Package Holidays: Do I Still Need to Take Out Travel Insurance?

Package holidays are back. And they could have COVID-19 to thank for their change in fortunes.

Since the mid-2000s and the boom in independent travel booking, the proportion of holidaymakers booking package holidays has been in steady decline. In 2019, the figure stood at just 39%.

But according to figures from UK travel agent association ABTA, holidaymakers may be having a change of heart about packages. 27% of people say they are more likely to book a package holiday now compared to before the pandemic. 

The reasons are telling. 39% of people say they prefer to book package holidays for the extra financial protection they provide, while 37% say they like the feeling of everything being taken care of for them. When asked to compare how important different parts of the booking process are to them, 78% of people picked out the regulation of package holidays as of high importance to them.

It’s not hard to see what’s going on here. Travel has been tough over the past couple of years (where it’s even been possible at all). COVID-19 has shrouded the supposedly pleasurable experience of planning and going on holiday in all sorts of uncertainty. Changeable COVID travel rules, the risk of last-minute cancellations, worrying about social distancing and protecting yourself from the virus itself.

With all of this going on, it’s understandable that holidaymakers should turn to the certainties of a package holiday. They provide a level of financial protection against cancellations that you don’t always get booking independently. You know exactly where you are going and have things like airport transfers taken care of, rather than having to navigate public transport on arrival.

Just as important to travellers, it seems, is the fact that they can book a package through a travel agent. 47% of people told ABTA that they valued professional guidance with COVID rules and safety guidance.

So just how much protection do package holidays give you against things like last-minute COVID cancellations? And if you’re getting that protection from your package holiday’s terms and conditions, do you still need to take out travel insurance?

Different Types of Cancellation

Package holidays are covered by a variety of legal and financial regulations, the most recent of which are the Package Travel and Linked Travel Arrangements Regulations introduced in 2018. One of the main purposes of these rules is to guarantee holidaymakers financial protection if their trip is cancelled or significantly altered for any of the following reasons:

• Circumstances at your destination mean your holiday cannot go ahead as planned
• Your flight is cancelled
• Your travel operator goes bust.

Under these regulations, affected holidaymakers must be offered a refund, a rebooked flight or a replacement holiday. In the case of a travel firm going bust, refunds are guaranteed through the ATOL scheme. Holidaymakers are also guaranteed they will be looked after and flown home. 

These are all important consumer protections. But they don’t actually cover all the reasons why a package holiday might be disrupted because of COVID.

Consider the following scenarios. Family A has a holiday booked to a country that is experiencing a rapid rise in COVID infections. The week before they are due to fly, the country imposes a strict lockdown. Are they entitled to a refund under the regulations?

It depends what the knock-on effects of the lockdown are. If the country they are travelling to closes its borders, or orders hotels to shut as part of the measures, then yes, they would be protected. That would fall under the criteria for a change in circumstances at their destination. Their airline might also take the decision to cancel flights to the newly locked down country. Again, they would be covered.

But it’s possible none of the above happen. The new lockdown measures might involve a curfew and an order for bars and restaurants to close, but not hotels. The border might remain open and flights might keep running. No one would blame family A for not wanting to take their holiday in these circumstances. But there would be no obligation under the package holiday regulations for their travel operator to offer them a refund or a rebooking.

Here’s another one. Family B are all set to fly for a summer holiday when one of the kids develops flu-like symptoms a few days before. They all take PCR tests, and sure enough, it turns out two of them are positive for COVID-19. Unable to fly, they have no choice but to seek a refund or a rebooking to a later date.

Again, this very common scenario which thousands of travellers have already faced is not covered in the package holiday regulations. Put simply, it’s up to the individual travel companies. Many have introduced flexible booking policies to give customers extra reassurance. But many haven’t. There is no obligation.

The fact is that the most recent package holiday regulations were drawn up before COVID. They were not designed to cover many of the circumstances the pandemic has thrown up for travellers. So sure, booking a package holiday does come with certain protections. But if you want guaranteed cover for all the things COVID might throw at you, you need to take out travel insurance, too.

Collaboration.