When holidays go wrong: how to deal with travel agents, accommodation and bankruptcy

Travel agency bankruptcy: when the law protects you and when you’re on your own

The fear of a travel agency going bankrupt is not just a theory. Fortunately, in the Czech Republic, there is relatively strong protection for clients thanks to Act No. 159/1999 Coll., on certain conditions of business in the field of tourism. Every travel agency must have a statutory insurance policy for bankruptcy, which covers the refund of money paid for a trip that has not taken place and the possible return of clients back to the Czech Republic.

If the travel agency actually goes bankrupt, the client should contact directly the insurance company with which the agency has arranged insurance. The insurance company is then obliged to satisfy the clients’ claims. However, this protection applies only to package tours – that is, packages of services including a combination of transport, accommodation and other services sold by the travel agency.

The situation is different in the case of individual travel, where the client separately books the flights, hotel or car rental. In this case, the statutory protection does not apply. If the airline or hotel goes bust, the client has to recover the money independently, often abroad and under foreign law. Therefore, when travelling independently, it is a good idea to think about good quality commercial insurance against cancellation or bankruptcy of individual providers.

Holiday claims: how to correctly claim discounts and compensation

There are rules for claiming for holidays, and it’s a good idea to know them before you even go on your trip. The key is that you need to start solving most problems on the spot. If, for example, you get a worse room than agreed, the hotel is in a poor state of hygiene, the beach is far from the accommodation or the promised all-inclusive doesn’t work, contact the delegate or hotel staff immediately. Have the situation confirmed in writing – the so-called complaint report is important evidence later.

You can also make a claim after you return from your holiday – usually within 3 months of the end of the trip, which is stipulated by the Civil Code. Always submit your claim in writing, attaching any evidence: photographs, video recordings, witness statements from fellow travellers and copies of communications with the delegate. The more concrete evidence, the better the chances of success.

The so-called Frankfurt discount tables are often used to determine the amount of the discount for a defective tour. These are not legally binding, but provide a guide: for example, a 10-25% reduction in price is often accepted for noise in the hotel, up to 20% for non-functioning air conditioning, and over 50% for accommodation other than the agreed accommodation.

If the holiday has been substantially devalued, you can also claim compensation for the loss of enjoyment of the holiday (Art. 2543 of the Civil Code). However, this is not an automatic claim – there must be serious fault on the part of the travel agent which has spoiled the whole holiday (e.g. serious hygiene problems, failure to provide basic services, having to find other accommodation, etc.).

In the event of a dispute, an out-of-court settlement is recommended first – for example, through the Czech Trade Inspection Authority (CTIA). The court solution is more likely to come into play in more serious cases and higher claims.

Holiday insurance: what travel insurance covers and when it helps

Travel insurance is practically a must when you are on holiday outside your home country. But many people don’t realise what it covers – and what it doesn’t.

If you’re travelling within the European Union, you’re entitled to medically necessary health care thanks to the European Health Insurance Card (EHIC, known in the Czech Republic as the European Insurance Card or EU logo insurance card). This will ensure you receive treatment under the public health system of the host country under the same conditions as for local citizens. However, you may still have to pay extra costs, which are common in some countries (e.g. Germany, Austria or France). The EHIC also does not cover repatriation, transport back to the Czech Republic, nor does it cover extra or private care.
Therefore, it still makes sense to take out commercial travel insurance that will cover:

• the cost of private or extra medical care,
• hospitalization without a deductible,
• transport back to the Czech Republic (repatriation),
• possible costs of medicines that would otherwise be fully covered out of your own pocket.

It is also advisable to take out accident insurance to cover the permanent consequences of the accident or death. Liability insurance is also recommended to protect you if you accidentally cause damage to someone else’s health or property.

Many insurance companies also offer trip cancellation insurance, which covers situations where you cannot go on holiday at all due to serious health or family reasons. Especially in times of frequent strikes or epidemic complications, force majeure insurance can also be useful.

It’s important to always study the policy terms, coverage limits and exclusions carefully – for example, extreme sports, chronic illnesses or pandemics are often not covered by regular travel insurance.

Faulty accommodation, lost luggage and spoiled service: what you need to prove

Problems on holiday don’t have to arise just from a breach of the travel contract. Often it is a single situation where a specific service – such as accommodation, meals or transport – fails.

In the case of faulty accommodation, the most common discrepancy is between what was promised and what the client actually received. This may be a different room type, a lower standard, hygiene deficiencies (mould, smell, dirt), noisy surroundings or missing equipment. In order to make a successful claim, it is essential to document everything carefully – ideally take photos and videos immediately upon arrival, keep the promotional materials declaring the standard of accommodation and, if possible, ask for a statement from the hotel representative.

For lost or damaged luggage, air travel is governed by international conventions (e.g. Montreal Convention). Damage must be reported immediately on arrival at the airport using the PIR protocol. If luggage is lost at the hotel or during transfer, the liability is based on who had custody of the luggage.

For spoiled services (e.g. poor quality food, failure to comply with all inclusive, lack of animation), evidence should also be collected – menus, receipts, photos of meals, communication with staff, etc.

In all of these cases, the more concrete and objective evidence the client presents, the stronger their position is in any subsequent dispute resolution.

When a dispute ends up in court: what are the chances of success and what awaits you

In practice, most problems with holidays are resolved out of court – either directly with the travel agent or through the Czech Trade Inspection Authority (ČOI), which acts as an out-of-court consumer dispute resolution body. As a rule, it is only in more complex and valuable cases that court proceedings are initiated, when no agreement can be reached.

What are the chances of success? Above all, it depends on the quality of the evidence. The client must be able to prove what services were promised, what defects actually occurred, how they claimed them and what damages they suffered. Written confirmation of the claim on the spot, photographs, videos, emails or witness statements are key. A general statement such as “the holiday was terrible” is not enough.

In particular,the court will assess the extent of the breach of contract and the reasonableness of the compensation claimed. For simple defects, it is often only the amount of the discount that is in dispute; for more serious cases, compensation for loss of enjoyment of the holiday can also be claimed.

It should be borne in mind that court proceedings can be time-consuming and expensive. The client pays the court fee and, where applicable, the costs of legal representation and expert reports. However, if the client has well prepared arguments and sufficient evidence, there is a chance of success.
In any case, the better the dispute is documented in advance, the better the negotiating position outside court.

Summary

If a holiday goes wrong because of problems with accommodation, transport, illness, loss of luggage or even the bankruptcy of the tour operator, passengers are entitled to reasonable compensation, a refund or compensation depending on the specific circumstances and type of trip, thanks to consumer protection, European regulations and the Civil Code.