Holidaymakers can reap sterling benefits on long haul trips

Holidaymakers may face a bumpy ride in Europe as the euro continues to ride high - but canny consumers can avoid having to dig deeper in their pockets this year by choosing long haul holiday destinations that remain unaffected by the slide of sterling.

In What the Pound Buys Abroad, its annual report into currency movements, Post Office Travel Services reveals that sterling has actually gained ground over the past year in six of 20 destinations surveyed.

All six are long haul destinations with the most marked growth for sterling in South Africa, where the UK currency has strengthened almost 15 per cent against the rand, compared with last year. Hong Kong, Jamaica, Barbados, St. Lucia and the USA also look good value for UK tourists, as does Dubai where the rate has remained constant.

Looked at over a two year period, sterling appears healthy. In Jamaica, for example, the Post Office reports that the UK pound buys nearly 19 per cent more Jamaican dollars than in 2006. The same applies to the Hong Kong dollar (+12.82 per cent) and UAE dirham (+11.53 per cent). In fact sterling grew against 10 of the 20 currencies.

This is part of a trend which means that currencies tied to the US dollar are struggling against sterling and holiday destinations using these will be less expensive. Like the US dollar, up 1.06 per cent on the same period a year ago and 12.17 per cent on 2006, this will make resorts further afield a tempting prospect for holidaymakers.

Post Office currency sales in the run up to Easter suggest that many of these destinations will reap the benefits this year as holidaymakers seek out the best value. Sales of US dollars showed an increase of 23 per cent over the past month and a massive 48 per cent during Easter week.

Similarly the Post Office sold 46 per cent more UAE dirhams during March 2008 and 27 per cent more Hong Kong dollars.

Although sterling has dipped in value against every European currency, there is no sign of a British boycott. The Post Office reports euro sales up 29 per cent in Easter week, even though sterling is worth nearly 17 per cent less than a year ago, and the Bulgarian lev grew by a staggering 158 per cent, probably on the back of Easter skiing holidays.

However Prague, one of the most popular city break destinations, may be set for a tougher time. Its currency, the Czech koruna, is now worth 31.63 per cent more against sterling than a year ago and sales have slumped by almost 11 per cent over the past 12 months. This dip accelerated to 15.81 per cent in the run up to Easter, suggesting that UK tourists want to avoid higher costs in the city and are looking elsewhere.

Helen Warburton, Post Office head of travel said “currency sales in the weeks running up to Easter are a good indication that people want to hang on to their holidays, despite the credit squeeze. Across the board we sold 20 per cent more currency during March and, whilst this can be explained partly by the timing of Easter and school holidays, it suggests that holidays remain a firm priority.”

“Looking forward, we believe that holidaymakers will look very carefully this year at how to get the best value for their money. With the Open Skies agreement due to come into force in April, they should keep a close eye on transatlantic flight costs, where the market will become more competitive.

“We also recommend that they consider not just the exchange rates available but also the living costs in holiday destinations – and consider using a pre-paid card, like the Post Office Travel Money Card, which will help budgeting.”

“Based on this, Hungary, Turkey and Portugal look to offer the best value in the short haul market while New York and Dubai are good bets for holidaymakers who want to restrict travel time to below eight hours. When time is not a concern, South Africa and Jamaica are great value destinations,” she added.

The Post Office is currently offering customers spending £500 or more on any foreign currency a special exchange rate. This offer is only available for a limited period. For more information, visit postoffice.co.uk.