Holidays abroad back on as pound rebounds

THE pound continued to bounce back last week, cutting the cost of holidays to Jamaica, Egypt and Dubai, and bringing Eurozone destinations such as Spain and Greece once more within the grasp of the UK holidaymaker, according to a Holiday Money Report published by the Post Office.

But Hungary looks the top tip for UK travellers this summer, offering cheap prices matched with a weak and sliding currency and plenty of history, though not much by way of a beach.

A year after the pound crashed, the tourist rate is back up to 1.083 to the pound, 9.3 per cent higher than its low point in January 2009. Yet it remains 15 per cent down on two years ago.

Sterling is also up more than 16 per cent against the US dollar compared with 12 months ago, and a pound will buy $1.526.

But currencies are no longer the only factor determining what will be the cheapest destinations this summer. Last year's grim takings for hoteliers and restaurateurs in Spain and Greece, after the strong euro triggered a boycott, has led to them slashing prices for the coming season, says the Post Office.

Big discounts on accommodation, food and other typical tourist buys have pushed these Eurozone destinations right up the affordability tables, making them once more attractive for UK sunseekers.

By contrast, the UK's number one short-haul destination, Turkey, has let last year's record-breaking season go to its head. Confident of attracting travellers looking for value outside the Eurozone, Turkey's holiday industry is intending to cash in again this year. But in pushing up prices they have propelled themselves up the table of expensive resorts.

Post Office head of travel money Sarah Munro said: "Holidaymakers planning trips abroad in 2010 need to think carefully about where they will get good value.

"Many consumers automatically think, for example, that Turkey is cheap. But as our report shows, it has dropped 14 places down the affordability table and is now the 22nd most expensive out of 30, making it dearer than Spain."

Despite the Turkish lira weakening by more than 7 per cent against sterling over the past year, tourist prices have gone up almost 44 per cent, according to the Post Office.

Overall, tourist costs have fallen in 17 out of 25 leading destinations, with Bulgaria, Mexico, Mauritius and Barbados seeing costs deflate the most rapidly.

Hungary was the cheapest destination surveyed by the Post Office for the second year running, and since its currency, the forint, is now worth more than 9 per cent less than a year ago, the country looks unbeatable value for a city break.

Thailand is the cheapest long-haul country, with close competitor Kenya taking seventh place overall in the survey. However, it is important to check out the Foreign Office's travel website (www.fco.gov.uk), which currently warns of a high risk of terrorism in the country, advises against travel in certain areas of Nairobi and near the Somali border, particularly after recent kidnaps of aid workers and nuns.

Surprisingly, however, holiday currency sales are also soaring, up 78 per cent, indicating that more UK travellers are succumbing to the lure of the exotic.

Prices have risen in only eight destinations, led by Turkey and South Africa, which has one of the few currencies to have strengthened against sterling since last summer, up by 13 per cent.

While a variety of factors will dictate the overall price of a holiday, such as travel and accommodation, the gap between so-called incidentals can quickly turn what appears to be a cheap break into a costly adventure.

The Post Office monitors affordability based on a basket of typical items which holidaymakers might purchase such as a cup of coffee, bottle of beer, can of coke, bottle of water, sun cream, insect repellent, packet of cigarettes and three-course meal for two adults in a local restaurant including a bottle of house wine.

Taken together, this selection will cost nearly three times as much in the most expensive destination, Brazil, as in the cheapest, Hungary.

Eating out is no longer cheap in most destinations. Only in Hungary, Thailand, Bulgaria and Spain did the meal for two come to less than £30, ranging from £21.83 in Hungary to £25.56 in Spain.

In Italy the same meal will set you back £47.33, and in Turkey £58.14, according to the Post Office, although you could eat more economically in Greece, where the meal for two could be had for £37.86, or Cyprus at £39.72.

Yet Italy was one of the cheapest for a cup of coffee, with a typical price of 85p, the same as Tenerife. This compared with £2.24 in Turkey, and £1.09 in Hungary. Portugal offers the cheapest coffee at just 52p.

By Teresa Hunter.