Tuesday, 2 December 2008

Package holidays best value as £ slides

Yesterday's further slide in the £ against the US dollar prompts a renewed reminder. As I wrote in this month's Ski & Board magazine, if ever there was a winter to book your holiday through a tour operator, this is it.

The advice applies to all holidays but to ski and snowboard trips especially, because besides paying for hotels through operators it is also possible to buy lift passes, rental packages and lessons.

Most package operators bought some or all of their US currency requirement on the forward market, when the £ was worth close to $2. Yesterday it had slipped to around $1.45.

This means that unless sterling rebounds, the price of lift passes, lessons, ski rental and any other extras on offer from operators are likely to be around 25% lower than in the resort.

Some operators who hedged only part of currency dollar needs – typically they buy 60% - 70% forward – may yet come under pressure to impose currency surcharges on customers who have already booked. However, rough calculations suggest that with operators in any case obliged to absorb unforeseen costs up to 2% of the basic package price, widespread currency surcharges are unlikely. And any which are levied should not be too painful.

All that assumes that the £ does not slips significantly further, however. It looks weaker than it should be to me. and in the current climate, nothing can be taken for granted.

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