Paying for holidays – too much, too soon

by , Assistant Travel Editor Transport & Travel 19 February 2013
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Many travel companies ask for holidays to be paid in full months before your trip. Is it reasonable to pay for a holiday three months in advance? Where does your money go?

Holiday balance - time and money

I don’t like paying for things in advance. Call me a miser, but I like to hold on to my money as long as I can.

I don’t like handing over money and then waiting weeks to see the results of my spending. Meanwhile, the money sits in someone else’s bank account collecting interest, rather than my own.

Take builders. I was once asked to pay nearly half the cost of the work as a deposit weeks before the project would have started – so I walked away and found someone who only wanted a 5% deposit with no more to pay until the builders arrived and started work.

Early payments go too far

So when I book a holiday, I don’t like the idea of paying the full cost of the trip months in advance. Yet this is what a lot of travel companies ask you to do.

Thomas Cook and the Co-operative Travel, which are now part of the same company, want the full balance of a holiday 14 weeks before departure, for example.

One of our Which? Travel readers disliked this idea so much he didn’t pay the balance for a trip to the Isle of Man on time, and lost his holiday and deposit as a result.

I wouldn’t go that far, but I don’t see why once you’ve paid the deposit, the full balance is needed so far in advance.

Paying months before you travel

However, such terms are common in the travel industry among big companies – Thomson and Virgin Holidays, for example, both want full payment 12 weeks before departure.

Full payment dates have been getting earlier over the years, and clearly it’s in travel companies’ interest to have all the money paid over earlier.

But what about the consumers’ interest? Shouldn’t we be able to hold on to our  money as long as possible?

What’s the earliest you’ve ever been asked to pay the full cost of a holiday? And do you think it’s reasonable for travel companies to ask for your cash months in advance?

21 comments

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richard

Travel companies need to ensure the costs are covered – They are NOT charities or gamblers – they are there to ensure they make a profit for their shareholders by NOT gambling that all their tickets will be sold – Called good business sense. Why should a company suffer from mind changing holiday makers? It works both ways.

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wavechange

Companies that demand full payment long before a holiday are being greedy. Astute customers are likely to seek out companies that take a deposit at the time of booking and ask for the balance to be paid near to the date of travel. It’s good business sense to consider customers as well as shareholders.

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richard

Wavechange – Not with this “government” they don’t consider the customer at all – Feel free to do your own thing – I support the shareholder – it is called business sense.

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wavechange

Richard – I bet you are grateful to Mrs Thatcher for turning us into a nation of shareholders. :-)

I would like to see a fair compromise that takes into consideration both the customer and the travel business.

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richard

Wavechange – I don’t find your ‘humour’ funny – I hate THATCHER – who did not turn us in shareholders – remember – she destroyed inner London Education – forcefully sold off council houses to pay for government spending causing the housing SHORTAGE – caused the buy to rent chaos – Sold off the Utilities – deregulated rents allowing them to rocket – causing immense hardship to the poor – the disabled – the unemployed – she caused two recessions – Need I say more – The Con Dems continuing that disaster. She was the biggest disaster since the War – which was why she was thrown out by her own side. So please no more funnies – they are not appreciated, This is the third time

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wavechange

Paying early annoys me too. Now that I am retired I can take advantage of last minute bookings and not having to pay a lot of money well in advance.

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Lee Beaumont

I would feel un-easy paying in full 3 months before I leave. I would understand 2 weeks tho, 14 day’s sounds reasonable to me.

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tpoots

While I get why we’d all rather hold on to our money as long as possible, travel companies need to make sure they’re going to get paid and can guarantee numbers well in advance. It’s the same with any bookable item – be it a concert ticket, football match etc where it is generally expected you pay up front.

Paying month’s up front can also save you money as the prices can be cheaper months in advance of departure.

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Malcolm R

It would be useful to ask the travel companies for their justification for this. It may be they have to part – pay in advance themselves for flights, hotels, cruises, or they may suffer losses if customers opt out at the last minute without having paid. If you organise a group holiday yourself you would want payment early to ensure commitment – thinking of bowls, cricket club tours, for example.
I book UK holiday homes each year – they ask for a 1/3 deposit when booking and the balance 6 weeks before the holiday; I don’t have a problem with that as the booking is insured for unavoidable cancellation, but it ensures I have the holiday I want. As with package holidays, I could avoid this advance payment by leaving my booking until the last minute and risking not getting the holiday of choice, or at the price I would like.
I’m just suggesting we look at both sides of the argument .

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wavechange

I agree that we should look at both sides of the argument. It would be very good to have some input from those in the travel business.

Paying 1/3 deposit and the balance 6 weeks beforehand seems to be a fairly common requirement and I would be happy to do that if it was an overseas package. In these days of websites and email providing faster communication, perhaps a month in advance is more than adequate for UK holidays.

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John Ward

Is it not the case that the holiday companies buy stock [i.e. room nights] in advance in the same way that other traders buy goods in advance? Most retailers don’t get their money back until the goods are bought [at marked-up prices]. This requires working capital which holiday companies seem to be perpetually short of. The holiday company probably does not pay the hotelier in Spain or Greece the balance of the room rate until well after the guest has departed. I go along with the suggestion that a one-third deposit to secure the booking and prevent it being sold to someone else should be charged at the time of booking with the balance payable no more than six weeks before departure.

There is a strange pricing cycle for holidays: they start off at “low” prices as a book-ahead incentive, then rise progressively as the date gets nearer, and then drop like a stone to make sure all seats are taken on the plane and all rooms are occupied at the resort. With interest rates as low as they are, I am not sure that the customer is losing much through premature payment or that the operator is gaining much [other than a healthy order book for which the traveller should be rewarded].

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Malcolm R

John, this seems inevitable – having booked a quantity of e.g. flight seats and rooms well in advance, the initial sales see how popular the holiday is, those that then trickle in see how close they get to their allocation, and then if the holiday is underbooked a cut-price last minute sale to fill the empties. That, I would have thought, was just good sense, and what many of us would do if we were in the travel business.

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John Ward

Yes Malcolm, I certainly agree with you. The early customer also gets a better choice of accommodation. I think it’s the demand for upfront payment in full that people don’t like, possibly due to the not unreasonable apprehension that the company might fail.

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rarrar

I can understand the small specialist holiday providers asking for significant deposits or advance payments – they dont usually have the clout to negotiate with the hotels etc for low deposits on the rooms the reserve.

However associated with the early payments demanded are the very skewed cancellation costs, customer cancels they loose deposit or a significant proportion of the holiday cost if nearer the time.
Company cancels – money back and if lucky a tiny amount of compensation if cancelled in the last few weeks.
Not exactly fair ?

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Malcolm R

Cancellation insurance is strongly adviseable to cover unavoidable cancellations. I suppose the companies are protecting themselves against change of mind.

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Andrew T

Of course if you buy the holiday bits separately you’re more than likely going to have to pay for at least the flight element up front straight away and most of the hotel cost too… and also why would someone book through an agent if they’re going to the Isle of Man?!?!

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wavechange

Booking through an agent might be cheaper, it might be more expensive, but it might be the only option for some accommodation. Many people rent out property through an agent to save the hassle or do the job more professionally. If there is a choice of booking directly or through an agent it is worth comparing prices, particularly for late bookings where discounts are offered.

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Geoff Fletcher

An all inclusive visit to Santorini for the 25th of May . Kinver Travel reminded me that payment in full £3148 was required on the 28th 0f February. When paying by credit card a further charge of £62.97 was imposed. On enquiry of the length of time ahead of travel, the comment was that as interest rates fell ever earlier payment is imposed ! I think that WHICH should use maximum publicity to expose this unwarrented practice.

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Pauline Creer

I booked a cruise with Swan Hellenic departing 20th June, 2013. I had to pay the balance by 28th February, 2013, some 16 weeks prior to departure. obviously this exceeds the 14 weeks max which was stated in your latest Which travel. I was, however, sent a reminder.

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Denise Dodd

I paid a deposit for £250.00 with Ola Holidays which was a holiday due in August, 2012 but due to being deaf and aquired a new assistance dog to help me with my disability. Because of training and bonding involved of which means I cannot go anywhere without my assistance dog for at least 8 months and also financial changes to way benefits are paid like the delay in tax credit changes that I have had to ask that I can amend the booking to May 2014 as for one that I don’t lose my deposit and secondly it will give me time to be able to pay for the holiday nearer the time. But Ola Holidays are putting me under immense pressure and demanding that I pay the remaining 50 per cent balance immediately. I have explained all the circumstances as above but to no avail and still demanding 50 per cent balance now and they have threatened me debt collectors if I cancel the holiday. Surely they can’t do this???? Can someone please advise. I am very distressed about all of this and have enough stress to cope with being disabled in my life and the current changes going on, plus making me feel extremely ill.

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chrissie 53

What is really annoying is that I have paid on time for the last two years, and each time just days before the holiday they have changed the venue and dates. This year they have just changed my flight times. In future I will book last minute and pay in full. Those three months they are profiting from interest on my money. They should be made to repay lost interest. When my mother died just days before my holiday they just said ‘unlucky’, then they had the cheek to ring me full of apologies the day before telling me it was no longer available. As luck would have it that worked in my favour.

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