Villa Plus has agreed to offer refunds for holiday accommodation cancelled due to the Covid-19 pandemic following pressure from consumer bodies.

Consumer group Which? Travel welcomed the change of heart after reporting the company to the Competition and Markets Authority for “failing to treat customers fairly” over refunds.

Villa Plus had rejected many customers’ requests for a refund, saying that they should instead claim on their travel insurance.

“Within 24 hours of Which? reporting the company to the CMA, Villa Plus decided to help its customers and offer refunds,” the consumer group said.

Villa Plus issued an apology on its website to customers “for any worry caused”.

The company will now provide full refunds for villa-only bookings up to June 28 “in light of recent developments”.

Villa Plus said: “It was never our intention for these customers to be left out of pocket, but we are now aware how many of them are unable to make travel insurance claims and want to help them too.”

However, the firm added: “Whilst we understand the general remit of the CMA, we believe that their rules/regulations do not extend to the provision of overseas holidays and we will be asking the CMA to clarify this point.

“Notwithstanding this, we maintain that we acted lawfully throughout the Covid-19 crisis and within our terms and conditions, which have been in place for over a decade.”

The company contended that under the Package Travel Regulations it is not legally obliged to refund villa-only customers “in a scenario where villas can be made ready for occupation but customers cannot leave the UK”.

The Foreign Office imposed indefinite advice against all but essential overseas travel in early April, having initially issued the advice on March 17.

Villa Plus added: “We believed that the offer of a villa-only voucher was a reasonable gesture of goodwill, but for those customers that have insisted on a refund, we will indeed now refund you in full, in departure date order.”

The company pledged to contact those seeking refunds “very soon” to confirm what will happen next.

“It has been a fast-moving and complex period and we accept that on occasions our communications might have been better. We are grateful to our customers for their patience and understanding and are putting measures in place to improve this.”