The Post Office’s Holiday Money Report makes for encouraging reading. Ian Taylor reports.
Sales of foreign currency rose last year, particularly in peak summer, as demand for overseas holidays increased for the first time in five years.
A report due out on Friday will hail “a summer surge in euro sales” and an upturn in purchases of US dollars in the UK, as well as surging sales of currencies to spend in many other long-haul destinations.
The Holiday Money Report 2013-14, published by Post Office Travel Money, will furnish fresh evidence of rising travel demand – reflected in currency purchases through Post Offices, which account for about 25% of the UK total.
UK Office for National Statistics (ONS) figures show a 4% increase in outbound holidays last July and August against the same months in 2012, with a 7% rise in trips to eurozone countries year on year and an 8% increase in numbers travelling to destinations beyond Europe and North America.
Purchases of foreign currency appear to have outstripped these rising visitor numbers in most cases, suggesting average spending by holidaymakers also rose despite sterling losing 9% of its value against the single most-popular holiday currency, the euro, in the 12 months to July 2013.
The Holiday Money Report reveals a 6% increase in sales of euros through the Post Office in 2013 while noting: “By July, sterling was worth more than 9% less against the euro than when the schools broke up the previous summer. The falling pound put less cash in the pockets of UK tourists visiting almost every European destination during the summer.”
However, price cuts in Spain, Portugal and Greece eased the situation for UK visitors, the report suggests: “Resort price cuts more than counteracted the impact on the family purse. Families travelling to the Costa del Sol, Majorca, Crete and the Algarve could expect to pay less for typical holiday purchases than in 2012.”
The situation had improved by the end of the year, with sterling having pulled back against the euro to within 2% of its value in December 2012. At the same time, the report notes huge variations in how much people spent, even within the single-currency zone of the euro.
Post Office head of travel Paul Havenhand said: “Families who eat out every day on a one-week holiday in Italy could add more than £700 to their expenditure.” That compares to an average weekly bill of £250 in Spain or Portugal. Havenhand suggested: “This helps to explain the enduring popularity of Spanish resorts and the Algarve.”
The growth in the purchase of euros was mirrored in sales of dollars. Despite sterling falling against the US dollar throughout the spring and summer of 2013, the Post Office reports “dollar sales well ahead of 2012 levels” and “by December, sterling was stronger against the dollar than a year previously”.
The report ends on an upbeat note: “By the end of 2013 sterling was stronger than in 2012 against three-quarters of the Post Office’s top 40 currencies. The power of the pound remains unpredictable, but the prospects look brighter than for some time.”
The Holiday Money Report 2013-14 is published by Post Office Travel Money
The pound might be weak – but the desire to travel is getting stronger
Sales of foreign exchange rose for all but two of Post Office Travel Money’s top 20 currencies in 2013, although sterling was weaker than in 2012 against most.
The effect extended way beyond leading eurozone destinations and the US. The annual Holiday Money Report 2013, based on Post Office sales of foreign currency, notes: “By July, [UK] tourists could expect to receive far less foreign currency for their pounds than in 2012. Yet currency sales grew significantly.”
The sterling exchange rate for Croatian kuna was down 8%, for example, yet sales of kuna rose 30% over 2013 – and 35% in the summer – as UK visitor numbers boomed. Indeed, the Post Office reported sales of the currency up 143% over the past five years.
The major exception was the Turkish lira, which fell to a five-year low against sterling in 2013 yet still saw currency demand fall – reflecting a decline in UK visitors.
There was a “mid-year spike” in demand for UAE dirhams, up 48% in the summer and 25% over the year, suggesting “holidaymakers changed course [from Egypt] for Dubai”. Sales of currency for Qatar and Oman were also up – by 31% for Qatar and 27% for Oman.
Currency sales for long-haul destinations also rose. New Zealand dollar sales were up 45% on 2012, while sales of Australian dollars rose 40% helped by sterling increasing 16% in value against the currency. Purchases of Mexican pesos were up 33% and sales of South African rand rose 31%. There was a 23% increase in sales of Japanese yen, following a 34% rise the previous year, taking sales above the period before the disastrous tsunami struck the country in March 2011.
However, Vietnam and the Dominican Republic topped Post Office Travel Money’s top 20 chart of Fastest Growing Currencies, with a 94% increase in sales of Vietnamese dong and 82% rise in purchases of Dom Rep pesos. Sales of dong have risen more than 200% since Vietnam Airlines launched direct flights from Gatwick in December 2011.
Holiday money report 2013-14
Best-selling currencies
- Euro
- US dollar
- Australian dollar
- Turkish lira
- Canadian dollar
- Swiss franc
- New Zealand dollar
- Croatian kuna
- Thai baht
- UAE dirham
Fastest-growing currency sales 2013
- Vietnam (dong)
- Dominican Republic (peso)
- Russia (ruble)
- New Zealand (dollar)
- Australia (dollar)
- Mexico (peso)
- Qatar (rial)
- South Africa (rand)
- Trinidad & Tobago (dollar)
- Croatia (kuna)