LoveHolidays forced to refund £18m for cancelled holidays after hundreds of complaints

Online travel agent commits to repay customers in full by March 2021

Online travel agents have struggled to pay refunds (Getty Images/iStockphoto)

LoveHolidays has pledged to refund customers more than £18m for cancelled holidays after an investigation by the Competition and Markets Authority (CMA).

The CMA received hundreds of complaints from consumers who were left out of pocket when the online travel agent cancelled their trips due to the coronavirus pandemic but failed to give them their money back in full.

Customers were told they would only be refunded for the flight portion of their holiday once LoveHolidays had received the payment from the airline.

However, this contravenes the Package Travel Regulations, which stipulate that travel agents and tour operators must refund a customer in full if they have cancelled the holiday, regardless of whether they have received the money back from the supplier.

The regulations also state that customers must be refunded within 14 days of the cancellation, a timeframe that the majority of travel companies have found nigh-on impossible to stick to during the pandemic. 

After the CMA’s intervention, LoveHolidays has now signed formal commitments – known as undertakings – promising to pay back all its customers.

So far, of the £18m that was still outstanding, £7m in refunds has been paid out to around 20,000 customers. The firm has committed to paying back the remaining £11m (refunding 24,000 customers) by March 2021 at the latest.

Insisting on earlier repayment would result in LoveHolidays dipping below its regulatory obligations, according to the CMA.  

The refund process is to be speeded up by being split into two parts, with the cost of hotel accommodation and transfers for holidays cancelled before 1 November refunded by 31 December, and the cost of flights refunded by either the end of February or the end of March. 

LoveHolidays said in a statement: “We are pleased to have reached agreement with the CMA on undertakings to accelerate refund payments to our customers impacted by package holiday cancellations as a result of the Covid-19 pandemic. The pandemic has brought unprecedented disruption to the entire tourism sector and we appreciate the CMA’s acknowledgement of the extraordinary pressures faced by package holiday companies this year. 

“We have been working tirelessly since March to do everything we can to ensure our customers receive their money, and have refunded more than £205m owed to over 180,000 customers - the equivalent of 10 years’ worth of refunds in eight months. And as noted by the CMA, since signing the undertakings we have already made significant progress in the payment of these refunds. 

“Despite the severe challenges caused by Covid-19, we are already refunding all hotel and transfer elements of cancelled bookings within 14 days of the cancelled departure date. We sincerely thank our customers for their continued patience, and apologise that it has taken much longer than normal to process their refunds.”

The CMA has demanded regular reports from the company, and has said it is prepared to take LoveHolidays to court if the agreed payment deadlines aren’t met.

“Travel agents have a legal responsibility to make prompt refunds to customers whose holidays have been cancelled due to coronavirus,” said Andrea Coscelli, chief executive of the CMA.

“Our action today means that LoveHoliday’s customers now have certainty over when they will receive their money back and they will receive this without undue delay.

“We are continuing to investigate package travel firms and where we find evidence that businesses are breaching consumer law, we will not hesitate to take enforcement action to protect consumers.”

The CMA has previously intervened to ensure that Lastminute.com, Virgin Holidays, TUI UK, Sykes Cottages and Vacation Rentals all met their refund obligations.