Which? issues warning as it finds holidaymakers at risk of paying large sums to cancel ‘low deposit’ holidays

Which? is warning holidaymakers to be wary of enticing ‘low deposit’ breaks sold by travel firms, which in some cases fail to make it sufficiently clear that they could be forced to pay up to thousands of pounds if they need to cancel after booking. 

When holidaymakers book a package holiday or cottage rental, they’ll often be presented with multiple payment options, which can include paying an initial amount advertised as a ‘low deposit’. While consumers may assume that this figure is the only amount they have committed to paying, in many cases this is merely a first instalment towards a larger deposit.

Which? is concerned that some firms are not clearly signposting this at the point of sale, leaving customers unexpectedly out of pocket in the event they need to cancel their plans.

Michelle Simons from Northampton told Which? that she would “never book with Tui again” after finding she was liable to pay another £650 to cancel her family holiday to Bodrum, Turkey, after making an initial ‘low deposit’ payment of £150. 

Ms Simons told Which? that as she hadn’t been abroad for 13 years, she opted to go into a Tui store to get specialist advice. She said the Tui agent handed her ‘a laminated piece of card with T&Cs on’, but it was not verbally explained at the time of booking that she’d be liable to pay a larger amount if she opted to cancel later on.

Which? has also seen an email confirmation sent to Ms Simons which describes later scheduled instalments as ‘payments’ – which Ms Simons interpreted to be payments towards the remaining balance of the trip, rather than towards a further, non-refundable deposit.

When she later had concerns about her choice of holiday, in part due to reports of high temperatures in the resort area, Ms Simons wanted to cancel the trip and rebook an alternative holiday, believing she’d only stand to lose the initial £150 deposit payment. She told Which?: “That’s when they told me I’d have to pay the full £800 deposit – so another £650 on top of the £150 I’d paid to cancel… I had no reason to think that the deposit I’d paid wasn’t the full deposit.”

When she tried to challenge this, she said a store manager warned that she could be taken to court if she did not pay the remainder of the deposit. She was not prepared to lose the money, and felt she was left with little choice but to go ahead with the holiday. 

Which? researchers tested making an online booking with Tui, finding that in addition to its ‘low deposit’ offer, Tui customers can also select a ‘no deposit’ deal on selected trips. On the payment page the small print sets out that customers are liable for a ‘full’ deposit amount should they cancel their ‘low deposit’ trip, while more confusingly, those on a so-called ‘no deposit’ holiday would also be liable to pay a non-refundable deposit.

Which? believes it would be of benefit to consumers for Tui to set these terms out more prominently, earlier in the booking process. 

Which? has also expressed concerns about other firms’ low deposit schemes,with some  appearing  even more confusing. 

When looking at a week-long package holiday for two people with loveholidays to the Oberoi Beach Resort in the UAE for August 2024, Which? researchers were offered a ‘low deposit’ of just £29 per person for the £3,490 holiday. 

If selecting the low deposit option, loveholidays outlines a breakdown of future costs, calling them ‘instalments.’ It does not clearly indicate that the first two instalments make up the remainder of a larger deposit, meaning a customer might wrongly assume they’d lose just £58 if they wanted to cancel. In fact, they’d be required to pay a further £1,439 to cancel this trip – the remaining deposit due. 

While loveholidays does include a link to its full T&Cs under the heading ‘I understand and agree to the following,’ Which? believes the firm could be more explicit about the financial obligations in the main text. 

On The Beach requested £30 per guest to secure a booking at HSM Canarios Hotel, Majorca. During the booking process On The Beach signposts that cancellation charges may apply, and hyperlinks to Ts&Cs – but Which? believe the terms of the low deposit could be made clearer upfront. As with loveholidays, future charges are described as ‘instalments’, rather than clearly emphasising that the next two payments contribute to a non-refundable deposit – which could also be confusing for consumers. 

In contrast, Which? Recommended Provider Jet2’s ‘low deposit’ refers to the full deposit payable. At £60 per person this initial payment is higher than with some other companies, but the original £60pp payment is all a holidaymaker would stand to lose if they opt to cancel their trip, with no additional fees. 

Meanwhile Cottages.com offers a low deposit in a similar way to Tui – with the initial low deposit making up just part of a larger deposit due. However, this is made much clearer at the outset, with a pop up message appearing as soon as you select the low deposit option, outlining precisely the amount that will be due if you decide to cancel – and explaining that this figure is the difference between the ‘low’ and ‘standard’ deposit amounts.

Naomi Leach, Deputy Editor of Which? Travel, said:

“As the cost of living crisis continues to stretch household budgets to the limit, ‘low’ and ‘no’ deposit holiday schemes can be an enticing option, allowing consumers to spread the cost of their holiday over a longer payment period.

“However we have found many of these schemes can be confusing for holidaymakers, with cancellation fees and ‘top up’ deposit payments sometimes buried in the terms and conditions. If you’re considering a low deposit booking, always take the time to check the terms carefully, so you understand exactly what you’re liable for should you decide to cancel.”

-ENDS-

Notes to editors:

Tui – Online bookings(example)

loveholidays  – Oberoi Beach Resort (example)

On the Beach – HSM Canarios Park (example)

Rights of Reply

A Tui Spokesperson said: ‘We welcome this feedback from our customers and strive to make booking a TUI holiday as easy as possible. We will review how we communicate our low deposit offering during the online booking process as our customers tell us they value our low or no deposit offers and the option to spread the cost of their holiday via direct debit.’

Tui did not respond to the case regarding Michelle Simons.

A loveholidays spokesperson said: “Our low deposit scheme helps our customers pay for their holidays in instalments before departure, as opposed to all at once upon booking, which has become an increasingly popular choice amid the cost-of-living crisis. 

“We provide customers with clear and accurate information about how all of our market-leading payment options work, with this information readily available on our website and throughout the booking process. 

“We always have our customers best interests at heart, so we are committed to reviewing this feedback from Which? in the context of further improving the bookings journey.

On The Beach did not respond to a request for comment.

Which? tips for navigating low deposit offers

-Be wary when you see low deposit offers – it often means you’ll have to pay a further deposit top-up payment (if it is non-refundable), even if you cancel a few days later. Ensure you will be able to afford the holiday before committing – it’s unlikely you only stand to lose a low amount if you choose to cancel.

-Read the full terms and conditions, and look out for extra charges you may be liable for. For instance, if you book a package deal through an online travel agent (OTA), you may have to pay the OTA an extra fee (over and above the deposit) when cancelling. For example, An OTA will often ask you to pay for the outstanding air travel amount, as flights are often non refundable.

-Check sliding cancellation payment scales. If you cancel close to your departure/holiday date, you’ll likely owe more than just the deposit.

What is a non-refundable deposit?

A non-refundable deposit is part of the total cost of something or an advance payment you make when booking.  Businesses sometimes insist it’s non-refundable if you cancel and even write it into the contract. But this could be challenged as an unfair contract term.

If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover actual losses directly resulting from your cancellation.

This could include costs already incurred or loss of profit, such as non-refundable flights.

In 2019, the CMA called on businesses to check their terms, and it also encourages companies to be upfront and clear with their customers about charges, especially in the event of a customer cancellation.

About Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

The information in this press release is for editorial use by journalists and media outlets only. Any business seeking to reproduce information in this release should contact the Which? Endorsement Scheme team at endorsementscheme@which.co.uk. 

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