Feeble pound shifts Britons' holiday targets

(China Daily)
Updated: 2008-07-01 10:58

A British woman walks near a billboard in the center of the Black Sea coast city of Varna, about 450 km northeast of the Bulgarian capital Sofia, on June 25. 

Vodka, the famous Starowka quarter and the Palace of Culture commonly draw tourists to Warsaw, but John Bentley had a more mercenary motive for holidaying there recently - it wouldn't break the bank, despite sterling's weakness.

As the summer holiday season begins, sterling's frailty coupled with a rise in airfares due to soaring oil prices are changing Britons' holiday plans in Europe - by far their most popular playground.

With Britain's summer shaping up cold, wet and expensive, there is not much sign of a big shift to stay-at-home tourism: visits to Europe by UK residents in the year through to April slipped only by 1 percent to 55.2 million, official data show.

That figure is easily double the 23.6 million Europeans who holidayed in the UK during the same period, suggesting Britons for now at least remain keen to flock to Europe.

But while holiday mainstays like France and Italy- euro zone countries whose single currency hovers near a record high against sterling - remain a magnet for UK tourists, cheaper European destinations outside the euro zone are gaining in popularity.

Awaiting his flight at London's City Airport earlier this month, Bentley said the weak pound was making it hard to travel in the euro zone.

"You feel it more than you did one or two years ago," he said. "It definitely makes you think twice about costs when you get (to your destination)."

Sterling is stuck near an all-time low to the euro around 81 pence, nearly 20 percent weaker on the year. The pound has been pummelled by a slowing UK economy as a struggling housing market weighs on consumer confidence and growth.

A weak currency makes travel abroad painful, as tourists receive less when they exchange their money in many places. Travellers from the UK are already shelling out for fuel surcharges, as oil prices have nearly tripled in the last 18 months.

"UK tourists have woken up to the fact that the euro is stronger than it was last year, but it's not dissuading people from going on holiday," said Mark Nancarrow, managing director of financial services at UK leisure travel group Thomas Cook.

Travel website Expedia says it has seen a rise in popularity for eastern European countries that don't use the euro among UK customers, as sterling is not as weak against their currencies this year as it is against the euro.

"Demand is definitely shifting," said Dermot Halpin, president of Expedia in Europe. "Destinations outside the euro zone which are mid-haul rather than long-haul, such as Turkey and Bulgaria, are on the up."

Travel to Turkey in particular has become more popular, in part because the accommodation costs remain affordable even as sterling hovers around a four-year low against the Turkish lira.

Turkish figures show UK arrivals to the country rose nearly 10 percent in May from the same month last year, having climbed 17 percent since January. The United States is also gaining in popularity because of a weak dollar, even though it is much further away.

The changes are not yet dramatic: it's business as usual at discount carriers which mainly service short- to mid-haul European and UK flights, with Europe's largest carrier Ryanair reporting a 22 percent increase in passengers on the year and No. 2 easyJet saying passenger load rose more than 13 percent.

At the same time, sterling's slump - in addition to higher inflation pressures - has required UK tourists to spend more overseas, travel operators say, pointing out that currency transaction values have risen in the past year.

(China Daily 07/01/2008 page10)