How world events are reshaping the travel market

Britons are resilient travellers but their holiday plans have been tested by geopolitical events and now a sharp drop in the value of the pound.

 For most families this summer, there will have been no time to change their travel plans following the sudden rise in costs triggered by the Brexit vote.

Having enjoyed the benefits of a strong pound over recent summers, holidaymakers to Europe are now braced for the price of everything from sangria to boat trips to be about 10% more expensive than last year.

But if sterling’s weakness continues, tour operators will wonder how long families will absorb these higher costs. More than 29 million foreign holidays are made by UK travellers to EU countries, equivalent to 76% of all holidays taken.

Tried and tested

The uncertainty is another setback for the holiday industry so soon after terrorist attacks in a number of popular destinations led Abta to describe 2015 as an “unprecedented extraordinary year”.

The Foreign Office now advises against all but essential travel to Tunisia, a country which received 400,000 British tourists in 2014.

A similar warning affects Sharm el-Sheikh airport in Egypt while demand for Turkey is significantly down, having been Thomas Cook’s second biggest destination in 2015.

Operators responded to the turmoil by switching capacity to ‘tried and tested’ destinations such as Spain and its neighbours on the western Mediterranean.

They also stepped up efforts to expand long-haul offerings, with the United States, Mexico, Dominican Republic and Jamaica the most popular destinations.

More discounts?

The strategy helped the industry weather the storm in 2015, aided at the time by the strength of the pound. This has now been reversed, with companies now having to consider the additional impact on their business of costs priced in dollars or euros.

It is likely that the weaker pound will also mean they have to consider bigger discounts in order to entice people to travel.

In addition, staycations may grow in popularity but will greater demand impact on domestic prices and availability?

All is not lost though for those with wanderlust. There are some countries where the pound is stronger than three years ago. According to FairFx, these include Australia and Canada and, closer to home, Sweden, Norway and Russia.