel. Ryanair will not refund you if you cancel, and you will have to pay £45 a flight, for each person, as well as the difference in cost to rebook (if the new flight costs more).
Meanwhile, easyJet lets you cancel within 24 hours of booking, but you must pay a £49 fee.
Booking.com and Expedia are among the sites that let you search for hotels and apartments offering free cancellation, which may appeal to some who worry that their plans could be affected by life events during the year.
The cutoff time for when this ends will vary – typically from one to two weeks, to up to 24 hours before check-in. And usually you pay more for this flexibility.
We went on to Booking.com and looked at hotels in central Amsterdam that advertised various rates for the same room based on whether you chose free cancellation, or a non-refundable booking. The premium for free cancellation for a weekend break around Valentine’s Day varied widely, from 4% to 40%, so shop around. Some may feel a small premium is worth peace of mind.
A big advantage of selecting free cancellation is that you can keep checking the websites and switch to a new deal if the price falls, or you find something cheaper. This strategy can also work with things such as car hire.
Buy insurance, quick
Arguably the biggest mistake people make is to book an expensive holiday and then wait until the last minute to buy travel insurance. By buying both at the same time, you will get all-important cancellation cover, which should kick in if a serious accident or illness, involving one of those going on the trip, or a close family member, prevents the holiday from going ahead.
Hobbs says: “We can’t emphasise enough how important it is to buy travel insurance as soon as you book. It means you’re much more likely to be covered for any pre-departure issues that mean you can’t travel.
“Many holiday companies and airlines will try to sell you their own insurance – don’t take it. It isn’t usually any cheaper, and it’s certainly not better.”
If you buy a single-trip policy, this should insure you from the point of purchase right until you return home from holiday. An annual multi-trip policy will cover all trips that take place during the period it is valid.
It is vital that you are honest with your travel insurer about any medical conditions. Failure to do so may invalidate the cover.
It is also important to let your insurer know if there are any changes to your health after you buy the policy – this is known as “ongoing duty of disclosure”. The insurer will then review the cover and may increase the cost.
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