With the Pound weakening against the Euro, price hikes in airfares and ancilliary services, surcharges on fuel and on overseas travel, Sharron Livingston looks at how hard the Credit Crunch is biting holidaymakers?
6 May 2008
Faced with a bombardment of price hikes and surcharges, holiday makers can be forgiven for thinking twice about where to book their holidays or if indeed to book their holiday at all.
A recenty survey touted by the price comparison website, savebuckets.com, predicted that 1 in 5 will cancel their trips abroad. On the other hand lastminute.com reported a whopping 18% rise in holiday bookings for the period of June and August but conceded this may well be because national football teams failed to qualify for Euro 2008. This view was supported by Hotels.com who saw a search in accommodation for Moscow rise by 350% in the wake of Manchester United's victory over Barcelona meaning their next playoff will be held in Moscow on May 21st.
The view outside of the sports arena though is a little different as travel on the whole has become significantly more expensive across the board.
Even those who have already booked and paid for the holidays may have to face surcharges as agents look to recoup losses made because of short falls. Those who negotiated rooms, villas, cruises last year in Euros for this summer's holidays will now be facing shortfalls of up to 20% thanks to the exchange rates and they want travellers to shoulder the burden. Last year the Pound would have fetched 1.48 Euros; last week this had dwindled down to just 1.21 Euros.
According to the small print in the brochures, a European Directive says that they can do this up to a limit of 10% but only if they absorb the first 2% of the increase and only if there are 30 or more days left before travel. Even then the operator will have to ask permission from ABTA (Association of British Travel Agents) to do so. So far 18 agents have applied citing the strengthening euro or price rises in fuel, but if things get worse, more could follow suit.
A spokeswoman for Abta says this is the highest number of applications it has received in recent years. “Surcharging has not really been an issue for us since the 1980s,” she says.
Those unhappy with the surcharges will either have to pay up or can cancel. However, they will have forfeit the amount paid unless the surcharge is more than 10% in which case you can cancel and expect a full refund.
But why should holidaymakers have to pay up when tour operators face hard times? As Rebecca Leach at Which? Holiday says: “If you buy something in a shop, you don’t expect the sales assistant to contact you at a later date demanding more money. Prices should be transparent.”
ABTA's response is that this is a last resort and that agents do so 'only when they absolutely have to'.
Big operators like Thomson and Thomas Cook say they have no intention of surcharging on their 2008 holidays.
In order to combat this and also to have more value added to their Pound savvy holidaymakers are looking to destinations outside the eurozone that offer more favourable exchange rates. According to cheapflights.co.uk places like Greece and Spain are being spurned in favour of cheap holidays in Egypt's Sharm El Sheik on the Red Sea and Tunisia. Conversely traditional holiday destinations such as Corfu and Alicante have fallen.
Even destinations that have escaped the tourist radar in the past such as Northern Cyprus - where they use the Lira (more traditional Cyprus has the Euro) - have enjoyed a 200% rise in visitors.
But there are other currencies and therefore other countries where the pound is still doing very well.
| Currency | Rise in value of the pound |
| Agentina Peso | + 01.78% |
| Iceland Krona | + 11.53% |
| Indonesia Rupia | + 01.96% |
| Jamaica Dollar | + 08.45% |
| Seychelles Rupee | +29.89% |
| South African Rand | + 09.01% |
Regarding airlines, airfares are steadily increasing. BA recently added £20 on a ticket and signs are that increases like this will have to be made if airlines are to stay in business. Andy Harrison, chief executive of Easyjet says that "oil remains the biggest challenge and uncertainly.
"The price of jet fuel has risen 35% over the last three months and is now 80% higher than last year" he said.
“Nobody knows how much of this increase is driven by short term financial speculation and how much is a longer term sustainable increase.
"What is certain is that if these fuel increases are maintained many of our weaker competitors will disappear or downsize.”
April alone saw 6 airlines file for bankruptcy. Low cost airlines such as Ryanair are preferring to claw back money via hikes in checked in baggage charges.
Martino Matijevic from WhichBudget.com observed "this is not a one-off, prices across the board will rise, and you may find that over the next few months less profitable routes will be abandoned".
It seems that the age of low cost travel is slipping away. Even a driving holiday in the UK starts to look expensive when you consider the high fuel prices being charged at the pump. Perhaps the answer is pander to your travel bug now before taking a holiday gets too expensive.