Is it possible to get money back if a package holiday is cancelled? And what does ATOL protection mean?

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

Fortunately, if you’ve booked a vacation package, you should be able to get back the money you shelled out for two weeks of relaxing on the beach.

With the 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 supplier goes bust without warning.

What is a vacation package and what are its advantages?

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

This means you could 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 supplier being responsible if something goes wrong and they are at fault.

To qualify, the trip must also last more than 24 hours.

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

Unlike a vacation package, a linked travel agreement only includes financial protection, which only helps you if the travel company you booked through goes bankrupt.

In any case, you will only be able to 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 directly from the airline and accommodation provider, you will not be protected.

Do I need to purchase travel insurance for vacation packages?

Yes, it is a very good idea. A considerable number of tourists go abroad every year without the protection of travel insurance. While your holiday package will provide you with 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.

We’ll also pay you if your trip changes significantly, your flight is cancelled or your hotel is below the promised standard.

However, these regulations will do nothing to protect you in the event of medical emergencies or injuries for which you are at fault, nor will they cover you if your luggage is lost or damaged.

An ABTA spokesperson told This is Money: “Whatever type of holiday you choose, you should make sure you have good quality travel insurance in place. You should also take out cover at the time of booking as you never know if your circumstances could change, such as falling ill or losing your job, which could force you to cancel your trip – any subsequent cancellation costs would be covered by your insurance.”

Similarly, a Thomas Cook spokesperson said: ‘We always recommend people take out travel insurance as soon as they book, so that if anything unexpected happens before they travel or while they’re away, they’ll be protected.

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

What happens if part of my vacation package is cancelled?

If your supplier cancels part of your trip, such as your flights or accommodation, then you are entitled to a refund of your holiday.

However, the supplier may offer alternative arrangements, either a different flight or the ability to rebook your trip for a later date.

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

Money Back Promise: When booking travel packages, look out for the ATOL logo to make sure you are protected.

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

If this option is not as good as the original, or you accept it because you have no choice, then you should be able to claim compensation.

In unavoidable circumstances, such as war, adverse weather conditions or labor disputes, suppliers do not have to offer compensation.

ABTA added: ‘If your tour operator is a member of ABTA, they will be required to comply with our code of conduct, which aims to help provide high standards of customer service.

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

What happens if I want to cancel my trip?

Except in extreme circumstances, such as war or natural disaster, cancelling your vacation package will likely involve paying a cancellation fee.

This means that if you have simply changed your mind, it is unlikely that you will be able to cancel a trip without losing anything.

However, cancellation fees will likely vary depending on when you cancel your trip. The less notice you give, the higher the percentage of the total cost of your vacation you will have to pay.

If the company makes significant changes to the trip after you’ve booked it, or increases prices, you’ll likely be able to cancel the trip without having to pay a fee to do so.

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

The price of your trip will need to have increased by around 10 percent or more for you to be able to cancel without charge.

Many providers will allow you to transfer your trip to someone else, if you find someone who is willing to pay. They will charge you to transfer the booking, but you will save much more than if you cancel the trip.

What happens if my travel company goes bankrupt?

If your travel company goes bankrupt, your trip could still go ahead.

Please contact your supplier to see if your booking has been affected. If you are unable to contact them, please speak to your airline and accommodation provider to verify your booking.

The good news is that when you book your package holiday you are protected by ATOL or ABTA.

For land and sea travel, ABTA will protect your money if the provider goes bust. ATOL, meanwhile, protects customers who have booked travel that includes flights.

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

In the unlikely event that your supplier goes bust, ABTA and ATOL aim to process your claim within 28 days of it being submitted.