Your paid-for package holiday could cost you hundreds extra if the pound loses value - here's what you need to know

Monday, 2nd September 2019, 1:49 pm
Updated Monday, 2nd September 2019, 2:49 pm
Package holiday firms are permitted to add an additional eight per cent on top of the original price of a holiday when their costs increase (Photo: Shutterstock)

Once you have booked and paid for your holiday, you can usually relax and eagerly look forward to the day you jet off knowing the hard work is done.

But holidaymakers could be faced with a surprise bill costing them hundreds of pounds extra if the value of sterling drops.

Extra charges

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Package holiday firms are permitted to add an additional eight per cent on top of the original price of a holiday when their costs increase. This percentage applies even if a holiday has already been paid for, which could bring an unwelcome surprise to customers who have holidays booked.

Travel firms can add the charges up until 20 days prior to departure if their costs have gone up due to fluctuating exchange rates, higher fuel costs or tax changes.

The charges mean that customers who have paid £3,500 for a holiday could end up paying an extra £280 for their trip.

Falling value of sterling

While the additional charges may not be widely known, the rule has long been in place.

However, with much uncertainty surrounding the UK's departure from the EU, experts fear the extra charges may come into force due to the fluctuating rate of sterling.

Since the referendum three years ago, the value of the pound has fallen quite significantly.

In December 2015, it was valued at around €1.40, whereas now it has dropped to €1.10 at the time of writing.

Naomi Leach of Which? Travel is now urging tour operators to clearly inform customers ahead of booking that the price of their holiday could increase.

Leach told The Sun, "A weakening pound will already be squeezing hard-earned holiday budgets, so millions of people who have already paid for a package deal could be in for a nasty surprise if travel companies use a little-known rule to charge potentially hundreds of pounds extra for their booking.

"The travel industry must make sure that this information is presented up front to holidaymakers when they book, rather than buried in the terms and conditions, so that they are fully aware of any additional charges they could face."

Customers will still be faced with the usual cancellation fee if they cancel their booking (Photo: Shutterstock)

What customers need to know

Customers who don't wish to pay surcharges will still be faced with the usual cancellation fee if they decide to cancel their booking.

If a firm charges more than this extra amount, however, customers have the right to cancel penalty free and be given a full refund.

Tour operators including Jet2Holidays, Lastminute, Loveholidays, Gower Tours and Wasteland Ski all reserve the right to change the price of your holiday after it has been booked and paid for, as stated in their terms and conditions.

However, Thomas Cook offers customers a so-called ‘Brexit price guarantee’, promising not to hike its prices "no matter what happens".

Guidance from the Association of British Travel Agents (ABTA) states that travel companies can increase the price of a holiday even after booking, providing it is included in their terms and conditions.

The guidance states, "They can do so if they include this caveat in their booking conditions, but they can only increase the price to negate certain costs, for example changes in the price of transport resulting from the cost of fuel; changes in taxes or fees imposed by third parties; or changes to exchange rates.

“This is known as a surcharge and they have to follow strict rules to see if they can ask you to pay the surcharge.

"Unlike other travel companies, ABTA members won't pass on small price increases to you, as the Code of Conduct obliges them to absorb an amount equal to two per cent of your holiday cost."

This article originally appeared on our sister site, Edinburgh Evening News.