STERLING TAKES A POUNDING
The pound has enjoyed a strong currency for many years, but the falling pound in recent months has left British holidaymakers lighter in the pocket. Brits heading to Europe, the US and Australia in particular will feel the pinch of less favourable exchange rates.
We have done a currency analysis recently which shows that Brits jetting off to the US on 1 February 2017 would have US$88 less (£70.27) to spend for every £500 they exchange than exactly one year ago. Those travelling to Europe also face lighter wallets, as anyone heading off on a ski trip this February will notice. British travellers going to France or Austria are now €76 (£65.15) poorer from the exchange of £500 than a year ago, while holidaymakers in the Swiss Alps are CHF110 (£87.93) lighter in their pocket compared to last winter.
Of the top twenty destinations visited by British travellers1, those visiting Australia and Norway will lose out the most in terms of holiday cash. A year ago Brits heading down under would have been able to exchange £500 for A$1,014, as opposed to A$830 on 1 February, a reduction equivalent to £111.27. Similarly, visitors in Norway now have kr1070 (£103.13) less to spend per £500 on their holiday than 12 months ago.
|On 1st Feb 2016 £500 gets you..
|On 1st Feb 2017 £500 gets you…
|One year change
|United Arab Emirates
|- Kč2056 (-£65.20)
The weakened currency is also having an impact on how people choose their holiday destination and their holiday style. Our consumer research3 shows that an estimated 21 million people (41 per cent) will change their travel plans this year as a result of the drop in pound. Younger people (18-34), who tend to have less savings, in particular are having to tighten their belts, with more than half of them saying that they are making changes to their holiday plans to save costs, compared to just 32 per cent of those aged over 55.
Although the less favourable exchange rates may have dampened Brits’ enthusiasm to travel abroad, the domestic tourism industry seems to have profited as a result. Eight million (16 per cent) people plan to ‘staycation’ instead of ‘vacation’ by spending more time in the UK this year. Brits are also becoming more financially cautious and are coming up with different ways to keep holiday costs down – 11 per cent plan to set a budget in advance, another eight per cent intend to reduce the number of holidays and a further seven per cent plan to travel on a self-catering basis to save money.
|Impact on holiday
|I will spend more time in the UK
|I will set a budget in advance to control costs
|My destination is predominantly determined by finance, so where I choose will be determined by the holiday price
|I will reduce the number of holidays I have
|I will aim to spend less on discretionary items (eating out / drinking) on holiday
|I will travel on a self-catering basis to save money
|I will go on a short haul holiday rather than long haul
|I will go on a shorter holiday
|I will stay in an all-inclusive hotel / resort to save money
|I will go to a cheaper hotel / resort to save money
|I will take more items such as food, shampoo, out with me to reduce expenditure abroad when on holiday
In view of our weakened currency, are there any desirable destinations in the world where the pound can go further? The answer is yes! Travellers going to far-flung destinations such as Japan, Mexico and Malaysia can get more local currencies worth between £22 and £27 for every £500 they exchange on 1 February than six months ago.
To get the most out of your pound for your holiday, you can consider some of these money saving tips:
- 1) Many European cities also offer well-priced visitor passes that often include transportation savings, plus discounts for museum visits and events and these can provide good value to visitors.
- 2) If you are planning to travel several times a year, an annual travel insurance is often cheaper than buying several single trip cover. If you would be travelling with your children as well, getting an annual family policy cover can save you money than buying separate cover for your family members.
- 3) Always take your European Health Insurance card (EHIC) with you when travelling in EU countries. Even if you already have travel insurance, EHIC might allow you a lower excess on your insurance policy.
- 4) More and more airlines are now charging for food and drink in short-haul flights. If you are a family of four, buying food and beverages on board already set you back a fair bit before you have even reached your holiday destination! Take food, snacks and drinks with you before boarding if you know you are going to be hungry.
- 5) Take time to explore the best currency exchange rates. There are many mobile apps nowadays offering currency exchange or money swap with locals at a much more favourable rate than many exchange centres or banks.
- 6) Although major airports are usually located in easy to reach areas, flying from/to an alternative airport might work out cheaper for your flight tickets, even when taking into account the costs required for any additional bus or train journeys. If time is not of essence, connecting flights are usually cheaper than flying direct as well.
- 7) Students or the elderly might be able to get discount for transportation or visits to tourist attractions. So always ask if such offers are available as they might not be advertised and make sure to take your proof of identity with you such as a student ID to benefit from any potential discounts.
- 8) Pre-packaged holiday bundling flights, accommodation and car rentals via airlines or a travel agent can offer significant savings, especially if you are flexible on your travel dates and your travel destinations.
- 9) If you don’t have kids’ school schedule to worry about when planning your trip, travelling off-season and during the week, from Sunday to Wednesday, can often make a great difference to the price of your flight tickets and accommodation. You are much likelier to find great offers when travelling in the last week of August and the first week in September.
- 10) Know what your bank charges you for transaction and service fees when using your bank cards overseas. These could be costlier than you think and it might be cheaper to use cash abroad than swiping your cards. If your bank cards have loyalty programme, make sure to check out if you can use your reward points to redeem for airfare, hotel and rental car and whether there are any restrictions or if there is an expiry date for using the reward points.
- 11) Trying to figure out where to go for meals can be a tricky decision at times, especially when you don’t know which restaurants are a must try and which are considered tourists traps! A half-/full-board option can take your headache away while making sure that you don’t overspend on food budget. If you are travelling with a group of friends or family, booking an accommodation with kitchen facilities so you can self-cater can be another great way to keep costs under control.
- 12) Holiday camps or caravan parks allow you to enjoy your holiday outdoor and be close to the nature. These sites are more affordable than hotel accommodation and usually offer other facilities such as swimming pools and pubs as well as activities and free entertainment.
- 1 Travelpac, Office for National Statistics
- 2 Columbus Direct’s analysis of historic currency exchange rates on xe.com for Sterling’s rate against all foreign currencies. Analysis conducted for the dates 1st February 2016, 1st August 2016 and 1st February 2017.
- 3 Research conducted by Opinium amongst a representative sample of 2,005 adults completed between 31 January – 3 February