Economic uncertainty to hit holiday prices in 2017

Global travel deals publisher Travelzoo predicts British holidaymakers could be paying at least 10% more for their holidays in 2017 due to continued uncertainty over Brexit, sterling depreciation, the rising cost of oil, and ongoing geopolitical events affecting global tourism. 

This is according to new research from Travelzoo, which shows four in five UK travel companies surveyed are bracing themselves for pricing increases in 2017.

Joel Brandon-Bravo, MD of Travelzoo in the UK, said: “The impact of sterling’s fall in particular has not really been felt in holiday pricing to date, however all the signs are pointing in the direction of price hikes for many popular holiday destinations in 2017. Until now British travel companies have been absorbing some price increases on costs such as hotel rates set in euros and many have been selling holidays at prices set before the June referendum. Businesses cannot do this indefinitely however and we expect pricing for next year’s holidays to increase by at least 10%. For almost one fifth (17%) of those we spoke to the increase could be as high as 15-20%.

“In Britain, the travel industry serves two masters; firstly, the UK economy – which is currently feeling the effects of Brexit, with a pound worth much less than this time last year; and secondly, the wider global market – one that’s reeling from rising oil prices, travel bans to north African sun destinations, and safety concerns in other traditional holiday destinations. If one catches a cold, the other can normally soak up the additional expense. However, when both are struggling – as they are right now – something has to give.”

The good news is that the British appetite to travel shows no signs of slowing down.  ABTA’s 2016 Holiday Habits Report states that 2016 has seen the largest proportion of Britons (86%) holidaying since 2011. Travelzoo’s 2016 Travel Trends research however shows a growing sense of consumers looking ‘beyond Europe’, with a quarter saying they’re avoiding European holiday destinations, due to concerns over the falling value of the pound and the general safety of Europe.

Brandon-Bravo concluded: “For those looking to minimise the impact of these imminent price hikes we would advise consumers to consider the following: book early for peak holiday periods such as summer 2017, consider destinations that have more favourable exchange rates and be open-minded about which country you visit. If destinations such as Sharm el-Sheikh and Tunisia remain closed to the UK this will continue to put pressure on pricing to ultra-popular Western Mediterranean destinations. The world is a large place – perhaps 2017 is the year to break out of predictable holiday destinations and try somewhere new.”

Travelzoo predicts South Africa, Slovenia, Montenegro, Oman and Sri Lanka are likely to see a rise in UK tourists in 2017 as they offer good value for money:

 Cape Town, South Africa

Ranked the cheapest long-haul destination for 2017 by the Post Office, Cape Town is an attractive and affordable destination right now. Despite a slight recovery for local currency – the South African Rand – it still remains very weak against the pound; in fact £1 buys nearly 17 South African Rand.

 Ljubljana, Slovenia

Although a lesser-known country in Europe, Slovenia – unlike many other destinations in the region – is described by the Foreign Office as having a “low threat from terrorism”. It is also set to gain more publicity as the next First Lady of the United States hails from the country. With direct flights available daily and a flight time of two hours, Ljubljana is fast becoming a safe city-break location for Britons in 2017.

Tivat, Montenegro

As easyJet launched two new direct flight routes to Tivat in 2016, Montenegro is now more accessible and affordable for Britons than ever before. As one of the cheaper city-break destinations in Europe it offers warm temperatures in the summer for a coastal break, and mild temperatures the rest of the year for exploring the city.

Zighy Bay, Oman

A surge in demand means there are now more flights operating between the UK and Oman – named one of Lonely Planet’s Best in Travel destinations for 2017 – than ever before. Zighy Bay offers luxury hotels set on beautiful beaches, making this a great winter-sun destination.