For our main holidays where the hotel is very important to us, we book with First Choice as it is one of the Premier hotels so we get extra baggage, pre booked seating etc. It is a very busy hotel and the smaller agencies haven't the same clout as FC so if they get overbooked, FC are the last Company they would upset. Friends of our booked flights and the hotel separately and had a phone call hours before they were leaving to say the hotel was full and they had to stay elsewhere.
They told them that they were only going to Spain to stay with us at that hotel and if they could not do that then they wanted to cancel and have their money refunded but the hotel agency said, 'no, because we are offering you an alternative.'
They were then sent to a hotel that they would never had chosen and we didn't spend the week together - we only saw them once!
We also go on short breaks where we choose the Country but don't mind so much where we stay so we usually book our flights with Easyjet and recently Thomson hotels which have been excellent and when you book with them, you are treated as if you have booked a package tour, i.e welcome meetings, assistance etc (but only if you want it!!)