The £100 holiday sting

The £100 holiday sting

Travellers who have already paid for their summer holiday are facing surcharges of £100 or more from tour companies hit by the fast-falling pound. A total of 19 tour companies - mostly offering villa holidays in Spain - have sought permission from the Association of British Travel Agents to impose surcharges on holiday packages, in some cases months after the holidaymaker has settled the bill.

The pound has fallen by 17% against the euro since last summer, from around €1.47 to €1.22 this week, exposing tour operators to huge increases in costs. Many are now making small-print clauses in holiday contracts that allow them to demand extra cash from holidaymakers. Late-notice surcharges were a feature of holiday packages during currency crises in the 1970s but have been virtually unheard of since.

Worst hit are the smaller, independent holiday companies that did not "hedge" their currency risks and now say they have no alternative but to go back to customers for more money.

Villa specialists Just Sardinia is one company that has started imposing surcharges. In March, Phil Williams, 33, from Bristol, paid more than £2,000 for his up-coming honeymoon, but weeks later was sent a surcharge of £110.

"I booked a stay in Sardinia at the end of February through Just Sardinia. My travel agent confirmed our holiday a week later at a cost of £2,065 which I paid in mid-March. Then late last week, the travel agent passed.....continued below

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on a letter from Just Sardinia saying it would add a £110 currency surcharge, equal to 5.2% of the price I paid. This is blamed on 'the overwhelming fluctuation in exchange rates between the euro and the pound'."

Bournemouth-based Just Sardinia's contract says it can add a currency surcharge if rates change substantially from the €1.38 exchange it used in its brochure and online offering.

This power to impose currency surcharges is in the small print of many other holiday companies. Thomson Holidays, part of Britain's biggest tour company, says: "In our terms and conditions, we reserve the right to increase the price of a holiday 30 days before a customer travels, but only in very exceptional circumstances." Virgin Holidays says: "We reserve the right to increase or decrease prices due to changes in fuel costs, taxes or flucutations in exchange rates."

Fay Hargreaves, the co-owner of Just Sardinia which arranges around 2,500 holidays each year, says her firm added 4.5% in February, 1.3% on March 2 and a further 2% at the start of April. "We wouldn't do this if we did not have to. It jeopardises our goodwill and it was the hardest decision in our eight years of trading. But because we do small bespoke holidays, we can't block book up to a year in advance like the big package tour firms and we can't get involved in the currency market. We pay hotels in Sardinia when we get paid by customers - typically eight to 10 weeks before they travel. We absorb the first 2% of the surcharge but we could not afford any more." The firm's €1.38 rate was set in December 2007 and can't be varied for 12 months due to Revenue & Customs rules on the type of VAT that holiday firms pay. "We are not allowed to reprice on the brochure" she says.

Abta bans members that sell package tours from imposing currency surcharges without its permission, although firms providing accommodation-only are exempt.