The uncertainty following Britain’s vote to leave the EU is causing many UK residents to think twice about booking a summer holiday abroad. The sharp fall of the pound against the euro and the US dollar have had a significant impact on the cost of foreign travel, and many Brits are unsure which countries will be the best to visit after the referendum result. Here we take a look at some of the options available, and why foreign travel doesn’t have to be as expensive as you’d think…
How Brexit Affects Your Holiday Money
Following the Brexit vote, the British pound has fallen sharply against most of the world’s currencies. What this means in real terms is that your money will not buy you as much abroad. For example, if you planned to take £1,000 abroad, it will now cost you roughly £55 more to spend it in most countries than it would have done before the referendum. Needless to say, this is making many British holidaymakers examine the options very carefully when it comes to planning their summer breaks.
Holidaying in the UK
Most people assume this will be the cheapest option, but it isn’t necessarily the case. UK hotels and travel companies have been hit hard by the fall in sterling, and do not want to feel the slump too keenly. Therefore, they are highly unlikely to be offering any cheap deals for holidays in the UK in the near future. Additionally, taxes on consumer goods are higher in the UK than they are in most European destinations, so the cost, for example, of eating in a restaurant or putting petrol in your car will be higher in Britain than in most EU countries.
Is Europe Now the Most Expensive Destination?
The pound has fallen roughly 6% against the euro since the Brexit vote. While this does not make exchange rates ideal for Brits, it is still favourable in comparison with the US dollar, against which sterling has fallen 8.5%. Because of this, the most expensive holiday destinations for Brits are the US, and other countries whose currencies are tied to the US dollar. These include the Caribbean, Dubai and China. It will also increase the price of cruises, as these are usually priced in US dollars, as are safari lodge holidays.
European holiday destinations have always been the most popular options for Brits to take their holidays, and they won’t want to lose that business. Therefore, there is a good chance that many tour operators will be offering cheap last-minute deals on holidays to Europe, with the best offers usually found directly on tour operators’ websites. To ensure you are getting good value for money, it is recommended you choose a package holiday priced in pounds, so you know exactly what your hotel and flights are costing, enabling you to work out how much you can afford to spend when you get there. One thing to be wary of, however, is that if sterling falls further, holiday companies can legally increase the price of your holiday by up to 10%, even after you have booked, but they are not allowed to do this if it is less than 30 days before your departure. They are also legally obliged to allow you to cancel and offer you a full refund if you choose not to pay the extra. It is doubtful whether many companies will bother imposing any extra charges should the value of sterling fall any further. With many Brits doubtful about holidaying abroad, the travel companies are all going to be competing for your business, so are likely to offer deals as cheaply as they can. Some holiday companies have already announced price freezes for both the summer and winter seasons, and ruled out additional charges, since the Brexit vote.
Some European destinations have seen falls in the price of consumer goods compared to what they cost a year ago, which is especially good news for anyone planning a self-catering holiday. These include Italy, Spain, Portugal, Cyprus, Greece, Croatia and Bulgaria.
Is Long Haul Now Out of Reach?
In spite of the fall in sterling, believe it or not, there are still many long haul destinations where the pound is performing more strongly than it was this time three years ago. Therefore, the most expensive part of a holiday to these destinations would be your flight; your actual spending power in any of these countries will have increased. Travel currency experts FairFX have listed the best countries for UK travellers to visit in terms of how the exchange rates compare to those in 2013. Top of the list was Argentina, with a huge 149% increase. Other long haul destinations where Brits can still get a great deal include:
% rise in sterling since 2013
South Africa 35%
The UK government advise caution when visiting Russia. It is mostly safe, but tourists are advised to avoid all areas within 10km of the border with Ukraine, especially if there are any rallies or demonstrations in the area.
In terms of short haul destinations, Norway is the most beneficial, with sterling having risen 22% over the last three years. This is followed by Sweden, with 11%.
Tips to Make the Most of Your Money
It is certainly worth shopping around at the moment to make sure you are getting the best deal for your pound. This also applies to exchange rates. It is not advisable to exchange your money at the airport, as you will never get a favourable rate. The same goes for travel insurance, package holiday operators will charge you three times the price on average.
Further instability is predicted in terms of the pound; however, as nobody can currently predict accurately how this is going to turn out, if you have a holiday booked this summer it is better to exchange your money now, rather than taking a chance and ending up with a worse rate weeks or months down the line.
In conclusion, as long as you choose your holiday sensibly and don’t go mad with the spends while you’re away, there is no reason why British travellers should not continue to enjoy foreign holidays, this year and into the future.