Although figures and/or projections from the U.S. National Travel and Tourism Office and the UK’s Office for National Statistics show healthy increases in travel to the USA and for all outbound travel by Britons, a new report on key UK travel companies suggests that holidaymakers in the UK can expect price increases in the range of 15 to 20 percent this year.
Travelzoo said that almost a fifth of the 15 travel firms it had just surveyed believed the increase in holiday prices “could be as high as 15-20 percent” in the coming year. In addition, the company reported, 80 percent of the UK travel businesses questioned, said they were “bracing themselves” for price hikes in 2017.
Cited as reasons for the dim outlook were: the decline in the value of the British pound sterling vs. the U.S. dollar; continued uncertainty surrounding Brexit; the rising price of oil; and ongoing geopolitical fallout. Anyone of these factors, Travelzoo suggested, may create a rise in holiday prices during 2017.
Travelzoo’s UK managing director, Joel Brandon-Bravo, said: “The impact of sterling’s fall in particular has not really been felt in holiday pricing to date, however all the signs are pointing in the direction of price hikes for many popular holiday destinations in 2017.”
Indeed, the pound is at its lowest level against the U.S. dollar in more than 20 years—lower than it fell in the immediate aftermath of the Sept. 11, 2001 terrorist attacks in the U.S. or in the trough of the 2008-2009 economic recession.
During the past six months, data show that the pound fell from a high of $1.49 on June 23, 2016—the date of the UK vote to withdraw from the European Union (the “Brexit” vote)—to a recent low of $1.22 on Oct. 27, 2016.
“Until now British travel companies have been absorbing some price increases on costs such as hotel rates set in euros and many have been selling holidays at prices set before the June referendum,” explained Brandon-Bravo, adding, “Businesses cannot do this indefinitely however and we expect pricing for next year’s holidays to increase by at least 10 percent. For almost one fifth (17 percent) of those we spoke to the increase could be as high as 15-20 percent.”
And the news in the past week has provided few developments that would cause Travelzoo to change its mind; for instance, a decision by the U.S. Federal Reserve Bank to increase interest rates is seen as a move that will make the dollar stronger against all currencies, while decisions by OPEC and non-OPEC oil-producing nations to reduce output will only increase pressure on price points of products, including travel, that ae dependent on oil-based energy.