Price war predicted in the Med

Price war predicted in the Med

Holiday choice in 2012 will be based strictly on affordability rather than aspiration, with Spain expected to reap the benefits.

Also forecast is a summer price war between cheaper resorts in Spain and Portugal and those in Greece and Turkey.

Despite low resort costs in countries such as Sri Lanka, Mexico and Thailand, higher air fares will make it harder for long-haul hotspots to compete with the Costas, according to the latest Holiday Money report by Port Office Travel Money.

Prices in Spanish resorts have slumped by 40% in five years to make the country the cheapest in Europe, helped by a 6.4% rise in the value of sterling against the euro in the past three months.

The cost of eight typical items in resort, including dinner for two with wine in the Costa del Sol, is estimated at £37.72 – less than £10 more expensive than the cheapest destination, Sri Lanka.

Cyprus was the only eurozone destination of seven surveyed to show a clear fall in resort costs – down 8% to £53.19.

Turkey, once regarded as one of Europe’s cheapest destinations, could only achieve 17th place out of 40 in the study’s Worldwide Holiday Costs Barometer at £60.20 – making it 60% more expensive than Spain.

The research found that sterling is stronger against 29 of its major currencies than a year ago, which should help deflect the pain of higher package prices and rising resort costs in two-thirds of destinations featured in the costs table.

The biggest rises were recorded in Kenya (up 52% to £69.70) and Portugal (up 39% to £45.58). But resort costs in Italy are 95% higher (up 21% to £89.03) while Corfu at £71.73 is 57% more expensive than the Algarve.

Post Office head of travel money Sarah Munro said: “Given that sterling is worth around 20% more than a year ago against the Turkish lira, we expected to see a lower barometer cost for Turkey, especially as the country had a disappointing 2011.

“However, we were surprised to find that local costs have actually risen by 21% and it is only the strong sterling exchange rate that is masking that increase.”

“It will be interesting to see how Turkish resorts respond to the challenge presented by Spain and Portugal. With Greek tourism also facing a fight for survival, we could see a price war between the eastern and western Med in 2012.”

Consumer research conducted for the report reveals that while holidays are important, people will not take out loans to finance them, preferring to borrow from friends and family or to delay payment by using a credit card.

Munro said: “The message that came out clearly from our holiday budgeting research was that 2012 will be all about affordability. Holidays may still be a priority but they are not a necessity and people will not knowingly get into debt to fund them.

“That means that holidaymakers will be looking very carefully at their own finances before committing to a holiday and eagle-eyed in searching out trips that represent genuine good value.

“The winning destinations will be those that offer good value not just for flights and accommodation, but for tourist staples like meals out and drinks. However, it will pay people to keep a watchful eye on exchange rate movements as well as considering easy ways to save money.”

The most cost-effective emerging destinations include Vietnam, Argentina, Qatar, Chile and Costa Rica.


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