Overspending hits record levels as two-thirds of tourists bust their budgets on holidays abroad

All Inclusive trips are top choice but extras add hundreds to holiday costs

• More than two-in-five UK adults are still planning holidays abroad in the coming months
• But past overspending means holidaymakers are likely to blow budgets by a record 40% according to the latest Holiday Spending Report (www.postoffice.co.uk/holidayspending)
• Over a third of those planning trips will go All Inclusive: Almost half say they won’t need spending money but extra spending reached nearly £700 on their last trip
• The numbers paying for AI extras are now up to six times higher than in 2014
• Price comparison between All Inclusive and self-catering holidays with food included shows that Britons can halve their costs by choosing self-catering: 30% of Britons plan to do so

Reports of a surge in bookings after the latest changes to the government’s traffic lights ratings shows the strength of demand for holidays abroad. Destination choice remains a tricky decision for Britons trying to second guess developments in the coming months, but that has not stopped them planning trips. The Post Office Travel Money Holiday Spending Report reveals that 43 per cent of adults intend to travel abroad, with All Inclusive and self-catering the most popular choices. Three-in-five (59 per cent) plan to budget more for their holiday, in stark contrast to only six per cent in the last report, but this comes after the research showed levels of overspending at a 10-year high.

Over the past decade the gap between budgets set and cash spent has widened. On their most recent trip abroad, three-quarters (76 per cent) of holidaymakers set a budget averaging £326.20 per person, nine per cent less than on their previous holiday. Fewer than two-in-five (38 per cent) of them stuck to it and the remainder (62 per cent) bust their budget by an average of £129.23 – 40 per cent more than planned. This compared with a 26 per cent overspend on the previous holiday.

Nick Boden, Head of Post Office Travel Money,said: “The evidence provided by Britons who have holidayed abroad in recent years makes it clear that an overwhelming majority cast their budget aside once they get to their destination. Even though many holidaymakers plan to budget more for this year’s trip, they should set a realistic budget based on their past experience and try to stick to it by avoiding poor exchange rates and transaction charges incurred at ATMs, or when paying with credit or debit cards.”

The Holiday Spending Report research reveals that significant numbers try to cut spending by choosing All Inclusive holidays. Over a third (36 per cent) of those planning trips this year intend to choose this route. Almost half (46 per cent) told Post Office Travel Money they view All Inclusive holidays as good value because they need not worry about taking holiday spending money. However, despite viewing this type of holiday as the best way to ensure all their costs are covered, extra spending by the majority of All Inclusive holidaymakers reached nearly £700 on their last trip.

On their last All Inclusive holiday 61 per cent of holidaymakers paid for a range of extras on top of their paid-for package in their resort. In particular, the numbers paying extra for food and drinks has mushroomed since Post Office Travel Money began tracking additional spending in All Inclusive resorts in 2014. Spending on à la carte meals and international alcohol brands has doubled, while over three times as many people reach for their wallets to buy cocktails and bottles of wine. The percentage of Britons paying extra for local alcohol and soft drinks brands – once at the heart of the free All Inclusive drinks promise – has risen from six per cent seven years ago to 40 per cent now.

Spending levels in European resorts have risen for almost all food and drink items since the last report was published in 2019. Holidaymakers spent an average of almost £390 on nine food and drinks items – a significant increase of 27 per cent.

The biggest spending rises in European All Inclusive resorts were on alcohol and soft drinks – paid for by over 43 per cent of holidaymakers. They paid a third (33 per cent) more for branded alcoholic drinks - an average of £50.76 compared with £38.09 in 2019 - but 58 per cent more than in the 2019 survey on wine and 46 per cent extra on branded soft drinks.

Spending away from their resort by Britons on All Inclusive packages has also increased. Three-quarters of holidaymakers who had previously taken an All Inclusive package chose to leave their resort and spend money in local bars, restaurants and shops. The amount they spent on eight food and drinks items rose 16 per cent to an average of around £295 compared with 2019.

With the high levels of extra spending by holidaymakers on All Inclusive packages, choosing to go self-catering could be a cheaper alternative. 30 per cent of adults planning trips abroad this year told Post Office Travel Money they will take a self-catering holiday. Their past experience shows that spending on provisions in shops and supermarkets averaged £140, significantly less than the cash overspent by All Inclusive holidaymakers.

To prove the point, Post Office Travel Money compared the average cost for two people of a one-week four-star self-catering holiday including £140 of provisions with the cost of a one-week four-star All Inclusive trip including the average ‘away from resort’ spend of £295 in six destinations (Algarve, Costa del Sol, Majorca, Corfu, Cyprus and Croatia). In all cases it found that the cost of self-catering was much lower. In the Algarve, for example, the self-catering option cost £785 for two compared with £1,557 for All Inclusive – around half the price (see table in footnotes)¹.

Other key Holiday Spending Report findings:

• Over a quarter of survey respondents said they have more cash to spend because they saved money during lockdown
• Almost four-in-five (78 per cent) holidaymakers expect to pay an average of £89 on Covid-19 tests
• Over one-in-ten (11 per cent) incurred bank charges for withdrawing money at an ATM but only 35 per cent changed enough money before leaving the UK to avoid this
• One-in-six (17 per cent) felt that debit and credit card transaction charges were unfair
• Three-in-five rated some aspect of their last holiday abroad a ‘rip off’, with the cost of airline food and drink proving the biggest irritation for 37 per cent.

Careful planning remains the Post Office advice. Nick Boden said: “There are improved rates for bigger value exchange transactions in Post Office branches and online so holidaymakers who calculate their likely costs pre-travel can change sufficient cash into foreign currency and make savings.”

The Post Office is the UK’s leading foreign currency provider, offering around 60 currencies for pre-order at around 7,000 Post Office branches or online at www.postoffice.co.uk/travel for next day branch or home delivery. 3,600 larger Post Office branches stock the leading currencies and around 7,000 offer euros over the counter without pre-order. These can also be ordered online for same day ‘click and collect’ at selected branches, next day collection at any branch or home delivery.

Ends

Full details of the Post Office Holiday Spending Report 2021 findings can be found in the accompanying brochure.

For more information, please contact:

Christine Ball CBPR 01798 874177 / 07976 285997 cball@cballpr.co.uk

Emma Hancock Post Office Press Office 07922 844352

Emma.Hancock@postoffice.co.uk

Notes to editors:

¹ Comparison of costs between All Inclusive and Self-Catering holidays in six European destinations

All Inclusive Holiday total includes one-week four-star package for two people plus extra spending average of £295 by All Inclusive holidaymakers outside their resorts but no extra spending within the resort. Self-catering total includes one-week four-star package for two people plus average shop/supermarket spend for one week.

The package costs quoted for each type of holiday are an average of the five lowest prices available online at TravelSupermarket.com or Tui.co.uk for departure on or around 4 September 2021: