The falling euro could be good news for holidaymakers heading to the continent. On Wednesday the value of the currency against the pound was at a seven-year low, with €1 costing just 70.48p.
Does this mean cheaper continental holidays this summer?
Unless you have already paid for an all-inclusive deal, it could well do. As recently as summer 2013 it would have cost you around £440 to buy €500 to take on holiday, with commission eating up another chunk of your cash too. Now that €500 can cost as little as £354.
Bob Atkinson of Travelsupermarket said British holidaymakers travelling to the eurozone were getting the benefits of a “double whammy” of reductions. “Living costs in the resorts in Spain and Portugal have been falling and the struggling domestic market means restaurants and other businesses are having to do deals to get customers in,” he said. “Holidaymakers stand to get the benefit of the falling euro and these lower costs.”
Self-catering holidays, camping trips, and other breaks where food and drink is not included will cost less than last year if the euro stays around its current rate, he said.
How much can I save?
You should not expect your total holiday bill to come in at 15% less just because the euro is that much lower, Atkinson says. “A big proportion, over 50%, of your holiday is likely to be the airfare and that’s subject to fuel costs, which are based on the dollar,” he says.
Travel money firm Centtrip said holidaymakers typically spent an average of £512 while on European holidays in 2013, and would now save £98 on the same holiday purchases. It says UK businesses could save £82 on each trip.
According to Moneycorp, a €200 Parisian hotel room is £25 less this March than last, while €170 tickets for family of four to a Spanish water park cost around £21 less.
Alternatively, if you have budgeted to spend a set amount you could upgrade to posher restaurants rather than saving.
Can I lock into these euro rates for my spending money?
Yes. Pre-paid currency cards are the main way tourists can lock into exchange rates before they travel. There are now hundreds on the market; moneysavingexpert recommends a card from Ukash if you’re loading less than £500, with FairFX and CaxtonFX better for larger sums.
So should I lock in?
That’s the €64,000 question. Centtrip says it has seen a rush of customers buying euros now to spend later in the year.
Although the euro is weak, it’s nowhere near as weak as it was a decade ago. In 2004, sterling briefly fetched €1.5, and if the same happens again you might kick yourself.
Atkinson says there are concerns that if the May elections produce no clear winner, several weeks of discussions between parties could weaken the pound.
I’ve already booked, will I get a refund from the operator?
Package holiday providers will have a clause in the terms and conditions reserving the right to increase charges if new taxes are introduced or currency fluctuations raise the cost of providing your break – but it doesn’t work the other way round. If you’ve paid for your holiday they do have to offer refunds if taxes are cut, but not if the cost of provision has dropped.
Would I be better off booking my hotel separately?
This would allow you to benefit from the falling cost of a hotel, but bear in mind that to take advantage of the current rates you would need to pay for the hotel now. Lots of booking sites offer you the chance to reserve a room, but payment is only taken when you get there. Atkinson says: “If you aren’t travelling until the summer, unless you pay now you are taking a gamble on rates.”
Will package holidays come down in price?
Not immediately, says Atkinson, who says prices are based on last year’s exchange rates. However, the current strength of the pound against the euro could filter through to cheaper holidays next winter and summer when operators price them up over the coming months.
