Brits holiday despite credit crunch

Despite pessimistic reports that the travel industry faces tougher times ahead as the credit crunch bites deeper and fuel surcharges push up flight costs, the latest Post Office Holiday Money Monitor of foreign currency purchases confirms what successive consumer surveys suggest: that holidays are proving one of the last ‘luxuries' to be jettisoned.

One of the latest surveys, commissioned by the BBC, has revealed that one third of UK consumers will still take an annual holiday overseas, no matter how bad the economy gets - while a recent CBI survey reported that travel was the only consumer services sector to report volume growth in recent months.

In this update of travel money trends in June and July during the run up to the school holidays, Post Office Travel Services confirms that there has been no sign of a spending slow down. Although non-euro countries including Turkey, Croatia and the Scandinavian duo of Norway and Sweden emerge as Europe's big winners this summer, the Post Office says that euro sales are running well ahead of 2007 levels.

Post Office currency sales statistics for June and July reveal a healthy picture for the euro, despite its soaring value against sterling. After falling to its lowest ever level, the euro tourist exchange rate has since stabilised and Post Office sales rose cumulatively by 3.2 per cent for June and July against the previous two months in 2007.

More significantly, euro sales accelerated during the latter part of this period to give a year on year growth rate of 8.1 per cent overall in July. And in 2008 to date, sales have increased by six per cent, compared with the same seven month period in 2007, proving the resilient demand for holidays in the eurozone.

US dollar sales also grew year on year during June and July, despite the fact that sterling's value has dropped to its lowest level for 12 years in recent weeks. Although the growth rate slowed in comparison with April and May, Post Office dollar sales still show a 4.4 per cent increase in June and July and five per cent overall for the year to date.

Turkey leads the growing list of European countries benefiting from its lower cost of living compared with eurozone resorts. Sales grew year on year by 22.9 per cent in June and July and by 130 per cent over three years, compared with 10 per cent for the euro. And, while the Swiss franc exchange rate has risen by a similar level to the euro, its sales grew disproportionately by 8.8 per cent, compared with 3.2 per cent for the euro.

Helen Warburton, Post Office head of travel, said: "The continuing growth in demand for euros shows that most holidaymakers are not deserting summer sun favourites like Spain, Greece and France. However, accelerating sales of Turkish lira, Swiss francs and Croatian kuna suggest that many UK tourists are shopping around in Europe."

Looking at the overall picture, 16 of the Post Office's leading 20 currencies have shown a healthy increase in sales this summer. However, the Czech koruna, which is the European currency registering the strongest rise against sterling, has experienced a 20.3 per cent drop in demand."

Post Office top selling currencies (June/July 2008)

1 Euro
2 US dollar
3 Turkish lira
4 Canadian dollar
5 Australian dollar
6 Swiss franc
7 Egyptian pound
8 Bulgarian lev
9 Norwegian krone
10 Czech koruna

Bulgaria, the cheapest European destination surveyed in the 2008 Post Office Holiday Costs Barometer, has entered the top 10 currencies for the first time this year. Over three years demand for the Bulgarian lev has grown by 126 per cent.

In a good year for Scandinavia, Norway is its top-placed country, consolidating its place in the leading 10 currencies with a 14.5 per cent year on year sales increase.