It is often true that holidaymakers can find cheaper deals by putting together their own packages on the internet rather than buying a package holiday from a single holiday company. However, if you buy a traditional package holiday you are currently much better protected if something goes wrong.

Following approval by the European Parliament on 12 March 2014, a proposal for an updated directive on package travel and linked travel arrangement (Proposed Directive) means a wider range of holidays may soon be afforded greater protection. For organisers and retailers involved in the provision of linked travel arrangements the Proposed Directive could have significant implications.

Current protection for package holidays

The Package Travel, Package Holidays and Package Tours Regulations 1992/3288 (Regulations) were implemented in the UK under Council Directive 90/314/EEC (1990 Directive). The Regulations and the 1990 Directive currently provide protection for holidaymakers who purchase a traditional package holiday.

If for example, a tour operator's business collapses, holidaymakers are entitled to a refund of the price of their holiday. However, as internet sales and cheap flights have become more readily available, it has been recognised that this unfairly penalises holidaymakers who choose not to buy a traditional package holiday from a single tour operator.

What will the Proposed Directive cover?

The Proposed Directive covers a wider variety of travel arrangements to protect holidaymakers if, for example, an airline operator goes bust or prices dramatically increase. If travel arrangements will not be covered by the Proposed Directive, travellers must be clearly informed of this before they make their booking.

However, the Proposed Directive only covers linked travel arrangements where, for example flights are bought from one provider but the traveller's name or contact details are transferred to an accommodation provider. It will not cover unrelated bookings or where a traveller is led to another website simply by clicking on an advertisement on another operator's website.

Current position

The Proposed Directive was voted through by members of the European Parliament on 12 March 2014. The next stage of negotiations will not commence until after the European elections so a final decision is unlikely for several months.

Considerations for holiday organisers and retailers

If passed, the Proposed Directive will place significant obligations on businesses involved in linked travel arrangements. Some of the key points operators may need to consider are:

If the price of the package increases by more than 8% after the contract has been concluded travellers will be entitled to their money back – including payments for travel insurance. Any price reduction of more than 3% should be passed on to the traveller. All travellers should be informed if they are booking a linked travel arrangement. If unforeseen circumstances occur, for example a natural disaster and the traveller cannot return as planned, the operator must ether arrange comparable accommodation or cover the cost of five nights stay at up to 125euros per night.

Organisers and retailers may therefore need to consider financial protection to cover the potential additional costs of unforeseen events. It will also be vital to carefully consider whether the travel arrangements offered fall within the scope of the directive and ensure that procedures are put in place to deal with the new information requirements.

We will continue to watch the development of the Proposed Directive and will provide updates following any significant developments.