No-deposit bookers are more likely to be hit by currency fluctuations says Noel Josephides Chairman, ABTA, and Chairman, Sunvil
Let’s pretend it’s 2015 and that I have decided to book my 2016 holiday independently. I am computer-savvy and have no qualms about accessing a bed bank online and finding an independent accommodation owner with whom I can talk to make sure that the accommodation I am booking is what I am after.
I want to take advantage of the ‘no cancellation charges’ deals on some sites and, as I am not sure of where I want to go, I book several properties while I look for the best flight price.
So far so good – I am playing the field and I’m proud of taking advantage of the modern technology that enables me to book a holiday in this way.
I finally decide and book a no-deposit deal with a bed bank because, well, why pay now when I can pay locally on arrival at the hotel? After all, if I don’t like something, I may be able to reduce the payment locally.
Currency changes
Let’s say I booked this accommodation 12 months ago for August 2016, and that the bed bank’s website quoted a sterling price based on a notional exchange rate that its website used to convert the currency in which the hotel would be paid when I arrived.
It’s a five-star hotel and a week’s B&B stay would supposedly cost £1,500 for two. The rate of exchange 12 months ago was in the region of €1.42 to £1, giving a local rate for the accommodation of €2,130.
When I came to pay locally in August 2016, the euro had strengthened to€1.18 to £1 so, in sterling terms, this hotel now costs £1,805 – and I have taken a hit of £305.
Unfortunately, it does not stop there. My credit card will not convert at the spot rate. There will be at least a three or four‑point difference, so I could be charged a rate of ¤1.15 to £1, which would make the difference between what I thought my hotel would cost and what it actually cost come to £352, plus any transaction fees.
Caught out
Can I complain I was misled when I originally booked and, if so, to whom? No, I’ve been too clever by half and been caught out. I’ll simply keep quiet and tell my friends I booked a real bargain online!
There are hundreds of thousands of people who have been ‘caught out’ this year. I have friends who have paid over £1,000 more than they expected for accommodation.
Yes, of course the exchange rate can go the other way, or it can stay much the same. But whichever way you look at it, surely it’s better to book with a tour operator so that you know what you are paying? A tiny minority may surcharge once the client has booked but, generally, operators tend to take any bad news on the chin.
As Abta says, “Look for the logo”. And, in these uncertain times, why not?
You can join Abta chairman Noel Josephides at the Travel Convention 2016 in Yas Island, Abu Dhabi, on October 10-12, places are still available.