Savvy holidaymakers may be choosing different destinations this year, driven by the cost of their holiday money.
When the Post Office crunched the numbers on best-value destinations recently, it found good news for many of us, with sterling now stronger year-on-year against 80% of holiday currencies. The gains are strongest for those travelling long haul, where dollar destinations, such as the USA, the Caribbean and Middle Eastern resorts are nearly 12% cheaper than they were last year.
Consumer Intelligence’s biannual travel money survey shows that the euro and dollar are by far the most popular currencies for travel money, but that could be about to change. Look out for the peso from the Dominican Republic, where customers changing £500 could get almost £72 worth more pesos for their money this year than last, or Costa Rica, where the Colon has fallen almost 17%.
These currencies are rapidly becoming more popular, with the Post Office saying that sales of the Costa Rican colon have risen 239% in the past five years with the Dominican peso up 121% in the same period.
Andrew Brown, from Post Office Travel Money, said that this was “clear evidence” that holidaymakers are choosing destinations where they will get more for the pound. “Every long haul currency in our top 40 — except for the Malaysian ringgit — has fallen against sterling since last February and, with savvy travellers watching exchange rates carefully, there is good reason to believe that more of them will consider holidaying further afield this year.”
Closer to home, too, there are better value destinations where customers will not have to spend euros. The Turkish lira is down 16.5% against the pound, while Russian, Swiss and Scandinavian currencies are weaker against sterling too.
With this in mind, holiday money providers must ensure they compete on these more niche currencies, as well on rates for the euro and the dollar. Our studies show that Consumer Intelligence customers value both a good rate and convenience when it comes to their travel money, so these factors will be the key points to highlight to would be travel money customers.
“Encouraging loyalty in customers is a key issue for travel money providers, since our studies show that, at present, customers are not very loyal” says Andy Buller, travel money expert at Consumer Intelligence. “One way to help to keep yourself front-of-mind for travel currency is to offer helpful information and alerts on currencies that travellers are interested in, especially when there may be destinations that travellers have not thought about before.
“Just advertising your dollar and euro rates may not be enough, if travellers are seeking good value longhaul destinations where the cost of living is low and the pound has strengthened against the local currency.
"If you offer the Dominican peso and the Costa Rican colon, it might be worth telling customers about your great rates on these products, or stress that your travel money card is available for use with these currencies.”
- Sterling now stronger year-on-year against 80% of holiday currencies
- Biggest gains of up to 16.7% against long haul currencies
- ‘Dollar destinations’ — USA, Caribbean and Middle Eastern resorts — are 11.5-12% weaker against sterling and down 5% in the past three months
- Position is patchier in Europe — but Turkish lira is down 16.5%, while Russian, Swiss and Scandinavian currencies are weaker against sterling too
Even though sterling has dipped in the wake of last week’s stock market falls, its gains over the past three months mean UK holidaymakers can at last look forward to seeing their cash stretch further on trips abroad. 80% of the top 40 holiday currencies have fallen in value against the pound compared with a year ago — over half of these by more than 10%¹. However, the latest exchange rate comparison by Post Office Travel Money shows that people prepared to travel further will reap the biggest benefits from sterling’s surge.
The biggest cash bonus will be for UK tourists visiting Caribbean all-inclusive family favourite, the Dominican Republic, whose peso has plunged 16.7% year-on-year against the pound. This will give them almost £72 extra peso on a £500 currency transaction. In Costa Rica the colon has fallen almost as much — 16.6% since last February (+£71). Post Office Travel Money said that its sales of the Costa Rican currency have risen 239%in the past five years as a result of the direct flights now available from the UK, while Dominican peso purchases have grown 121% in the same period.
Andrew Brown of Post Office Travel Money, which accounts for one-in-four UK currency transactions, said:
“The huge growth in sales for these currencies provides clear evidence that growing numbers of holidaymakers are choosing destinations where they will get more for the pound — especially where the cost of living is also low.
“Every long haul currency in our top 40 — except for the Malaysian ringgit — has fallen against sterling since last February and, with savvy travellers watching exchange rates carefully, there is good reason to believe that more of them will consider holidaying further afield this year — especially as low cost airlines are closing the gap with Europe by offering cheap airfares to the USA and Far East too.”
Things are looking up for tourists travelling to the USA and countries whose currencies are pegged to the US dollar. Holidaymakers visiting ‘dollar destinations’ like St Lucia, Antigua, Barbados, Dubai and Oman as well as the USA can expect their pounds to stretch between 11.5% (Barbados) and 12% (St Lucia and Antigua) further than a year ago after a sterling surge of 5% the past three months. This will give them up to £53 more cash to spend than a year ago when they change £500 into foreign currency.
The same cash bonanza applies for holidaymakers or friends and family visiting relatives ‘down under’ in the coming months. The pound is up 10% year-on-year against the New Zealand dollar (£46 on a £500 exchange) and 9% (+£41) against the Australian dollar. This is a 23% rise over the past five years and good news for those planning trips to Western Australia on the first direct flights from the UK from next month.
The position is patchier in Europe. Travellers to eurozone destinations will have almost £20 fewer in euros on a £500 currency transaction than a year ago and they will also have to pay more for meals, drinks and other staples than in 2017 in popular eurozone destinations. The Post Office’s latest Worldwide Holiday Costs Barometer found that prices have risen by 30% in Portugal’s Algarve and 39% in Spain’s Costa del Sol.
However, the Turkish lira has halved in value against sterling in the past five years and is 16.5% weaker than last February. Prices in its leading resort, Marmaris, are low too and cheaper than the Costa del Sol, according to the Post Office barometer of meals and drinks.
Elsewhere in Europe the Russian ruble is 10.7% weaker than a year ago, which is good news for football fans planning trips during the World Cup this summer. Skiers will have 4.1% more Swiss francs to spend if planning trips to Switzerland’s ski resorts and Scandinavia will be cheaper too. Sterling has risen 5.5% against the Norwegian krone, 2.4 % against the Icelandic krona and 0.9% against the Swedish krona.
The Post Office is the UK’s leading provider of foreign currency, offering euro on demand at over 10,000 branches and US dollars at 4,000 branches. These can also be ordered online at postoffice.co.uk for same day ‘click and collect’ at almost 3,000 branches as well as next day collection at any branch or for home delivery. 1,600 larger Post Office Branches stock 30 leading currencies while up to 80 currencies can be pre-ordered at over 11,500 branches or online at postoffice.co.uk/travel for next day branch or home delivery.
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Consumer Intelligence’s biannual travel money survey reveals a detailed picture of the UK travel money market. Our last survey involved 1,096 online interviews in October 2017. Here are some highlights.
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