Package Holiday Guide UK (Cancellation, Refunds, ATOL Protection 2026)

What Is a Package Holiday and Are You Protected

A package holiday exists when two or more different types of travel services are combined for the same trip, either: bought from one operator in a single booking (e.g. a Thomas Cook or Jet2Holidays package), bought from one website and the organiser selects the services before you pay, or bought from separate sites but the first trader passes your details to another within 24 hours (linked travel arrangement). The key protections under the 2018 Regulations include: the organiser is strictly liable for all services in the package, you have 14 days to cancel with a full refund if the organiser significantly changes any essential term, the organiser must provide insolvency protection (ATOL or bonding), and you can transfer the booking to someone else on reasonable notice. Linked travel arrangements (booking a flight on one site then clicking a link to book a hotel) have weaker protection — insolvency cover only, not full package liability. If the organiser fails to provide the contracted services (e.g. a downgraded hotel or cancelled excursion), they must offer a suitable alternative or a refund with compensation. The regulations cover both online and high-street bookings, domestic and international packages.

ATOL Protection Explained

ATOL (Air Travel Organiser's Licence) is a UK financial protection scheme run by the Civil Aviation Authority (CAA). If you book a package holiday that includes a flight, the organiser must hold an ATOL licence. ATOL protects your money in two ways: if the travel company goes bust before your trip, the CAA will ensure you get a full refund for all monies paid, or if you are already abroad, the CAA will arrange for you to complete your holiday and fly home at no extra cost. Every ATOL-protected booking must issue an ATOL Certificate — check that the booking reference on the certificate matches your trip. Some flight-only bookings (seat-only sales) may also be ATOL-protected if the agent holds an ATOL licence. The scheme covers bookings where the flight is part of a package; standalone hotel-only packages are covered by separate bonding or trust schemes. As of 2026, ATOL covers a total of £2.5 billion in annual consumer bookings. The CAA operates a consumer helpline and online portal for ATOL claims. If a company fails, act quickly — the CAA usually processes claims within 2–4 weeks. Do not rebook flights yourself until the CAA confirms your options. Note that ATOL does not cover cruise-only packages, rail-inclusive packages, or DIY holidays booked directly with separate providers.

Your Rights if Your Holiday Is Cancelled

If the tour operator or travel company cancels your package holiday before departure for any reason other than your own fault, you are entitled to a full refund within 14 days. You do not have to accept a credit note, voucher, or rebooking — though you may choose to. The refund must cover the full cost of the package, including any booking fees, admin charges, and optional extras. Under the Package Travel Regulations, the organiser must also offer you an alternative package of equivalent or superior quality at no extra cost. If the alternative is of lower quality, they must refund the difference. If the cancellation is due to unavoidable and extraordinary circumstances (pandemic, natural disaster, war, civil unrest, significant FCO advice change), the organiser must still refund you but is not liable for additional compensation. If the cancellation is for commercial reasons (e.g. not enough seats sold), you may also claim compensation for losses — for example, non-refundable connecting travel, visa fees, or accommodation booked separately. The amount of compensation depends on the notice period: cancellation more than 14 days before departure typically attracts minimal compensation; less than 14 days before entitles you to a higher scale. Always check your travel insurance policy — it may cover cancellation costs that the operator does not refund, such as non-refundable ancillaries.

Changing or Cancelling Your Holiday Voluntarily

If you want to cancel your package holiday because your circumstances have changed (illness, work, change of mind), your rights depend on the organiser's terms and conditions. Most operators charge a sliding scale of cancellation fees based on how close to departure you cancel: typically 50–100% within 14 days, 30–50% within 28 days, and the deposit only if you cancel early. These fees must be transparent at the time of booking. Some operators offer a cancel for any reason option for an additional premium. If you have a serious reason (e.g. medical emergency, bereavement), you may be covered by your travel insurance — check your policy's cancellation cover limits. If you need to change the booking (dates, names, destination), the operator can charge an amendment fee — typically £25–£50 per person. Many operators allow you to transfer the booking to someone else under the Package Travel Regulations, provided you give reasonable notice before departure. The operator can charge only the actual cost of making the transfer (e.g. airline name-change fees). Unreasonable refusal to allow a transfer may be challenged under the Regulations. If the operator significantly changes an essential term of your package (e.g. hotel downgrade, departure time change of more than 12 hours), you have the right to cancel without penalty within 14 days of being notified.

What to Do if Your Travel Company Goes Bust

If your travel company enters administration before or during your trip, your first step is to check whether your booking is ATOL-protected (if it includes a flight). If it is, contact the CAA ATOL Claims team at caa.co.uk/atol or call their consumer helpline. The CAA will handle your claim and issue a refund within 2–6 weeks. If you are already abroad when the company fails, the CAA will arrange for you to complete your stay and fly home — do not rebook your own flights without speaking to them first. If your booking is a non-ATOL package (hotel-only, rail-inclusive, or cruise), check if the operator had a bond or trust scheme (often through ABTA, AITO, or the Cruise Lines International Association). ABTA members must provide bonding, and you can claim via ABTA's claims process. If neither ATOL nor ABTA applies, you may need to claim via Section 75 of the Consumer Credit Act if you paid by credit card (see our Section 75 guide), or via chargeback for debit card payments. Unprotected bookings leave you as an unsecured creditor of the insolvent company — you are unlikely to recover your full payment. Always prioritise ATOL or ABTA-bonded operators when booking a package holiday to ensure your money is safe.

Package Holiday Refunds for Poor Quality or Missed Flights

If your package holiday is not delivered as promised — poor hotel quality, missed excursions, or substandard accommodation — you are entitled to a price reduction and/or compensation under the Package Travel Regulations. The organiser is liable for the proper performance of all services, regardless of whether they provided them directly or through a third party (e.g. the airline or hotel). If your flight is delayed or cancelled, you may have additional rights under UK retained EU Regulation 261/2004 — see our Flight Delay Compensation guide. For poor quality: document everything with photos, videos, and written complaints to the operator or their representative (rep) at the resort. If the operator fails to remedy the problem on the spot, you can claim after returning home. The compensation reflects the difference between the service promised and the service received. Minor issues (e.g. one dirty towel) typically attract modest compensation around 10–20% of the daily package rate. Significant failures (e.g. no air conditioning in 35°C heat, building works not disclosed) can justify 40–60%. In extreme cases (completely uninhabitable accommodation), you may be entitled to a full refund of the package price. Submit your claim in writing to the operator within 28 days of returning home. If the operator rejects or delays, escalate to ABTA (if member), the CAA (if ATOL-protected), or the Small Claims Court for amounts under £10,000.

FAQs

What is the difference between ATOL and ABTA protection?

ATOL protects package holidays that include a flight — run by the CAA. ABTA is a trade association whose members must provide financial bonding for non-flight packages (hotel-only, cruise, rail). Always check which applies to your booking.

Can I get a refund if I cancel because of FCO travel advice?

If the FCO advises against all but essential travel to your destination, you are entitled to cancel with a full refund under the Package Travel Regulations. The operator cannot keep your money if travel to the destination is officially advised against.

How long does an ATOL claim take?

The CAA aims to process ATOL claims within 2–6 weeks. You will need your ATOL certificate, booking confirmation, and proof of payment. Claims can be submitted online at caa.co.uk/atol.

What if my package holiday was booked through a travel agent?

If the agent acted as the organiser (they put the package together), they are liable. If they simply sold you a package organised by another company, the organiser is liable but the agent must provide insolvency protection details and the organiser's identity.

Am I covered if I book flights and hotel separately?

No — DIY holidays are not packages and are not protected under the Package Travel Regulations. You will need separate travel insurance and will not have joint liability protection. Consider booking as a package for full protection.