Huge price hikes on package holidays
Jan, 4, 2009: Tour operators have increased the price of summer holidays by up to 40 per cent this year, raising the cost of an average family break to the Mediterranean by as much as ￡500, according to research for The Independent.
Sterling´s slump against the euro and other currencies and rising prices in "bargain basement" Turkey and Egypt will put the cost of a week on a foreign beach in August beyond the reach of hundreds of thousands of families hit by the downturn.
The travel companies TUI and Thomas Cook have also removed at least two million of their 13 million package holidays from the market in a long-planned move to increase profit margins and stabilise an industry rocked by the collapse of XL Leisure last year.
Overall, an average foreign holiday for a family of two adults and one child has risen from £1,466 in 2008 to £1,742 this summer, up 18.8 per cent, the country´s biggest independent travel agent, Co-operative Travel, told The Independent. Some holidays have risen by more–a break to the medieval city of Bodrum in Turkey has soared from £1,095 to £1,538 – a rise of 40 per cent.
Members of the Association of Independent Tour Operators have also been forced to raise the price of bookings for more unusual holidays. The specialist operator Sunvil Holidays, for instance, has raised the cost of trips to the Greek islands by 8 per cent and bespoke tours of Italian hotels by 15 per cent. The company´s managing director, Noel Josephides, a director of AITO, said: "Normally our increases are a maximum of 5 per cent and have been for many years – 2009 will see the highest increases ever."
The increases come as families start to book breaks. Most are expected to keep their main holiday, but may seek to save money by staying one week rather than two or by opting for a cheaper resort or country. Almost all destinations around the world popular with British holidaymakers have become more expensive – for travel and living costs – because of sterling´s collapse on global currency markets. Britons who arrive in Spain, France, Italy and other countries in the eurozone this week will find that their spending money buys 23 per cent less than it did a year ago.
Since January 2008, the pound has fallen against most global currencies, down 8 per cent against the Australian dollar, 24 per cent against the Thai baht, 25 per cent against the Egyptian pound, 26 per cent against the US dollar and 40 per cent against the Japanese yen.
Stephen Heath Fair, managing director of Fair FX currency service, said: "I expect people will switch out of the euro countries because it´s a really expensive place to go now."
Travel commentators expect tourists to head to cheaper Mediterranean resorts in Egypt and Turkey, with bookings to both up 8 per cent so far this year. However, even Egyptian and Turkish resorts will be far more expensive than in previous years because hoteliers and other businesses have realised that they can remain competitive while raising prices.
"I think the days of cheap, cheap travel are over," said Trevor Davis, of Co-operative Travel.
Travel companies have cut capacity since the big four operators became the big two in 2007, with the mergers of TUI with First Choice and Thomas Cook with MyTravel. Further capacity has been taken out of the market by the collapse of XL, the third-biggest holiday company in September, which took 10 per cent of holidays off the market.
The companies will take away almost two million fewer passengers this summer – German-owned TUI, which runs Thomson, has cut its 7.5 million annual total by 16 per cent while Thomas Cook is cutting its 6 million UK capacity by 11 per cent.
Thomas Cook has increased prices by 8 per cent this summer. TUI would not comment on its prices but in its annual results this week, the company said: "Following the mergers of the major European tour operators, all major participants are focused on growing profits."
One bright spot for travellers is that the cost of flights is expected to fall over the next 12 months as airlines remove fuel surcharges. And Iceland is expected to become more popular as it becomes cheaper, following the collapse of its financial system.