/ Money, Travel & Leisure

The high cost of Lowcostholidays.com

A suitcase by the sea

A holiday company has gone bust, leaving thousands stranded and out of pocket. Do you always check for Atol protection before you book a holiday?

The demise of Lowcost Holidays has not only destroyed the travel plans of hundreds of thousands of holidaymakers, but it’s now been revealed that those affected may only be in line for a refund of a few measly pounds.

Thousands of you who’ve been left out of pocket now want to reclaim your money from the firm, which was based in Spain – with many weighing up whether they can afford to rebook even though there’s no guarantee they’ll get back what they’ve already paid.

Thousands left out of pocket

The collapse has left 27,000 holidaymakers stranded abroad and a further 110,000 out of pocket on future bookings. Many of those currently abroad are now having to pay for their hotel accommodation again, as well as other incidental costs.

The holidays sold by Lowcost are covered by the government of the Balearic Islands, but they’ve only put aside €1.09m to compensate those affected. With 110,000 people yet to go on holiday and 27,000 currently on holiday it works out at around just £8 each if everyone makes a claim.

The budget travel agent entered administration last Friday, despite offering an extended summer sale just hours before it announced it had gone bust. It posted an advertisement online boasting: ‘Our holiday sale has been extended for a limited time only. Grab your lilo and go.’

Many of its customers were furious that it had enticed them to pay for cut price breaks just hours before the firm collapsed.

Some took to Facebook to vent their fury. One customer said: ‘60% off Sale the DAY before you disappear off the face of the earth with everyone’s hard earned money. Absolutely disgusting…’

The firm is laying the blame on ’the recent and ongoing turbulent financial environment’.

The importance of Atol protection

The big problem with Lowcost Holidays is that it wasn’t Atol protected. An Atol license means your holiday is protected and it guarantees you’ll be brought home if your travel company collapses while you’re abroad.

What can Lowcost holidaymakers do?

Back in 2013, the Civil Aviation Authority (CAA) warned holidaymakers to avoid booking with Lowcost Holidays after the company relocated to Spain.

Sadly, many who booked with Lowcost Holidays are unlikely to have even realised it wasn’t part of the Atol scheme. Do you know if your last package holiday had Atol protection? Is it something you always check for?

If you or anyone you know has been affected by the collapse of Lowcost Holidays, we’ve created a guide with easy steps you can follow to try and get your money back.

Comments
Guest
Stephanie Stewart says:
23 July 2016

When we booked our package holiday over the phone after browsing the Internet to check what was out there, in January this year with Lastminute.com because they were protected! At no time during the conversation did anyone say they were booking with their partner lowcostholidays who were not protected. Why would Lastminute.com bother with protection at all if they were as they claim only a facilitator or agent? Most of us assume if we agree on something and give our money to a company for a product/service that our contract is with them. Lastminute.com say they are doing everything they can to help, but they never even notified customers, they waited for the customers to come to them. We found out because the Transfer company notified us of the cancellation. Why does it say on the TCs that the deposit covers 100% flights, 25% accommodation and 50% transfers, if the only thing paid for was the flights? We must get our Minister for Trade & Industry to look at what has happened, and if possible an enquiry to be held to answer the question of whether Lastminute.com and any other company had any prior knowledge or suspicion that lowcostholidays and the lowcostgroup were going to cease trading? And we must certainly try and get a Law introduced to protect consumers better.

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Guest

How many times in the past have we been told that the company who you contact for the holiday or whatever you have bought are the ones that your contract is with. Seems to me that a solicitor would be the best person to clarify this situation. I certainly will not be doing any more business with Last minute .com as I would not have any faith in them.

Profile photo of John Ward
Guest

In answer to Which?’s question – yes, we always check that the tour operator is ATOL-protected and make sure we have the certificates with us as we go. But this case raises many other serious questions that need to be addressed.

By law, every UK travel company which sells air holidays and flights is required to hold an ATOL, which stands for Air Travel Organiser’s Licence. Unfortunately, Lowcost Holidays is not a UK company.

Who was carrying advertisements for Lowcost Holidays and not pointing out that the firm was not a UK company so not ATOL-protected? Was any of the advertising dishonest and untruthful? Did the company make it clear in its literature that it was only regulated by the Balearic Islands administration? Were any travel agents implicated in the sale of unprotected holidays? What was lastminute.com’s [and any other websites’] position in this? Does the CAA have any duty to bring holiday companies outside its protection scheme to public notice? When did the directors know the company was starting to fold? Was it trading while technically insolvent? Was the discount holiday sale promotion in any way legal? By relocating to the Spanish jurisdiction it is possible that the company and directors have been able to evade some of these questions and escape the consequences of their actions.

27,000 people have had a ruined holiday and have had to pay again to get what they thought they had bought. And four times as many people won’t get away at all unless they can afford to replace the lost holiday. The money set aside to compensate people will barely cover the cost of the correspondence. The important issues for consumers generally are how this situation can be prevented in the future, why compulsory bonding is not a legal requirement for any holiday sold in the UK, and why it is not mandatory in the UK for the airline and hotel charges to be paid in advance by the travel operator irrespective of where they are registered.

Budget holiday companies are, understandably, very popular as the number who booked with Lowcost Holidays demonstrates, so there needs to be even closer scrutiny of their activities. Where do Trading Standards fit into the picture? Should ABTA do more to warn the public about unlicensed operators? Could the travel trade generally be committed to mutual cover or taking over a failing firm? – Not if it’s outside an industry scheme such as ABTA presumably. It seems that every year there is another collapse of a travel operator, usually at the last minute, stranding lots of people and cancelling future bookings without refund.

Returning to the here and now, for people about to take holidays abroad, how are they supposed to know about ATOL? What would alert them to not having an ATOL certificate? If you buy a holiday through a high street travel agent these things should get dealt with properly but the ease of buying holidays on line means more safeguards are required and more essential information and warnings should be apparent on the website.

With hindsight it is easy to say that the name “Lowcost Holidays” should ring alarm bells, but who would have thought they were skimping on the basic protection of their customers? Most people would assume the holidays were cheaper because the company did not have a high street presence, was run through the internet, had few destinations so could achieve economies through large-scale bookings, and was using lower-grade but adequate hotels.

I feel sorry for the people affected and hope they can manage to have a holiday break at some point this season. My advice to teachers is not to set the standard essay on the first day back at school.

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Guest

John, You can always go onto the CAA website and check to see if a company holds an ATOL. And I would certainly not believe any company that has an ATOL logo on the website without checking it myself first.

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Guest

Good point, William. Unfortunately a lot of people probably don’t have a clue about ATOL or they think it’s just another bit of the bumf they have to print off. And if the travel company doesn’t send an ATOL certificate, because it isn’t licensed, would people realise that they should check? Noticing the absence of something is harder than observing its existence.

Guest
Jason says:
23 July 2016

We booked our holiday through the lastminute.com website. They are saying they are unable to access our booking details as our contract is with lowcostholidays. We found our holiday on both the lowcostholidays and lastminute.com websites. We booked online with lastminute.com because they were ATOL protected. It wasn’t until we received our booking details we realised the holiday had been booked with lowcostholidays. The first we knew about the collapse of lowcostholidays was a cancellation email from our transfer company. Nothing was sent from lastminute.com. Our flights are booked, however our hotel was cancelled. By the time we contacted the hotel our room was sold to someone else. We currently have flights but nowhere to stay. I have contacted my credit card company and they are currently refusing to provide a refund as my statement says lastminuteholidays. They say I need to prove that my money went to lowcostholidays but no one seems to be able to help or they don’t want to. Is lastminuteholidays – lastminute.com or lowcostholidays or Paul Evans’ private bank account???

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Guest

The comments above from Stephanie Stewart and from Jason show that booking through third-party intermediaries can leave people unprotected when things go wrong. These companies should at least inform their customers of the full details of the company that will actually be fulfilling the contract. This situation is on a par with the problems people have with companies selling through the Amazon market place and Amazon disclaims any responsibility for the transaction. Can lastminute.com [and others presumably] abdicate responsibility? I do not know what information they give on their booking documentation. From the point of view of trust and ethical conduct I feel Which? ought to be challenging them on these points. If lastminute.com is just an aggregator of holiday opportunities from other companies and not a travel operator, why do they have an ATO Licence? Perhaps they are both and should make their position clear in each case including the existence and limits of any protection.

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Guest

It would be interesting to know how effective is travel insurance in protecting holidaymakers from operator failure, especially the slimmed-down cover provided by banks as part of their current account packages.

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Guest

I think it was Which? pointed out, travel insurances vary considerably in what they cover, linked partly to their cost. You need to read the cover before you buy. The advice has always been to use an ATOL-protected company. Why don’t people? If they take the risk to save money, should a card provider come to their aid – all card users will end up paying for their avoidable loss. Equally, why do card holders give facilities to a holiday company without customer protection?

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Guest

I would look at this from a different perspective. Why should the card provider have allowed the travel company with its service if it is not ATOL-protected? If a credit card company is incapable of thinking about the risk, it’s hardly reasonable to expect a card user to do so.

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Guest

I think you are both in alignment as I suspect Malcolm meant to write “card providers” instead of “card holders” in his final sentence [unless I have completely misinterpreted it].

I think withdrawing credit card facilities from companies that pose a risk would be a good and justifiable way of preventing their exploitation of consumers. There is considerable risk of claims against the credit card companies arising from the Lowcost Holidays default, especially from customers who took up the cynical and deceitful sales promotion on the eve of the company’s collapse.

In the 1960’s there was a cheap holidays entrepreneur called John Bloom who completely shook up the travel trade [he had already blown the washing machine industry wide open]. It was a major consumer interest story at the time as there were concerns about his cut-price packages to eastern Europe but I don’t think anyone was let down. Nevertheless, the company’s advertising slogan “All this on a John Bloom holiday” did contain more than a touch of irony.

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Guest

Thank you John. indeed I did mean “card provider” – as you interpreted 🙂 . It seems to me that card providers should be careful who they allow to use their service and steer clear of inappropriate businesses. Giving the facility to a non-ATOL holiday company might allow their clients to regain some or all of their money, but it does not replace the great inconvenience and cost caused in sorting out their ruined holiday.

Card users should consider risk; that is their responsibility but sometimes we seem to think we can abandon responsibility for our own actions when we can claim recompense from someone else. However recompense does not include all the distress that accompanies a problem; that can only rest with the individual.

Guest
Prav Singh says:
25 July 2016

I feel for all who have been caught up in this nonsense. I read something interesting today about people trying to raise money via crowdfunding. Appealing to peoples better nature in an attempt to raise the cash to take their families on holiday after all. Hopefully the idea helps some of your readers who have been affected!

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Guest

“The holidays sold by Lowcost are covered by the government of the Balearic Islands, but they’ve only put aside €1.09m to compensate those affected. There are 110,000 people yet to go on holiday, which works out at around just £8 each if everyone makes a claim.”

1.09m/.11m = £9.90 rounding down

Sometimes I could cry.

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Guest

Hi Dieseltaylor, thanks for picking up on this, indeed the figure is inaccurate so I’ve changed the sentence to include the 27,000 currently abroad. Thanks

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Guest

I had wondered if the figure had allowed for administration costs.

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Guest

However you do the maths [and it’s usually best to stick to one currency at a time] it’s a paltry sum. I suspect there are a number of hoteliers who will also be claiming against the Balearic Islands government; there will be those who have not yet been paid for the holidaymakers who have already left and for those who are still there, as well as losses if their future booked guests don’t turn up. I should be surprised if any pay-out is more than a few cents to the Euro.

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Guest

You will appreciate that if one counts the 137,000 people affected that it is £7.95 . However the paragraph sits by itself and should make sense with the numbers provided in it.

Trying to get a sense of scale in this might help by looking at not the number of people but the number of bookings affected. those yet to go may well be families so divide that by 4 and the current 27,000 abroad by two indicates say 13,000 for a total booking actions of 40,000 people spread over a period of months.

The number of people who went on package holidays in 2014 was apparently 15.9m [ONS] .

The lastminute connection I think is highly significant in giving a gloss to transactions and this confusion as to whom you are booked with needs to be stamped on very firmly.

The matter of off-setting insurance claims will be interesting. You would think everyone who booked took holiday cover so at most it should be a major inconvenience. So what is the status on holiday cover?

First stop must be the holiday insurance cover. I suspect the Banks will in many cases fork up as they should – but no doubt with some painful procrastination over what their inclusive account travel insurance covers.
It would be nice to see which card issuers/Banks really take ownership of this.

SO some interesting data could come out of this – if someone collects it.

As readers know I think Which? should have a ready reference section laid out like Wikipedia where subscribers can quickly check for details on firms they may do business with. You can see that a quick reference for lowcostholidays would have been labeled with the CAA warning. The entry for Lastminute.com would be extensive anyway but this particular aspect of the business where people are confused how this operates would have been a useful addition.

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Guest

I think speculating the refund is unhelpful. If anything is available at all from the Spanish authorities it is unlikely to be a straight payment per person, or per day booked, and more likely to be a percentage of the cost of the particular holiday in each case. There could also be other claims. The Euro/Sterling conversion rate at the time any distribution is made could also have an impact.

Guest
Howard House says:
29 July 2016

A related problem.
My wife, her daughter & 3 young children booked a holiday with On The Beach, problems with the hotel being closed, booked via “You Travel” It was booked through On The Beach who advertise ATOL protected but You Travel are not! begs the question then; was it covered by ATOL? Obviously not, I am waiting for a response but will take it further.

Guest
Susan says:
1 August 2016

We are due to marry this December and my hens thought a sunny short break in Tenerife would be fun……booked with Low Cost Holidays on the 13th July……….evening news on the 15th July advising administration!!!! Surely this should be illegal…they were trading with no intention of fulfilling their side of the contract…..now waiting to see if John Lewis will honour the Section 75

Guest
Alan says:
3 August 2016

Reading this I am now thinking that barclaycard may not pay me out as my statement showed lastminuteholidays too. Should I worry? It’s not as bad as some as its only 400 ish but won’t be happy if bc / lm between them wriggle out of it 🙁

Guest
Paul says:
28 August 2016

I booked my hotel and flights thought Alpharooms.com. We found out 72 hours before we were due to fly to Cancun (Aug 13th) that this agent used Low Cost Hotels to book the Hotel rooms. Only at this point we knew we had a problem, and we had to find a hotel quickly as the original hotel was now totally booked. We found a lower grade all inclusive hotel with the rooms and times we needed, and Alpharooms booked it. We ended up paying extra cost for meals and excursions which were included in the original booking. Can we claim from Alpharooms.com for any extra cost because they did not advice us that our holiday was booked through Low Cost Holidays and that they did not advices us that we had no rooms until so late?

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Guest

I think it would be worth exercising your rights under the Consumer Rights Act 2015. Alpharooms did not provide the duty of care to which you were reasonably entitled and they withheld material information from you that had you been aware of might have led to your making different holiday arrangements.