Sterling decline impacting outbound tourism

New research from travel insurance specialist Columbus Direct reveals that the falling pound has left British holidaymakers lighter in the pocket, with 41 per cent saying that it has had an impact on their holiday plans.

Those jetting off to the US would receive US$88 less (£70.27) in exchange for £500 on 1 February 2017 than exactly one year ago. Although the currency has gradually recovered over the last six months following the Brexit referendum, Brits still would have US$30.45 (£24.41) less to spend per £500 across the Atlantic now than on 1 August 2016.

Those travelling to Europe also face lighter wallets, as anyone heading off on a ski trip this February will notice. Travellers going to France or Austria now get €76 (£65.15) less in return for £500 than last February, while holidaymakers in the Swiss Alps are CHF110 (£87.93) lighter in their pocket compared to last winter.

Of the top twenty destinations visited by British travellers3, those visiting Australia and Norway will lose out the most in terms of holiday cash. A year ago Brits heading down under would have been able to exchange £500 for A$1,014, but they will now only receive A$830 in exchange, a reduction equivalent to £111.27. Similarly, visitors in Norway now have kr1070 (£103.13) less to spend per £500 on their holiday than 12 months ago.

Table 1: Change in currency values over last 12 months for top 20 countries most visited by Brits

Source: Columbus Direct, 2017

The weakened currency is having a real impact on Brits’ travel plans this year, with an estimated 21 million people (41 per cent) saying that it will affect their choice of destination and holiday style. Younger people (18-34) in particular are having to tighten their belts, with 51% saying that they are making changes to their holiday plans to save costs, compared to just 32 per cent of those aged over 55.

While the less favourable exchange rates may have dampened Brits’ enthusiasm to travel abroad, the domestic tourism industry seems to have profited as a result. Eight million (16 per cent) people plan to ‘staycation’ instead of ‘vacation’ by spending more time in the UK. Brits are also becoming more financially cautious and are coming up with different ways to keep holiday costs down – 11 per cent plan to set a budget in advance, another eight per cent intend to reduce the number of holidays and a further seven per cent plan to travel on a self-catering basis to save money.

Rob Thomas, head of Brand at Columbus Direct said: “Anyone heading to Europe, the US and Australia especially will feel the pinch of less favourable exchange rates. We have enjoyed a strong currency for many years so the reduced strength of the pound is going to be noticeable for holidaymakers when it doesn’t go as far as it used to.

“Setting a budget for the holiday itself and spending money while abroad can be a good way to help travellers remain within budget. Many European cities also offer well-priced visitor passes that often include transportation savings, plus discounts for museum visits and events and these can provide good value to visitors. Travellers should make sure they buy travel insurance as soon as they book their holiday so they are covered in case of cancellation and delays, and if they plan to travel several times a year, it is often a lot cheaper to buy an annual travel policy than a single trip cover.”