Martin Lewis has issued a warning to travellers booking flights and hotels separately, highlighting potential risks if disruption occurs. While ATOL-protected package holidays offer stronger protection, TravelON explains why the full picture is more complex—and what travellers should consider before booking in 2026.

Standfirst: Martin Lewis has warned that travellers who book flights and hotels separately may not be protected if their flight is cancelled and the hotel refuses a refund. Mr TravelON agrees that ATOL-protected package holidays offer stronger protection in 2026, but says the wider travel industry story is more complicated than many people realise.

What we know

Martin Lewis has warned that separate flight and hotel bookings can leave travellers exposed if one part of the trip fails.
MoneySavingExpert has long advised that package holidays can offer stronger protection than DIY bookings.
ATOL protection applies to many UK flight-inclusive package holidays sold by UK travel companies.
If a traveller books a flight and hotel separately, the airline may refund the flight, but the hotel is not automatically obliged to refund the accommodation.
Mr TravelON says package holidays may be the safest option in the current travel climate, but warns against a future where large tour operators regain too much control over holiday pricing and choice.

What happened

A video featuring Martin Lewis, the MoneySavingExpert founder, has been widely shared online after he answered a question about what happens if a flight is cancelled but the traveller has booked their hotel separately.

The question was simple but important. If a traveller books a DIY holiday, with the flight booked separately from the hotel, and the flight is cancelled because of travel disruption, does the hotel have to refund the stay?

Martin Lewis made clear that, in many cases, the answer is no. The airline may owe the passenger a refund or alternative flight, but the hotel booking is a separate contract. Unless the hotel’s own terms allow cancellation, or unless travel insurance covers the situation, the hotel may not be under any obligation to refund.

That is why Lewis pointed towards ATOL-protected package holidays, especially those booked through major tour operators such as Jet2holidays or TUI, where the flight and accommodation are sold together as one protected holiday.

Why this matters to travellers

For years, many travellers have saved money and gained flexibility by booking flights, hotels, villas, transfers and experiences separately. The rise of Booking.com, Airbnb, direct airline websites and online comparison platforms changed the holiday market completely.

But in 2026, with travellers facing a more uncertain landscape including fuel supply concerns, geopolitical instability, rising travel costs, airport disruption and changing border systems, the safest way to book may not always be the cheapest or most flexible.

If a flight is cancelled, the passenger may have rights with the airline. But that flight refund does not automatically solve the problem of a separately booked hotel, apartment, villa, airport parking, car hire or excursion.

That is the gap Martin Lewis was highlighting, and it is a gap many travellers do not think about until something goes wrong.

Mr TravelON: “Martin Lewis is right — but this is not the whole story”

Mr TravelON, a Canary Islands travel expert with 30 years in the travel industry, says he agrees with the core advice.

“Martin Lewis is right on the protection side,” Mr TravelON says. “If you book a proper package holiday with flights and accommodation together, and it is ATOL protected, you are in a much stronger position than if you book everything separately.”

But Mr TravelON says travellers also need to understand why this issue is now being pushed so strongly.

“For the last 20 years the travel industry has changed beyond recognition. Tour operators used to control almost everything. Then the internet came along, Booking.com came along, Airbnb came along, and suddenly people could build their own holidays. That gave travellers freedom and it gave hotels more choice too.”

He says this shift weakened the old tour operator model, where large companies controlled room allocations, prices, contracts and in-resort services.

“Hotels used to depend heavily on the big operators. In the early 2000s, companies like TUI, Thomas Cook, Airtours and later Jet2 had huge control in many destinations. They could dictate terms because they brought the volume. Then online booking gave hotels a way to sell direct or through platforms. That changed the balance of power.”

The rise of the DIY holiday

The DIY holiday became popular because it offered choice.

Travellers could book a low-cost flight, compare hotels online, choose a private apartment, rent a villa, avoid the traditional rep system and build a holiday around their own budget.

For destinations such as Lanzarote, Tenerife, Fuerteventura and Gran Canaria, that flexibility helped small accommodation providers, independent restaurants, local excursion companies and property owners reach customers directly.

It also reduced the need for the traditional travel agent or resort representative.

But Mr TravelON says the travel industry may now be entering a new phase.

“The irony is that the very freedom people loved could now become the risk. If everything works, DIY is fantastic. But if a flight is cancelled, or there is major disruption, or fuel problems hit schedules, the cracks appear quickly.”

The Airbnb effect and pressure on hotels

Mr TravelON also points out that hotels initially benefited from the internet because it reduced their reliance on large tour operators. But the rise of Airbnb and short-term rentals changed the market again.

“Hotels liked the online booking world when it gave them more independence from big tour operators,” he says. “But when Airbnb and private rentals exploded, hotels suddenly had new competition. People could rent apartments, villas and private homes, often at prices hotels could not match.”

That shift also created wider problems in many tourist destinations, including pressure on local housing markets, rising rents, and tension between residents, landlords, tourists and accommodation businesses.

Across the Canary Islands and many parts of Spain, short-term holiday rentals have become one of the biggest tourism debates of recent years.

Are tour operators about to become king again?

Mr TravelON believes the current uncertainty could push many travellers back towards package holidays.

That may be good for consumer protection, but he warns it could also bring back some of the old problems.

“If everyone runs back to the big tour operators, they become king again,” he says. “That means they can control more of the market, push more people into big hotels, demand strong commissions, and shape the type of tourism destinations receive.”

His concern is not with package holidays themselves. He says they are often excellent, convenient and safe. His concern is with too much power being concentrated in too few hands.

“When large tour operators dominate, local businesses can suffer. Tourists stay in big hotels, eat all-inclusive, book through the operator, and less money reaches the small bars, restaurants, shops and independent excursion providers.”

The return of the all-inclusive holiday

One possible consequence is the further rise of the all-inclusive package holiday.

For many families, all-inclusive offers certainty. Flights, bags, transfers, hotel, food and drink are often wrapped into one price. In a cost-of-living crisis, that can be appealing.

But Mr TravelON says destinations need balance.

“All-inclusive is not bad in itself. For some families it is the only way they can budget. But if a destination becomes too dependent on all-inclusive hotels, the resort outside the hotel suffers.”

In places like Lanzarote and the wider Canary Islands, tourism does not only support hotels. It supports taxi drivers, excursion companies, boat trips, restaurants, cafés, bars, markets, cleaners, maintenance workers, entertainers and many small family businesses.

A flexible booking landscape has helped spread that money more widely.

What ATOL protection actually means

ATOL is the UK financial protection scheme run by the Civil Aviation Authority. It mainly protects flight-inclusive package holidays sold by UK travel businesses. If the travel company fails, ATOL can help travellers continue their holiday, get home, or claim for protected parts of the trip.

However, ATOL is not a magic cover-all for every travel problem.

It does not usually protect a standard flight-only airline ticket once a valid e-ticket has been issued. It also does not automatically apply just because a traveller booked through a well-known website.

Travellers should always check whether they have an ATOL certificate and what it says is protected.

A package holiday can also give travellers wider rights under package travel regulations because the organiser is responsible for delivering the holiday as sold.

What happens with a DIY holiday?

With a DIY holiday, each booking is usually separate.

That means:

The airline is responsible for the flight.
The hotel is responsible for the accommodation.
The transfer company is responsible for the transfer.
The car hire company is responsible for the car.
The excursion provider is responsible for the excursion.

If the flight is cancelled, the airline may have to refund or reroute the passenger. But a hotel abroad may still say the room was available, the booking was non-refundable, and the traveller simply did not arrive.

That is why Martin Lewis’s warning matters.

The fuel crisis question

The current debate has been fuelled by concerns over jet fuel supply, rising aviation costs and wider instability linked to conflict in the Middle East.

For travellers, the important point is this: there may not be a current shortage affecting every UK flight, but uncertainty alone is enough to make people think more carefully about how they book.

Airlines, tour operators and travel businesses are watching the situation closely. Even when disruption does not happen, the fear of disruption can change booking behaviour.

That is why many travellers are now asking whether protection should come before price.

What this means for travellers

Mr TravelON says travellers should not panic, but they should book smarter.

For families, older travellers, nervous travellers, first-time visitors, or anyone spending a large amount of money, a proper ATOL-protected package holiday may offer the strongest peace of mind.

For confident travellers booking flexible hotels, refundable rates and good insurance, DIY can still work well.

The danger is booking the cheapest non-refundable flight, the cheapest non-refundable hotel, no travel insurance, and assuming everything will be covered if something goes wrong.

It may not be.

Mr TravelON’s advice

Mr TravelON says travellers should ask five questions before booking a 2026 holiday:

Is this a package holiday or have I booked each part separately?
Do I have an ATOL certificate?
Is my hotel refundable if my flight is cancelled?
Does my travel insurance cover disruption, missed departure, cancellation and supplier failure?
Am I booking for price only, or for protection as well?

He says the cheapest deal is not always the safest deal.

“People need to stop thinking only about the headline price,” he says. “In 2026, you need to look at protection, flexibility and what happens if something goes wrong.”

Analysis: Martin Lewis is right, but travellers should stay independent-minded

Martin Lewis is correct on the consumer rights point. A package holiday generally gives stronger protection than booking a flight and hotel separately.

But Mr TravelON says travellers should also be aware of the bigger travel industry picture.

There is a risk that fear pushes everyone back into the hands of large tour operators. That may be safer for some bookings, but it could also reduce flexibility, increase dependence on big hotels, and weaken independent travel businesses in destinations.

The best answer is not “package holidays are always good” or “DIY holidays are always better”.

The best answer is understanding the risk.

A package holiday gives protection and simplicity.

A DIY holiday gives flexibility and sometimes better value.

But the more separate parts a traveller books, the more responsibility they carry if disruption hits.

Conclusion

The Martin Lewis warning is not scaremongering. It is a genuine consumer protection issue.

If a flight is cancelled and the hotel is booked separately, the hotel may not have to refund the traveller. That is the reality of separate contracts.

Mr TravelON agrees that, in the current 2026 travel climate, ATOL-protected package holidays with trusted tour operators such as Jet2holidays and TUI may be the safest option for many people.

But he also warns that travellers should not forget why DIY holidays became popular in the first place: freedom, flexibility, choice and support for a wider range of businesses in resort.

The truth is simple: book with your eyes open.

In uncertain times, protection matters. But so does choice.

#TruthTravel