The cost of holidays in Europe is set to soar this year as the growing strength of the euro adds to tourists' shopping, bar and accommodation bills. Six months ago it would have cost £67 to buy €100; now it costs £78 after a 16 per cent fall in the value of the pound against the euro. Financial experts predict that the trend is likely to continue.
'This is having quite an impact over here,' said Kevin Mountford, a financial expert at Moneysupermarket.com. 'From a tourist perspective, you now have to be careful not to leave your currency exchange until the last minute.' A meal for two in a typical French restaurant with drinks and coffee at the end of last year would have cost £52 on average, according to price research from the Post Office. The same meal just a few months later would now cost £60.
Even if sterling does recover over the summer, tour operators agree their prices with hotel and apartment owners well in advance so the current exchange rate will be felt by those heading for some winter sun. The Post Office found that the rising strength of the euro is likely to be felt most by holidaymakers used to enjoying the relatively low costs of Malta and Cyprus, which both switched to the euro in January. Before the 2002 switch to the euro, Spain and Greece were the cheapest of Europe's major holiday destinations. To add to holidaymakers' financial burden, the cost of spending on credit and debit cards overseas is also rising, according to website uswitch.com. A number of card companies have recently started charging customers a flat fee every time they use their debit card abroad, on top of the foreign exchange fees they already pay.
People looking to buy property overseas will also be affected by the sharp drop in the value of sterling. A €150,000 house in Spain a year ago would have cost a UK buyer £105,000; now it would cost £120,000. 'On the positive side, the cost of property has fallen in many European countries, but the problem is that any gains are now being offset by this poor exchange rate,' said Mountford. 'On the flip side of the coin, friends going to the US for their holidays are now enjoying better value for their money than ever.'
British holidaymakers in the US have been able to take advantage of a strong exchange rate over the past few months, with one pound buying almost two dollars. A recent survey by Halifax Insurance predicted an increase in long-haul mini-breaks, which it dubs 'breakneck breaks'.
Eastern Europe's emerging city-break destinations, such as Krakow, Tallinn, Riga and Dubrovnik - which are in countries not yet using the euro - could also be set to benefit, predicts the Post Office. Bulgaria offers the cheapest European holiday, according to travel agent Thomas Cook. Amid the financial crisis, UK operators are hoping for a boost for British holidays, with foreign tourists taking advantage of the favourable exchange rate.
guardian.co.uk © Guardian Newspapers Limited 2008
