100,000 people hit as holiday firm goes under

Man raises his sunglasses in shock at his sunburn

More than 100,000 people have been hit by the collapse of hotel booking specialist On Holiday Group. The company wasn't the travel agent that people booked with - it was the 'bed bank' that many of the online travel agents use - so thousands won't recognise the name of the firm or realise that they have been affected.

What does this mean for holiday-makers?%VIRTUAL-SkimlinksPromo%

Have you been affected?

The company was the largest 'bed bank' in the UK - which means it buys an enormous number of hotel rooms in resorts overseas and then sells them to travel agents. They buy so many rooms that they get a more competitive price, so the agents use them because it's easier and cheaper than going direct to every hotel.

It went bust on Friday, still owing hotels money for more than 113,500 rooms. It means that a number of people who booked hotels or packages though a travel agent will have paid for their hotel room - but the hotel in question won't have received any money.

If you have booked and paid for a holiday through a travel agency, it makes sense to call and check whether you have been affected. However, the message at this stage is not to stress out even if you have been hit.

Safety nets

Over the next few days On Holiday Group will return money held in its client accounts to travel agents. In most cases the agent will contact the hotels direct or another bed bank, and use this money to pay for your hotel. In some instances this may mean you get a slightly different hotel, but the travel agent will contact you and let you know.

In some cases, travellers will be forced to pay the hotel direct while they are on holiday and then reclaim the money when they get home. This is especially likely to be the case for people who are currently on holiday with the firm or about to travel.

Even if the problems are worse than anyone thinks, then most people are protected by another safety net. If the firm doesn't have enough cash to refund your accommodation costs, then your travel agent will have to pay for you - as long as they are part of the Atol scheme - and as long as you booked a package with them.

If you only booked the hotel with them, then you're not covered by this, but it's worth checking your travel insurance. Some will insure you for the costs you incur when a supplier goes bust, so check the small print.

And if the worst comes to the worst, if you booked with a credit card, you have the protection of section 75 of the Consumer Credit Act. As long as you paid at least £100 of it on your card, the credit card company is jointly liable, so will refund the money. Technically it needs to be the airline or the holiday company listed on your credit card bill to qualify for a refund, but some credit card companies will pay even if it is the agent's name listed.

The over-riding message here is that very few customers will feel any impact at all from this - and those that do are likely to be protected by one safety net or another. Unlike some of the more high-profile company failures of recent years, the vast majority of people will emerge unscathed.

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100,000 people hit as holiday firm goes under

If you are a victim of a strike, or any other event beyond the airline's control (including ash clouds!), they must offer you a refund (in which case it's up to you to find a way home) or an alternative flight. While you are waiting for the flight you have the right to food and refreshment and accommodation.

If you are on a package holiday, your tour operator is entirely responsible for looking after you until you get back to the UK.

This is more likely to happen due to the financial crisis, but in some situations you are covered. 

If you pay by credit card and it's over £100, you'll get a refund from the card company. 

Your travel insurance may well cover you too, but check before you go.  

Talk to the airline, and if it is temporarily misplaced they should arrange for it to be sent to your accommodation, and you should be either given cash to cover the essentials in the interim.

If it's completely lost you must wait 21 days and then make a claim for compensation. If you are travelling as part of a package you can claim costs from your operator.

If you are travelling within the EU you need an EHIC card, which gives you access to public healthcare. However, this won't necessarily be free, and if you need extra services such as accommodation for a carer, a helicopter home or a delayed flight, you could end up seriously out of pocket.

The only protection that will guarantee you will be looked after without running up a horrendous debt is by having travel insurance - which often covers up to £10 million of costs.

The most common form of theft is pick-pocketing, followed by theft from a car and bag snatching. Meanwhile, 752,000 of those surveyed had items stolen from their hotel room or villa.

If you have anything stolen, your only protection is insurance. You need to tell the local police immediately and get a crime reference for your travel insurer.

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