Thomas Cook has agreed to pay damages to more than 450 guests who became ill while staying at the Bahia Principe Hotel in the Dominican Republic last year.
The admission of liability from Thomas Cook is likely to result in millions of pounds being paid to the British holidaymakers who travelled to the hotel in August 2007.
A total of 1,000 people who visited the Dominican Republic hotel are taking legal action against several tour operators.
Many of guests contracted salmonella and other illness such as campylobacter, shigella and giardia. The local medical clinic was overwhelmed by the number of tourists seeking emergency treatment.
Guests had complained about poor hygiene in the rooms as well as undercooked food.
Suki Chhokar, a partner at law firm Irwin Michell, said: “The continuing history of problems at the Bahia Principe hotel is among the very worst that we are aware of. The scale of illness suffered, and the number of guests suffering long term health problems, means that tour operators should have done more to ensure the safety of guests.”
A Thomas Cook spokesperson said: “Unfortunately thorough investigations failed to determine the cause of the illness outbreak at the Bahia Principe Resort in August 2007.
“However, those customers who were affected have been informed that we will work with them to agree fair compensation. We truly believe that this positive action will be welcomed, and that it demonstrates our continued commitment to offering the best possible service to our customers.”