Opinion: Rain and good rates spur rise in bookingsPosted: February 13, 2014
Several sources reported positive bookings for summer 2014 during January, but the bad weather alone would not have been the only thing driving this.
Sterling gains strength
Unemployment has tumbled, consumer confidence is rising and, once again, the pound is strengthening, directly impacting holidaymakers’ spending power.
Sterling’s strength is increasingly significant. First Rate’s Winter Holiday Confidence Index revealed 40% of holidaymakers are planning to take an overseas holiday over the next 12 months and highlighted exchange rates as a factor people consider when planning a holiday.
Back in 2007, holidaymakers were getting more than €1.45 to £1. But during the recession sterling exchange rates depreciated significantly, almost falling to parity with the euro in 2009 and considerably increasing the cost of a holiday.
More recently, as the economic recovery continues, the pound has been strengthening and this is likely to play a part in the holiday intentions and destination choices of millions. Indeed, there is growing evidence to suggest this is already happening.
For example, the Vietnamese dong became better value during 2013. Several operators serving the destination reported a surge in bookings and the latest Post Office Holiday Money Report showed UK sales of the currency grew by 94% in the past 12 months.
Value in destinations
A stronger pound also looks to have influenced demand for the Dominican Republic, with sales of the peso up 82%; South Africa, with rand sales up 31%; and Russia, with ruble sales up 53%.
In Europe the top 12 best‑selling currencies have also weakened against the pound, making the eurozone and eastern Europe better value.
Even more attractive are destinations where the pound is stronger and resort prices have fallen. The best example is Bali where the currency has weakened 29% against sterling and resort prices are the cheapest among 44 destinations surveyed for the Post Office Holiday Money ‘Worldwide Holiday Costs Barometer’.
In other destinations, agents could use this as a selling tool. Turkey is a prime example: the Turkish lira has dropped about 30% in value against the pound.
Of course, holiday intention and destination choice are not solely governed by favourable exchange rates and resort costs. But many holidaymakers do their research to get the best value and, while pressure on disposable income remains, these factors will influence decisions on how best to escape the British weather.
First Rate is a business-to-business foreign exchange services provider supplying partners including the Post Office and Virgin Holidays
Sourced from Travel Weekly