Having helped construct similar T&C's before, I hope I can help a little bit with this, note these comments do not necessarily reflect what I think is morally right or wrong!
The Terms and Conditions do not allow you to get a refund for the holiday price dropping. Your holiday price is not dropping, another identical holiday price is lower than what you paid for it.
i.e Say you paid £2000, of which £1800 was the cost to the Tour Op, and £200 was profit. Months later much closer to the time of travel, things are quiet, business is slow etc, the hotel and airline might drop their prices to the Tour Operator (to stimulate new bookings - they don't make money on empty seats or hotel rooms) so the same holiday can now be sold for £1500 (cost £1350, profit £150).
However, your holiday is still costing the Tour Operator £1800, not £1350. So, no, they cannot drop the price to £1500 as they would be making a loss. The airline and hotel will not allow them to re-book onto the cheaper prices (it's contractually stipulated - Tour Op's can lose airline contracts and hotels can refuse to rebook clients in such situations).
Likewise, if the flights and hotel got busier, the price would have risen (this would be mainly flight prices due to yield managements, hotel prices do not normally fluctuate upwards, but you might find your chosen (or cheapest) room category or hotel is full (and in this day and age with internet research, the better hotels sell out first)).
The Tour Operators want to sell the cheapest holidays first. The want to encourage you to book early, forward bookings are gold. However, trivial things such as recessions, swine flu, currencies can have a major effect on people booking far enough ahead. Such things also mean it's financially difficulty to guarantee they can refund you if the prices drop after you book (although if a major Tour Operator owns the airline & resort it might be possible).
Now, regarding the terms and conditions that you mention. They are there essentially to protect the Tour Operators should there be a major variance in currencies or fuel surcharges / taxes. For example, that £2000 holiday (nett cost £1800). If it was to Florida, and you booked last year, and 50% of the cost (£900) was hotel and transfers it would mean that the hotel and transfers would be costing the Tour Operators US$1710 (because they would have priced up at 1.9 US$ to the pound). However, if they came to pay now, that would cost them £1068.75 (@1.6) or if you had travelled a couple of months ago £1266.66 (@1.35). If the airline had also increased their fuel charges by £50 per person (the worst i've seen is an overnight increase of £150) and Alistair Darling lumps another £40 on Air Passenger Duty, then all of a sudden, the Tour Operators costs have increased from £1800 up to £2266.66 (for two people travelling). Then of course they need to be making a profit from this - so would have to increase the price to £2,500 and have to request an extra £500 from you.
Tour Operators cannot sell holidays at a loss - not in this climate! They have no option but to pass on the increase as the 'perfect storm' of currencies and fuel etc were causing a massive % of holidays to increase substantially. Now in the above example, the Tour Operator would swallow the first 2% (an ABTA Stipulation) - £40, but have to charge the rest. However, in the above case, as the increase is above 10%, you have the right to cancel. But in reality, by then, you price the holiday up again, you'll find it's still the cheapest option, so it's a case of pay up, or don't go on holiday.
Now, with the refund back to you in the T&C - if it's worked in reverse - i.e. you booked when the holiday was calculated at 1.35 US$ to the £, and the fuel surcharge was £50, and subsequently dropped - well. You wouldn't get the refund on the fuel surcharge, as it will still be paid to the airline. But theoretically you could and should get a refund based on the additional profit the tour operator will make by paying the Hotel and Transfers at todays exchange rate (US$1.6 / 1.65). However that is very hard to prove what exchange rate was used at the time of calculating your prices, and what they are paying today (commercially sensitive information). So will anyone get a refund despite the Tour Operators costs dropping below 2%? I doubt it.
Do bare in mind the above is just a generalisation, and varies depending on the type of holiday and operator you book with, and might not relevant. In fact, it's longwinded, an I apologise for boring you
, but might give someone an insight into the rationalisation behind these T&C's you've highlighted, and why the price fluctuates. And i've worked for big/very big/tiny tour ops in the past, there's an element of the above in most holidays (camping holidays in Devon not included!).
Or, if you prefer the short answer - no!
