I suppose it depends on the reason for the calculation. If the holidaymaker could not afford to pay for the rest of the holiday then theres not much that they can do, but if it was because of a bereavement then yes I think they could be more sympathetic.

Report this comment

I think one of the most popular reasons for cancellation is actually just the customer changing their mind for any number of reasons. This is exactly what the travel agencies are trying to guard against by giving the customer less incentive to switch company or ‘just not feel like it’. It’s not really ‘wasted’ either, because by that time the company selling the product has incurred a stack of costs (staff time, communication leading up to initial sale, mail outs, invoicing etc. etc.). The deposit only offsets those costs in cases where the customer cancels for no good reason. If it’s because of a separation/divorce, then that’s mighty sad, however I believe a few pounds for a lost holiday deposit is going to be the least of that couples concerns (the other costs involved with this probably run in the billions every year!). If they are cancelling because of an illness, this is generally covered by insurance of course.

Cancellation rates in the travel industry are generally well over 10%, something I know we are under in a small offline travel business I run. One thing we will do (I am not sure if this is standard, it just seemed fair to us) is offer the customer the deposit as a credit if they decide to postpone rather than cancel. That usually covers all cases where someone has become sick or can’t leave on a certain date, but still keeps them really satisfied and happy with the service!

Report this comment

Yet another reason to take out travel insurance, which covers against unforeseen cancellations. However a group of MP’s looked into the deposit situation and they made the following comment. The price of general holidays would increase if deposits where lower due to the cost of unsold inventory. We have very few customers cancel due to uninsurable reasons and most times that happens we can normally get the tour operator to assist. However if it is insurable they tend not to be helpful.

The real cost of making a holiday reservation for 2 people is between 80 and 120 pounds (in terms of staff costs etc, so just think what a travel company makes on a 200 pound late deal due to cancellation) yet deposits can be twice this. While 80% of trips maybe resold that still leaves 20% that are not, which is where almost all the extra monies go.

Report this comment

I agree with Nick and Sam. Resold or not the opportunity cost of the time spent by the agent or company is still something that has to be covered. Travel is so competitive I think consumers sometimes forget that this is business and that businesses have the right to set reasonable cancellation fees to cover their time and expenses. If I went to a barrister and spent 3 hours of their time but decided not to go to court I would still get billed their time even if they could now invest that court time on another client. As said earlier there is travel insurance to cover these things for a reason and change of mind is not the fault of the business. The other thing to consider is this is just another way for companies to make money. The actual price of airfares might be 200x cheaper than they were 5 or 10 years ago but the fees come from ancillary charges whether it’s baggage, headphones, food or whatever. Believe it or not you can’t run an airline if all the seats were at 1p and there weren’t any other costs. In Aussie where I’m from the laws state that you can’t advertise airfares unless displaying the total cost. If this were adopted in the UK the costs would be a lot more transparent in terms of taxes, fees, credit card surcharges etc. While I’m on about credit card surcharges, surely if a web based business only accepts credit cards it should be built into their price from the start…

Report this comment

Further to my above comment, i do have one horror story. A company that I dealt with in Aus, Creative Holidays, issued a prepaid hotel voucher for 2 weeks in New Orleans. for 2 rooms the price total AUD4000. Well, Katrina struck 6 weeks before check-in and the clients received no refund. The wholesale said that as they had left Australia on their trip their brochure conditions stated that no refund was due, despite them admitting that the hotel had not charged them for the room. Basically they pocketed the whole amount saying that they could provide a cancellation letter for their travel insurance company. Well, this client had ‘free’ travel insurance on his credit card which didn’t cover land arrangements….not sure if you have this free insurance on gold cards in the UK but it’s huge in Aus and it’s worth about as much as you pay for it…

Report this comment

Mark,
UK law states the total travel price must be advertised. This means the price you can take the trip for. Airfares, taxes etc. But not extras which can be meals, baggage, headphones etc.
With regards to insurance provided by Banks/ Credit Cards, in the UK these mostly come with accounts that you pay a monthly fee for. The insurance provided is often good and sometimes standard. As far as I know only dinners club provided a low standard.

Report this comment

Well, I am definitely one ‘CEO’ who is not getting rich from cancellations

We’ve had a handful of cancellations and these were for ill-health of one of the people travelling or immediate family. In all but one, as far as we know, their travel insurance covered the cancellation fee. In the other case, we will give them their cancellation fee as a credit towards a future holiday. Legally, we didn’t have to do this, but we thought it was the fair thing to do in their case.

I know your blog is ‘travel rants’ from a consumer perspective which I applaud, but I do sometimes feel you think the worst of travel companies. In our case yes, we do like bookings in advance, but that’s because it helps us plan better, not to make money from cancellations! (By the way, generally we make less money on early bookings, particularly this year, our costs have gone up *significantly* from fuel surcharges and exchange rates but we absorbed this ourselves.)

Now, say a customer books a year in advance and cancels 3 months before they go. Given the nature of our holidays, once we’ve sold a holiday, we can’t sell that exact holiday to someone else during that 9 months. We now have approx 6 weeks to sell that holiday to someone else. It’s unlikely that we’d be able to do that.

Also, as already pointed out, a lot of time and effort can go into selling a holiday. In our case, with some customers, over several months (initial enquiry, itinerary designed, questions, itinerary customised etc), this could tot up to 2 man days. Darren, I believe you work in IT – how much would that time be worth to you? Just as billable hours, without the overhead.

I certainly don’t want to pocket from people’s misfortunes. However, I really don’t see why we should be out of pocket given the time and effort we put into it, and I really don’t want to let down local people who have planned for the income.

Report this comment

Spare a thought for those who, like myself, are charged a cancellation fee as soon as a holiday is booked…I booked a surprise holiday to Hong Kong with Thomson last February for June…their website suddenly redirected me during the booking process requesting that I wait to be reconnected…this happened on 2 occasions and each time my booking information came up with a problem…the first was that the airport had defaulted to LHR( I wanted to fly from Newcastle) and then it told me that the hotel and departure day I had selected was not available so I changed it as I had already picked a second choice…unfortunately I didn’t know that the first correct booking had been accepted!!…I desparately contacted them(within 5 mins) and whilst they didn’t charge me for the LHR error (why this one only I don’t know) they charged £200 cancellation for the booking I didn’t want…I also waited 17 weeks for the £1200 refund…I’ve e-mailed, written and telephoned…they will not refund…the holiday was great but I had to tell my wife beforehand so it spoilt the surprise…I’m NOT a happy man!!…but what can I do?

Report this comment

I needed to cancel my holiday as I will be 35 weeks pregnant and they said I am not entitled to any refund of deposit even though I will be deemed unfit to fly!! How is that fair??

Report this comment

My daughter has recently booked a holiday via the internet for her future parents in law.she entered her credit details and went ahead with the booking on the final page it stated and excessive charge for baggage cost. She emptied her shopping basket and di d not complete the booking form. The holiday company had her card detaikls and have taken the money from her account. She has conatcted them and they state that theyb will no refund the holiday costs albeit she did cancel the booking at the time. her parents in law have already booked the same holiday via the itnternet? Does she have any redress from the holiday company.( her card supplier is witholding payment until enquiries are made) Does she have any redress in law over this misreresentation of the cost of the holiday viz the ezxcessive baggage costs not included in the package yet still claimed booking costs.

Report this comment

We booked a holiday with English Country Cottages, then shortly afterwards realised due to new work commitments we would be unable to go. We booked with a Special Offer Low Deposit of £25, which is heavily advertised on their site. When I called to cancel, less than a week after booking they said I owed them another £225!!! FOR WHAT? This was for a rental property in England, so no airfares ahd been booked, car hire or hotels. They are now threatening legal action if I don’t pay, but I feel I’m being ripped off! Their site is very difficult to navigate and its hard to find the bit about paying extra if you cancel. I don’t see the point of their SPECIAL LOW DEPOSIT if you’re going to have to pay it in full whether you travel or not, should I seek legal adivse or just pay?

Report this comment