Press release -
Revealed: destinations offering the lowest prices worldwide and the holiday hotspots already proving popular choices
- Holidaymakers are prepared to raid savings and reduce other spending to afford trips abroad
- Cape Town, South Africa is cheapest destination worldwide for bargain hunters
- Huge surge in currency sales confirms pent-up holiday demand for New Zealand and Japan
- Pound still stretches further in some British favourites led by Egypt and Turkey
As travel firms report that demand for overseas holidays is nearing pre-pandemic levels, new consumer research featured in the 17th annual Holiday Money Report from Post Office Travel Money reveals that millions of Britons who have taken trips abroad rate holidays as their biggest priority after paying for food, energy and other essential bills. Over 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 Post Office report advises Britons under pressure from cost of living rises at home how to get the best value on holidays abroad. Despite falls in the value of sterling and inflation abroad, its Worldwide Holiday Costs Barometer of 40 global destinations, produced in partnership with leading online travel agent Travel Republic, reveals that holidaymakers can still strike a bargain by swapping to a destination where prices have fallen or are only marginally higher than a year ago. Although prices are up in 80 per cent of resorts and cities, the barometer found that prices have fallen year-on-year in six of the 10 lowest-price destinations.
Best value of all is Cape Town, South Africa. Boosted by the South African rand’s sharp fall of almost 14 per cent against sterling in recent months and keen pricing in restaurants and bars, the city emerges as best value in the survey, up from fourth place a year ago. At just under £52 for eight tourist items (a three-course evening meal for two with wine, bottle of beer, glass of wine, can of cola, large bottle of water, cup of coffee, suncream and insect repellent) prices have fallen by 7.5 per cent. South Africa is named one of four Post Office holiday hotspots for 2023.
Resort costs have also fallen by 1.4 per cent to around £60 in Mombasa, Kenya, up to sixth place from seventh last year. A collapse in the value of its rupee due to last year’s political unrest has helped Sri Lanka (£73) jump seven places up to ninth position with a 2.2 per cent fall in prices. The Red Sea resort of Sharm el-Sheikh has also made the best value top 10 on the back of the dramatic fall of the Egyptian pound in recent months. In 10th place with a barometer cost of £74, Sharm is likely to benefit from a resurgence in demand after years when flights to the region were suspended.
Three Far Eastern destinations have returned to the top 10 after being off-limits to overseas visitors until recently. At just under £60 for the barometer basket, Hoi An, Vietnam is highest placed in fourth position. Bali(Kuta) and Japan (Tokyo) are in seventh and eighth place. Prices have tumbled by 4.3 per cent to around £70 in Tokyo and by almost one per cent to just under £69 in Kuta.
In fifth place, Portugal’s Algarve is again cheapest of nine Eurozone destinations surveyed but prices have risen by a third to £60. This percentage price rise is in line with increases in Spain’s Costa del Sol (11th, £74), Paphos, Cyprus (12th, £78), Funchal, Madeira (15th, £85) and Sliema, Malta (20th, £91), which have all dropped out of the leading 10 destinations. However, increasing costs are less of an issue in Corfu. The Greek resort has risen five places in the table to 13th with a small 4.4 per cent barometer price rise to £81.
Ed Dutton, Portfolio Director, Financial Services at Post Office, which accounts for one-in-four currency transactions, said: “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 (39th), and Reykavik, Iceland (40th, £196) – although a fall in the value of the Seychelles rupee means that prices are 17.6 per cent lower than in 2022.
Post Office says that sales of holiday currencies provide a good indication of where Britons plan to travel this year. Supporting the reports of a holiday bookings boom, its sales 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 per cent and 23 per cent 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.
Sales of both currencies reveal pent-up demand from British holidaymakers. Growth of 2,134 per cent has taken the New Zealand dollar to fourth place in Post Office’s bestselling currencies table. Sterling is also worth two per cent more against the NZ dollar and prices in Auckland have fallen by over one per cent. Even more dramatically, sales of the Japanese yen, 10th in the bestsellers table, have risen by 8,040 per cent in the year to date and are 84 per cent higher than in the period immediately prior to the Covid-19 outbreak. Sterling is worth 1.6 per cent more against the yen and prices for meals and drinks are down in Tokyo. As a result, New Zealand and Japan have also been named Post Office Holiday Hotspots for 2023.
Egypt is Post Office’s fourth Holiday Hotspot. A 52 per cent drop in the value of the Egyptian pound against sterling will make trips to the country’s historic sights and Red Sea beach resorts very affordable. Travel Republic is already reporting a 72 per cent year-on-year rise in family bookings this year. By contrast, Britons planning trips to Costa Rica or Mexico will get far less for their pounds. The latest Post Office Exchange Rate Monitor, published in the report, reveals that holidaymakers will get 22.3 per cent fewer Costa Rican colon for their pounds, over £143 less on a £500 currency transaction, while those planning holidays in Mexico can expect 18.7 per cent less in peso - £115 on a £500 purchase.
Given the weakness of sterling against most holiday currencies, Ed Dutton of Post Office Travel Moneysaid: “It will pay to be flexible when deciding on a holiday destination. The Egyptian pound and South African rand have been losing ground against sterling recently, while Latin American currencies like the Mexican peso and Costa Rican colon have been surging in value. Sterling is also continuing to rise and fall against the euro with no obvious sign of settling into a steady pattern. We advise holidaymakers to watch daily exchange rate movements before booking and buy their holiday cash when they see sterling move up against the currency for their chosen destination.”
Antonio Fellino, Managing Director, 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.”
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