Summer Holidays To Soar By £300 As Oil And Euro Hits Travel Companies

[Ash4781]

The cost of an average family summer holiday will rise to more than £2,500 next year as travel companies struggle to cope with spiralling fuel costs and the weak pound.

With the spectre of recession looming, major operators are slashing the number of deals available and families will have to "scrimp and save" to find at least an extra £300 for a typical two-week summer break.

If global oil prices continue to rise holidaymakers could also face fuel surcharges of up to 10 per cent on top of these increases, or an extra £250 on an average family holiday.

Experts warned of a return to the 1970s when families saved up for a summer holiday, and made sacrifices in order to afford a fortnight in the sun.

Keith Bretton, at the trade body Travel Trust Association, said: "Being the only person at school or in the office without a summer tan is a very public statement of downsizing – people will scrimp and save and not buy new clothes or change car so they can still go on holiday.

"The brochures are being priced now and they will go up, no question. It's like making a meal - if the cost of the ingredients goes up then the price of the meal has to go up."

Bob Atkinson, at price comparison website travelsupermarket.com, said basic brochure prices for holidays in Europe would rise by between 15 and 20 per cent because of a "double whammy" of rising fuel costs and the weakness of the pound against the euro. Holidays outside Europe will rise by between 10 and 15 per cent.

He said: "Fuel is the main driver and if the fuel rate goes up then there will be further costs in surcharges. It's definitely going up, there's no two ways about it."

The weakness of the pound against the euro meant it was "inevitable" that people booking package holidays in Europe next year "will experience between 10 to 15 per cent", according to Carl Michel, the chief executive of one of Britain's biggest travel companies, Holidaybreak.

John Bevan, UK managing director of internet travel giant lastminute.com, predicted holiday prices could rise by as much as 20 per cent next year.

And Roger Allard, chairman of cruise operator All Leisure Group, estimated package holiday prices would soar up to 15 per cent across the industry.

He said: "If the big tour operators have hedged fuel and currency, and with the increases in hotel costs, they will need to increase prices by £70 on mainstream package holidays. Some demand will fall off and mainstream operators will cut back."

According to the Association of British Travel Agencies (ABTA) the cost of an average two-week break this summer is £560 per person.

A family of four, therefore, will spend an average of £2,240 on their annual break.

But next year this will rise to between £2,464 to £2,688 if prices rise between 10 and 20 per cent.

Average prices for this summer's latest offers are already £100 up on last year and in future the best deals are likely to be for early bookings with fewer discounted last minute holidays.

Mark Reed, travel analyst at investment bank Landsbanki, said: "Holidays next year will take up a greater proportion of discretionary spend than for a long time and the ability of consumers to put the cost of the holiday on a credit card or overdraft is more limited."

Independent travellers, who avoid booking with a travel company, should avoid some of the price increases, but will be hit by soaring flight costs. These alone are expected to rise by up to 15 per cent by next summer driven by the soaring cost of oil.

Mr Michel said: "Independent travellers prepared to shop around may find a good bargain at a hotel, but they'll be hit by higher air fares. Most airlines are basing their air fares on oil being $100 a barrel. It's shot up since then."

Oil hit a record high of more than $140 a barrel last week having more than doubled in a year and analysts including investment bank Goldman Sachs say it could ultimately reach $200 a barrel.

British Airways has already increased fuel surcharges from £158 to £218 for a return flight of over nine hours.

In the package holiday market dozens of travel companies have applied to ABTA to impose surcharges on customers.

The tour operators must absorb costs equal to 2 per cent of the holiday price before they impose extra charges but they can then demand fees of up to 10 per cent of the cost of the holiday – long after a customer has booked the holiday.

One couple, Ron and Gwenda Bennett, from Verwood in Dorset, were forced to cancel their dream cruise when the operator, Voyages of Discovery, hit them with an £892 surcharge.

Europe's two biggest operators Thomas Cook and Tui, which owns First Choice, are expected to only raise their prices by about 5 per cent for next year but holidaymakers travelling with smaller operators are likely to face much bigger increases. Thomas Cook has already cut back the number of holidays on sale by 19 per cent this year.

Travel experts predicted summer holidays will be the last luxury people will scrap during an economic downturn.

An Abta spokesman said: "That's what it was like in the 1970s and 1980s. People would simply go for two-week summer holidays because the sheer cost of flying was so high."

Political leaders yesterday announced relatively modest holiday plans this summer.

Prime Minister Gordon Brown is taking a traditional "bucket and spade" break on the coast of East Anglia while Conservative leader David Cameron is going to Cornwall with his family.

http://www.telegraph.co.uk/travel/2286785/...-companies.html

here too

http://business.timesonline.co.uk/tol/busi...icle4321848.ece

Demand destruction ?

Not sure about the viability of the low cost airlines.

[Caribbean Beauty]

Good post. One of the biggest problems for folks looking to fly in future will be the lack of flights and routes available to them following the demise, or contraction, of ALL airlines as all will choose one option or the other, or have it forced on them.

Eg my region, the Caribbean - all or almost all islands have seen a startlingly quick cut in inbound airlift of between 40-60%. Like turning off a lightswitch. Even if we speculate that the remaining flights carry on as now through the recession, and I am convinced that more ailrift will be lost, then the price of fares will be so high that the ABTA spokesman is correct in his surprisingly bearish prediction that travel patterns will return to the 1970s - short-haul trips to Spain will be as far as regular folks will be able to reach, while long-haul trips will be absolutely the sole preserve of the rich as they once were - you will never again see crowds of regular Brit tourists in Phuket, Bondi Beach, Barbados etc. Chav free zones.

My biggest fear is that even the rich won't go, once conditions in islands whose economies are 99% dependent on tourist £ and $ turn ugly and the local people hurt real bad - up until the 1980's most islands had agriculture to keep them going with food and exports, but for the last 20-30 years of non-stop tourism growth during cheap-oil era, the farms have been abandoned and skills lost as youths moved into less arduous and better paid tourism work. At the same time, crack reached the islands...and respect for the local police forces has died as the MTV rap culture has boomed. Put it all together and you get: Haiti! Not an attractive desination, even for the rich.

Lord help anyone building a new hotel in this region now, or anyone with an existing hotel which is highly leveraged. You can kiss your ass goodbye. Unless they extend the Virgin West Coast Train line under the Atlantic, from Crewe to Barbados....

[surfcat]

http://www.telegraph.co.uk/travel/2286785/...-companies.html

here too

http://business.timesonline.co.uk/tol/busi...icle4321848.ece

Demand destruction ?

Not sure about the viability of the low cost airlines.

This is the key quote I think: "Experts warned of a return to the 1970s when families saved up for a summer holiday, and made sacrifices in order to afford a fortnight in the sun."

Gosh- how terrible? Save up for something nice!

[Realistbear]

http://www.telegraph.co.uk/travel/2286785/...-companies.html

here too

http://business.timesonline.co.uk/tol/busi...icle4321848.ece

Demand destruction ?

Not sure about the viability of the low cost airlines.

I have already booked my holiday for next year: Lindesfarne, just south of the Scottish Border on the right hand side. Nice quiet little Island that is a retreat for those seeking a bit of meditative Celtic spirituality amid a world gone mad. I have effectovely cancelled any plans for overseas travel due to the cost of fuel and all the surcharges the airlines are adding on.

We are in for one helluva big bust I tell ye!

[interestrateripoff]

You mean the holidays sector isn't recession proof as claimed by the holiday industry. This is shocking.

[OLDFTB]

The beard and sandal green brigade are going to love this. Less flights, less greenhouse gasses etc....

[Bloo Loo]

Pay Attention Gordon Brown and the rest of the government, £10 flight tax doesnt acheive FA, except more money in your coffers.

Market forces, however achieve what you couldnt.

Its a lesson.

Learn it with the housing market and the monetary system too If you please.

[silver surfer]

Good post. One of the biggest problems for folks looking to fly in future will be the lack of flights and routes available to them following the demise, or contraction, of ALL airlines as all will choose one option or the other, or have it forced on them.

Eg my region, the Caribbean - all or almost all islands have seen a startlingly quick cut in inbound airlift of between 40-60%. Like turning off a lightswitch. Even if we speculate that the remaining flights carry on as now through the recession, and I am convinced that more ailrift will be lost, then the price of fares will be so high that the ABTA spokesman is correct in his surprisingly bearish prediction that travel patterns will return to the 1970s - short-haul trips to Spain will be as far as regular folks will be able to reach, while long-haul trips will be absolutely the sole preserve of the rich as they once were - you will never again see crowds of regular Brit tourists in Phuket, Bondi Beach, Barbados etc. Chav free zones.

My biggest fear is that even the rich won't go, once conditions in islands whose economies are 99% dependent on tourist £ and $ turn ugly and the local people hurt real bad - up until the 1980's most islands had agriculture to keep them going with food and exports, but for the last 20-30 years of non-stop tourism growth during cheap-oil era, the farms have been abandoned and skills lost as youths moved into less arduous and better paid tourism work. At the same time, crack reached the islands...and respect for the local police forces has died as the MTV rap culture has boomed. Put it all together and you get: Haiti! Not an attractive desination, even for the rich.

Lord help anyone building a new hotel in this region now, or anyone with an existing hotel which is highly leveraged. You can kiss your ass goodbye. Unless they extend the Virgin West Coast Train line under the Atlantic, from Crewe to Barbados....

Good original post and good follow up post. It's informative and well observed posts like these that make this forum so useful, and worth wading through all the pompous rants to find!

[jonewer]

Unless they extend the Virgin West Coast Train line under the Atlantic, from Crewe to Barbados....

Given that an open return from Crewe to Kings Cross is around £200, I dont think theres enough money in the world to buy an open return ticket for that one!