Thousands of British travellers pay upfront for hotel rooms each year, only to discover that if plans change the money is gone. A recent Competition and Markets Authority (CMA) ruling clarifies when ‘pay now’ and ‘pay at hotel’ terms breach consumer law – and how to tell which one protects you.
Why the CMA intervened on hotel booking terms
In March 2023, the Competition and Markets Authority concluded a year-long investigation into how major online travel agents present payment options. The regulator found that several unnamed sites had been using misleading labels, making it hard for consumers to understand whether they were entering a binding prepaid contract or simply reserving a room.
The problem, the CMA said, was that some sites advertised a “pay at hotel” option that was actually a non-refundable prepayment – the money was taken immediately but called something else. Others hid cancellation penalties in fine print. The watchdog issued a formal ruling that such practices could breach the Consumer Rights Act 2015 and the Consumer Protection from Unfair Trading Regulations 2008.
Since then, the CMA has secured voluntary changes from six major platforms, including Expedia and Booking.com. But the ruling applies to all UK-facing hotel booking services, meaning smaller sites and direct hotel websites must also comply.
What the ruling changes for your refund rights
The core of the CMA’s decision is that the payment option must be named clearly and the refund policy displayed prominently at the point of booking. If you choose “pay at hotel”, the site cannot take any money until you check in – and you must be free to cancel without penalty within a reasonable period. Conversely, “pay now” must be explicitly non-refundable unless a cancel-for-any-reason policy is offered separately.
| Feature | Pay at hotel | Pay now |
|---|---|---|
| When money is taken | At check-in (or within 48 hours of arrival) | Immediately at booking |
| Right to cancel | Free cancellation until 24–48 hours before (varies by hotel) | Usually no cancellation; refund only if hotel agrees |
| Refund if you cancel | Full refund of any deposit (if taken) minus small admin fee | Typically zero refund unless a “free cancellation” add-on was purchased |
| Consumer warning | Must state “you will not be charged until arrival” | Must state “immediate charge, non-refundable” in bold |
Before the ruling, Which? research showed that nearly one in three travellers had accidentally paid upfront when they thought they were reserving without payment. The CMA’s changes are designed to eliminate that confusion. For example, a London hotel that offers a “pay later” rate must now make it clear that you will still be charged if you cancel within a defined window – typically 24 hours before arrival.
How the cost of a stay changes depending on your choice
The trade-off between “pay now” and “pay at hotel” is not just about refunds – it affects the price. Hotels charge higher rates for flexible terms because they carry the risk of an empty room. According to STR Global, the industry data firm, room rates on “pay at hotel” rates average 8–12% higher than the equivalent non-refundable prepaid rate in major UK cities such as Manchester, Edinburgh and Birmingham.
But the difference can be starker. In May 2024, a spot check by consumer group Which? found that a standard double room in the Lake District in August cost £179 with “pay now” and £209 with “pay at hotel” – a 17% premium. The cheaper non-refundable rate is locked in; the flexible rate can be cancelled for a full refund up to 48 hours before arrival.
The CMA ruling does not force hotels to offer a “pay at hotel” option, but if they do, the terms must be fair. Some hotels now offer a middle ground: a partially refundable deposit. For example, a hotel in Bath may charge a small non-refundable deposit (say £30) to hold the room, with the balance due on arrival. The CMA says that arrangement is lawful provided the deposit is clearly described and refundable if the hotel cancels.
What to do if you book the wrong type and need a refund
If you accidentally selected “pay now” but believe the site was misleading, you can challenge the charge under the consumer rights rules. British travellers are protected by the Payment Services Regulations 2017, which give you a right to a refund for unauthorised or mistaken payments. But the key is proving the terms were not clear at the time of booking.
The first step is to contact the booking platform or hotel directly, quoting the CMA ruling. Many have updated their internal policies and will process a goodwill refund for customers who complain. If they refuse, you can escalate to your bank’s chargeback scheme if you paid by debit or credit card. For purchases over £100, Section 75 of the Consumer Credit Act also applies to credit card bookings. More detail on how payment timing changes cancellation and refund rights is set out in the pay-at-hotel explainer, compiled by hotel-reference site HotelsPedia.
Should the business still reject your claim, the Citizens Advice consumer helpline can provide a template letter. You can also refer the matter to the Financial Ombudsman Service if you paid by card and the bank refuses a chargeback. The CMA’s enforcement team will consider evidence of widespread non-compliance if you report it.
- Always screenshot the payment option terms before clicking “book”.
- Check the cancellation policy in the confirmation email – it must match the screen.
- If in doubt, choose “pay at hotel” for flexibility, even if it costs more.
- Keep records of all correspondence regarding refund requests.
What the consumer rights landscape looks like now
The CMA’s intervention is part of a broader push to clean up online booking practices. In 2022, the European Commission updated the Package Travel Directive to require that prepaid accommodation be clearly labelled as part of a package or standalone, and that refund rights be explained in plain English. The UK, after Brexit, has not directly mirrored that directive, but the Consumer Rights Act and the CMA’s guidance fill the gap.
Travellers booking for stays in popular UK destinations – from Cornwall to the Scottish Highlands – should be aware that the “pay now” option is effectively a bet on your plans not changing. The saving can be worth it if you are sure of your dates, but the CMA ruling gives you a statutory right to clarity. If a site fails to warn you upfront that “pay now” means no refund, you can demand your money back.
Ultimately, the choice between “pay at hotel” and “pay now” comes down to risk appetite. The CMA has made sure that risk is made visible. But the responsibility still lies with the consumer to read the small print before clicking – no regulator can force you to open your eyes.
Sources and further reading
- CMA guidance on unfair trading in hotel booking (gov.uk)
- Which? analysis of pay now vs pay at hotel (which.co.uk)
- Citizens Advice – how to claim a refund for a hotel booking (citizensadvice.org.uk)
- ABTA consumer guide on hotel cancellations (abta.com)
- STR Global data on room rate differentials (str.com)
Sources checked 2026-06-29.
Daniel Reed is a staff writer for EveningLedger.uk, reporting on consumer affairs, technology and everyday life in the UK. His work is reviewed by the editorial desk and checked against our sourcing and fact-checking standards before publication.