Holidaymakers cut back on other spending to afford trips abroad

Holidaymakers rate overseas trips as their biggest priority after paying for food, energy and other essential bills, according to new research.

More than two in five (41%) say they will dip into their savings to afford a holiday abroad, while more than half will do without home improvements or spending on cars.

The research is revealed in the 17th annual Holiday Money Report from Post Office Travel Money, which also shows consumers where their pounds go further than last year.

The report’s Worldwide Holiday Costs Barometer of 40 global destinations – produced in partnership with online travel agent Travel Republic – reveals that prices are up in 80% resorts and cities, amid falls in the value of sterling and inflation abroad.

However, prices have fallen year on year in six of the 10 lowest-price destinations.

Cape Town, South Africa, is rated as the best value for Brits, as the rand has fallen almost 16% against sterling in recent months and there is “keen pricing” in restaurants and bars.

A collapse in the value of its rupee amid to last year’s political unrest has seen Sri Lanka rise seven places up to ninth position with a 2.2% fall in prices.

The Red Sea resort of Sharm el-Sheikh has also made the best value top 10 following the “dramatic” fall of the Egyptian pound in recent months, said the Post Office.

Only three European destinations have made the best value top 10.

Despite a 19.2% fall in the value of the Turkish lira, Marmaris has dropped from the top spot to runner-up in this year’s barometer.

Prices have more than doubled since last year because of inflationary pressures and a 55% rise in the minimum wage required in Turkey’s bars and restaurants.

Sunny Beach, Bulgaria, is in third place but prices have risen by 20%.

In fifth place, Portugal’s Algarve is again cheapest of nine Eurozone destinations surveyed but prices have risen by a third to £60.

Ed Dutton, Post Office financial services portfolio director, advised holidaymakers: “Despite the volatility of sterling, it is still possible to bag a bargain with careful planning.

“Check exchange rate movements and the cost of holiday essentials before booking to see where you might get more holiday cash for your pounds but be aware that sterling gains can be cancelled out by big resort price rises as the increase in Turkey proves.”

Barometer costs are highest in Mahé, capital of the Seychelles, and Reykavik, Iceland.

Post Office said sales of holiday currencies have risen year-on-year in the first two months of 2023 in 18 of its top 20 bestsellers led by the euro and US dollar, which have registered gains of 45% and 23% respectively.

However, the “stand-out stars” are the currencies for New Zealand and Japan, which re-opened to overseas visitors in the second half of 2022.

Growth of 2,134% has taken the New Zealand dollar to fourth place in Post Office’s bestselling currencies table.

Sales of the Japanese yen, 10th in the bestsellers table, have risen by 8,040% in the year to date and are 84% higher than in the period immediately prior to the Covid-19 outbreak.

Antonio Fellino, managing director at Travel Republic, said: “Britons are considering their options more carefully and really looking hard at how they get great value from the package they book and the destination they’re travelling to.

“So, it’s not surprising that places like Egypt and Turkey are seeing a significant increase in popularity this year because of the all-round amazing value they offer.”