Travellers who book holidays online from the end of 2017 will be better protected, according to the Government, as new package holiday rules have been approved by the European Parliament. But some travel experts say the changes don't go far enough.

There are already rules in place to protect travellers who buy traditional package holidays, such as flights and accommodation at an all-inclusive price.

But with the explosion of online sites allowing people to customise their own packages, it was felt the 'EU Package Travel Directive', which came into force in 1992, needed to be amended and modernised "for the digital age".

In particular, the rights and protection available to those booking 'DIY' holidays – where flights and accommodation are booked separately – needed to be clarified as the law remains largely grey in this area.

The key changes under the new rules are as follows:

1. Clearer information must be given. Before you sign a contract, the retailer must make it clear if you're buying a package, and if so, you must be informed of your rights and who's responsible if something goes wrong.

2. Clarifying what a package holiday is. In simple terms, the phrase 'package holiday' has been extended so it's not just defined by an 'all-in' contract. It will now include customised holidays where you book other elements of the holiday within 24 hours of the first booking, via a single site or from separate sites, but where your details and payment information is passed on to all these booking sites. So you may have several contracts and could have paid separately for each element, but these will be considered a 'package'.

As an example, say you book a flight to Thailand directly from airline X and you're offered an accommodation deal, and you pay a total price for both. When you arrive at the hotel, it's being renovated and there are no rooms available. But as the airline is considered an organiser of the package, it is therefore responsible for all services in the package and will need to make sure alternative accommodation at the agreed standard or higher quality is made available.

3. Get a full refund if prices rise or unavoidable events occur. You'll be able to cancel a package deal and get a full refund if the price rises by more than 8%, or if "unavoidable" events, such as natural disasters or terrorist attacks, strike your destination.

4. Clarifying protection for 'linked travel' arrangements. Holidaymakers will be buying a linked travel arrangement where they purchase an initial service, such as a flight, and then make a subsequent booking for another service, such as accommodation or car-hire, within a 24-hour period through targeted advertising such as a pop-up or email offer.

Crucially, what separates linked travel arrangements from package holidays is with the former your details and payment information are not passed between booking sites. With a linked travel arrangement, the consumer will be protected if the first trader goes bust, but they might not be protected if the other suppliers fail. This is because the trip still won't be considered a 'package'. You'll be told your exact rights when you book. 

As an example, say you'd booked a return flight to New York from airline X and when the booking was confirmed, you received an invitation to book a hotel room, which you do within 24 hours of the first booking. Once you're in the States the airline goes bust and the return flight is cancelled. Under the new rules, you'll be flown home, usually free of charge (or you can claim the cash back if you have to buy the flight yourself). However, if there are issues with the hotel, the airline won't get involved, as this isn't a 'package'.

The EU rules must now be legally adopted by the UK Government within two years, although there is an option of delaying for a further six months. A consultation on how the new rules will be implemented is expected next year.

Once adopted, the UK Government says it expects the European Commission to monitor the enforcement of the new rules.

Martin Lewis
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'There will still remain a potential gap in protection'

However, some travel experts say that while the majority of the new directive is good for consumers, the new rules don't go far enough.

A spokesperson for the Association of British Travel Agents (ABTA), says: "The new, revised Package Travel Directive will represent a substantial improvement in consumer protection for holidays when it becomes enshrined in UK legislation in two years' time, extending the protection of a package holiday to millions more holidays.

"However, there will still remain a potential gap in protection, when customers are invited to 'click through' from an airline's website to that of another service provider, such as an accommodation provider or car hire company. A consumer may think they have booked a package but under the new directive this type of arrangement will be called a 'Linked Travel Arrangement'.

"While it represents an improvement on the current situation where there is no protection in place, a Linked Travel Arrangement will not provide the same level of protection as a package. Under a package the travel company is responsible for both financially protecting the holiday and is responsible for the proper performance of all elements of the holiday.

"With a Linked Travel Arrangement, the travel company is just responsible for providing financial protection in the event of them going out of business and consumers could be left with little support in the event of problems with their holiday."

Meanwhile other travel experts have raised concerns that if something goes wrong, consumers will need to contact the regulator in the country the company they bought from is based, rather than the regulator in the country where the consumer is based.

This could lead to difficulties for holidaymakers in knowing exactly who to contact, how to get their money back, and problems around translation.

Package holiday protection to be extended from 2017
Package holiday protection to be extended from 2017
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