Top 5 false economies when booking a holiday….

Booking a holiday may be one of the most expensive purchases you make in any given year. So striving to save money on it is always sensible.

However when trying to save money there are a number of common traps that people fall into which can end up costing them a lot more money.

Here are the top 5:-

 

1) Booking flights at the last minute

Many people think that booking a flight at the last possible minute gets theWasting money on holiday best price. It’s not true. Airlines have teams of people (called yield managers) who use historic data and sophisticated modelling software to judge demand and price up flights accordingly. They are much better at predicting demand and so the chances of them getting it wrong and having to dump seats at cheap prices at the last minute are getting fewer and fewer. Also if they spot a problem and lower the price it’s usually earlier rather than later.

In fact flights can get a lot more expensive at the last minute. This is because airlines know that people who book tickets at the last minute often don’t have a choice about booking (urgent business meeting, funeral etc..)  and so they will pay any price to get the flight.

 

2) Getting travel insurance at the last minute

It’s common knowledge that annual travel insurance generally works out much cheaper per trip than single trip insurance, provided you travel a few times a year. However when you buy annual travel insurance there is a temptation to buy it just as you are about to depart on holiday in order to maximise the time that it is valid for.

This is a false economy because people forget that travel insurance can save you a lot of money before you travel. Travel insurance often covers you for events that cause you to cancel your trip. For example if you cannot go on holiday because of illness/injury or a family bereavement then travel insurance may be able to cover you for the cancellation charges you have to pay. These cancellation charges can be significant as most holiday companies charge a 100% cancellation charge anything up to 2 months before departure.

So let’s say you take out your annual travel insurance a couple of months before the departure date then it might have cost you around £10 ($15) to cover the period before you go on holiday. Let’s also say that the holiday would cost £1,000 ($1500) to cancel. This means that you will have to have 100 trips that don’t need to be cancelled before it becomes more expensive to take out the insurance. Can you guarantee your next 100 trips won’t need to be cancelled?

 

3) Using debit or pre-paid travel currency cards abroad

We know that using a credit card abroad is bad but often people think that a debit card or pre-paid travel currency card is better than buying your currency in cash beforehand.

At the time of writing the pound was worth 1.58531 dollars at the mid-market rate. Travel pre-paid cards are quoting rates at 1.5577 ie 1.8% worse that the mid-market rate. However if you were to buy your currency online in advance then you could get a rate of 1.5669 ie only 1.2% worse than the mid market rate. This includes free delivery.

So for every £1000 you spend, buying your currency online could save you £5-£10 compared to travel pre-cards. It would also save you a lot more than credit/debit cards or buying your currency at the airport (which is always more expensive).

 

4) Booking hotels direct

If you are going on a short trip to a familiar destination then it can make sense to book your flights and hotel directly yourself as you might be able to haggle a good deal from a hotel if they are struggling to fill rooms. However if you try to do this for a longer or more complicated trip then a lack of financial and regulatory protection could cost you a lot more.

If you book your holiday as a package (ie flights and accommodation together) with one provider rather than putting it together yourself then you are likely to have the protection of European Tour Operator regulations and also financial protection schemes such as ATOL (if the company is registered for ATOL).

If you have this protection then it means:-

a) You can get your money back if any of the suppliers in the chain go bust;

b) You have a company that is responsible for finding alternative accommodation if your booked accommodation goes wrong (goes bust, overbooks rooms, hotel not complete etc..) or if your travel arrangements go awry (flights delays, missed connections etc..).

c) There is also company in your home country that is responsible for the standard of your accommodation. So if it’s not up to scratch then you have a domestic company who you may be able to get compensation from. This could range from mundane complaints (room a bit dirty) to extremely serious ones such as you were injured during your stay. If you have an accident in a hotel would you want to get compensation from them (and they might not have insurance) in their domestic courts or a company in your own country who should have adequate public liability insurance.

 

5) Booking the “cheapest” flight

There are many reasons why the “cheapest” flight might not be the cheapest. We all know about hidden card fees, expensive baggage costs but one area that is often overlooked is the flight times and flight duration and how this can impact on the cost of your holiday.

For example if you are going to book a cheap unsociable flight time that arrives at your destination after midnight then not many people realise that you still pay for the hotel the day before as hotels charge on a per night basis rather than per day.

So take the situation where you have a flight that gets you at the hotel at 11am on a Monday and you have another flight that gets you in at 1am on the Tuesday which is £100 ($150) cheaper. In both cases, you will still be paying the same for the accommodation. So if the accommodation is costing you £1000 ($1500) for the week then you are paying £142 ($220) for a day in order to try and save £100 ($150) on a flight??

That’s also assuming that the value you are getting from a holiday is just the cost of it. Most people get value from a holiday that is greater than the monetary value and so is it really worth missing out on that extra day of enjoyment for the sake of a few pounds?

Are there any other tips you have for saving money on holiday? Or any horror stories where you thought you would save but ended up paying more?

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