British holidaymakers looking for top value for money should head to Portugal if staying in Europe, or South Africa if they are planning a long-haul trip.
According to the Post Office, a fall in prices over the past year and a strengthening of the pound against the euro has left Portugal’s Algarve the cheapest destination for UK tourists to spend money.
Its latest holiday money report, published on Friday, shows that a typical tourist basket of goods – including suncream, drinks and meal for two – will set you back under £30 in the Algarve compared with the £150 the same items would cost in Dubai, the most expensive destination surveyed.
Sunny Beach in Bulgaria is the second cheapest place to go, according to the report, closely followed by Cape Town in South Africa in third place, making it a cheaper place to holiday than the Costa del Sol in Spain.
The report said competition for tourists among businesses in the Algarve and in Sunny Beach meant local prices in both resorts had dropped by 12%, a fall boosted by the strong pound.
In contrast, the best-value destination in 2015, Prague, has been hit by rising meal costs that have left tourists paying £40.19 for the basket of goods this year – almost 14% more than 12 months ago.
Cape Town has become the cheapest long-haul destination, with the same basket of goods coming to £35, beating Bali for the first time, mostly because the South African rand has fallen in value by around a third over the past 12 months.
The Post Office said prices for British tourists had fallen in 23 of the 44 key worldwide destinations surveyed as economies around the world struggle.
Falling prices and the weak yen have made the Japanese capital Tokyo far more affordable than in previous years – its basket of goods will set UK tourists back £46, making it a cheaper destination than Malta or Nice in France.
Andrew Brown of Post Office Travel Money said: “If sterling continues to hold its value, UK holidaymakers will have plenty of choice in the coming year.
“In Europe, the best deals are likely to be in Portugal and Bulgaria, where increased competition to attract tourists has resulted in lower prices for tourist staples. Once the exchange rate is factored in, tourists should see their spending costs shrink.”
The Post Office named the Costa Rican currency, the colón, as its fastest growing currency of 2015, with sales up 46%. Demand for the Icelandic krona has soared by 276% in the past five years – taking it into the top 20 bestsellers for the first time.
New flights to Costa Rica and Iceland are expected to help boost demand further in 2016, it predicted.
Brown said: “When you look at many of the fastest growing currencies over the past year, it is clear that the strength of sterling has played an important part in determining holiday choice.
“The evidence suggests that holidaymakers have been doing their homework before booking and checking to see where their pounds will stretch further.”
Orlando (£68.54 for the basket of goods) remains the best-value US destination, although prices are up almost 9%. Boston (£79.88) is the least expensive of the four US city break destinations surveyed (San Francisco, £86.01; New York, £86.15 and Washington DC, £90.71).
