UK holidaymakers’ appetite for overseas travel remains buoyant despite sterling fall

UK holidaymakers’ appetite for overseas travel remains buoyant despite sterling fall

Fast on the heels of reports that sterling has slumped to a 31-year low against the US dollar comes news that purchases of foreign currency by UK holidaymakers are increasing rather than decreasing – suggesting a sustained appetite for overseas travel.In its latest Holiday Money Index, which surveys movements in exchange rates and currency sales, Post Office Travel Money reports that sales are outperforming 2015 when sterling was far stronger.

Accounting for one-in-four UK travel money transactions, the Post Office analysis of sales reveals healthy growth for 17 of its 20 bestselling currencies – led by the euro and US dollar.It reports that sales of the euro accelerated during September to show a 14 per cent year-on-year increase over the same period in 2015, which comes on the back of strong summer of sales for the single currency.And, despite the weakening pound, US dollar sales are up 16 per cent for 2016 as a whole – with no sign of a drop-off in demand.

The Holiday Money Index also shows double-digit percentage increases for all of the Post Office’s 20 Fastest Growing Currencies.With the winter sun season just underway, the biggest year-on-year growth has been for the Indonesian rupiah (+50 per cent), suggesting that trips to Bali will be popular, and for the Costa Rican colon (+44 per cent), where demand is being boosted by the introduction of direct flights from the UK.

There is evidence too that some European destinations are set to benefit from a growth in UK visitors this autumn.The Post Office report reveals that sales of the Hungarian forint have risen 17 per cent year-on-year but this growth increased to 21 per cent in September, suggesting strong demand for Budapest city breaks.And, fuelled by the allure of the Northern Lights in Norway, sales of the Norwegian krone showed a 20 per cent increase last month compared with September 2015, rising from 12 per cent for the year as a whole.

Andrew Brown of Post Office Travel Money said: “Our latest currency sales make it clear that the weaker pound has not dented UK holidaymakers’ appetite for travel so far. There is strong evidence that holidaymakers are planning travel abroad, even to those countries whose currencies have strengthened most against sterling.

“For example, we have seen very strong growth in demand for the Indonesian rupiah and yet sterling has fallen 24 per cent in value over the past year.Similarly, sales of the Japanese yen have soared by 19 per cent while sterling is down by 31 per cent since last year.This is because the low cost of living in Tokyo and Bali makes these destinations great value for UK visitors even though the exchange rate has fallen.

“There is evidence too that some canny travellers are choosing resorts where sterling has fallen in value least. Sales of the Mexican peso are continuing to rise as they have done for the past decade, while Costa Rica looks to be one of the year’s big successes as new flights bring the destination within easy reach.”

Where is best for the holiday pound?

Post Office Travel Money analysed rate movements over six and 12 months and found that while all currencies have strengthened to some extent, the two currencies that have strengthened least in the past six months are the Swedish kronor (-6.8 per cent) and Mexican peso (-8 per cent). Over 12 months the Mexican peso has gained just 8.9 per cent on the pound, making resorts like Cancun and the Riviera Maya a good deal for bargain-hunters. Looked at over two years, sterling is eight per cent stronger against the peso.

Other destinations that feature in the Post Office’s list of currencies that have strengthened least against sterling over the past six months include Malaysia (Malaysian ringgit: -8.1 per cent), Jamaica (Jamaican dollar: -9.8 per cent), Costa Rica (Costa Rican colon: -11 per cent) and countries belonging to the single currency (euro: -11.5 per cent).

Where has the pound lost most ground?

Some of the currencies to have strengthened most against sterling are the Brazilian real (-22 per cent in six months; -34.3 per cent over one year) and the Russian ruble (-20.5 per cent in six months; -19.7 per cent over one year).However, both currencies fell significantly in value between 2014 and 2015.Compared with 2014, the Russian ruble is now 20 per cent weaker against sterling, while the Brazilian real is worth around one per cent less against sterling than two years ago.The other currency to have strengthened significantly against sterling is the Icelandic krona (-20.8 per cent in six months; -27.6 per cent over one year). Yet this is one of the Post Office’s Fastest Growing Currencies (+18 per cent year-on-year).

The Post Office is the UK’s leading provider of foreign currency, offering euro on demand at over 10,000 branches and US dollars in more than 4,000. A wide range of currencies can be ordered at over 1,600 Post Office branches nationwide for next day collection.Euros and US dollars can also be ordered online at postoffice.co.uk for same day collection at selected branches, for next day collection at any branch or home delivery.