The Algarve, Portugal
Sterling looks set to play a pivotal part in destination choice this year, according to the 19th annual Holiday Money Report from Post Office Travel Money, which has found that three-in-five Britons are planning overseas holidays this year.
Forty-four per cent of them having already booked their trip, while holidaymakers who have yet to decide on their destination will benefit from lower prices in many of the world’s most popular resorts and cities.
This is because the report’s Exchange Rate Monitor reveals that 29 of Post Office’s 30 bestselling currencies have weakened against sterling over the past two years.
In its biggest ever barometer of costs in 47 destinations worldwide, Post Office Travel Money found that prices for eight items - a three course meal for two with wine, cup of coffee, bottle of local beer, can of cola, glass of wine, bottle of still water, suncream and insect repellent - are down in half of the resorts and cities also surveyed a year ago.
The biggest price fall is in the Dominican Republic, the only Caribbean Island of seven surveyed to make the top 20 in this year’s barometer in 19th place. At £93.09, prices in Punta Cana have plummeted by over 26 per cent.
Prices have also fallen in the Algarve, which returns to the top of the barometer chart for the first time in nine years.
Portugal’s most popular resort area has moved up to the top spot from fifth place a year ago with a barometer cost of £58.95, 1.6 per cent less than in 2024. This is thanks to the continuing low price of meals and drinks.
The cost of a three-course meal for two with wine weighed in at £40.33 – the lowest recorded across the 47 destinations surveyed and one third the cost in New York (£128.27). Sterling’s strength against the euro – up 1.8 per cent year-on-year and 6.3 per cent compared with March 2023 - has also helped to reduce prices for British visitors.
Laura Plunkett, Head of Travel Money at Post Office, said:
“It’s interesting to see the Algarve back at the top of the barometer chart again and this is largely down to the remarkable consistency in its low prices for meals and drinks. Even though the Algarve has featured in the best value top 10 since 2010, it has struggled to match the cheapest long haul destinations on price in recent years. Now prices have risen in its closest competitors but remained low in Portugal. This makes the Algarve a great choice for holidaymakers who want to keep their holiday spending to a minimum.”
Leaving aside the Algarve’s success, long haul destinations have outperformed European ones to claim five of top six places in this year’s barometer. Cape Town in South Africa has retained runner-up position with a barometer cost of £59.84, albeit 11 per cent higher than a year ago.
In third place, Japan’s capital city, Tokyo, has moved up one place, but prices have also risen by 7.4 per cent to £63.34. Bali (£66.88) has moved up from eighth to fourth place, but prices are five per cent higher year-on-year.
In addition to the Algarve, there have been price falls in four other top 10 destinations – all of them new entrants this year. Delhi is the highest placed of these, rising to fifth from 13th place a year ago on the back of a 10.7 per cent drop in prices to £69.52. The other new entrants to the Post Office top 10 are Prague, Czech Republic (8th, £75.92), which saw a significant price fall of over 20 per cent; Phuket (9th, £76.10), where prices in the Thai resort are down by 2.7 per cent and Spain’s Costa del Sol (10th, £76.51), where costs have dropped 6.4 per cent.
Sunny Beach, Bulgaria (6th, £71.46) and Hoi An, Vietnam (7th, £73.23) complete the top 10. However, a substantial price rise of 41.3 per cent saw Hoi An drop down the chart from the top spot last year, while the cost of tourist staples has continued to increase in Sunny Beach, this year by 13.9 per cent.
New York is the most expensive of the 47 destinations surveyed, with a barometer total of £167.85, (+15.6 per cent year-on-year). Two new entrants to the chart, Mahé in the Seychelles (44th, £152.21) and Hawaii, USA (46th, £155.80) are almost as expensive. Prices in Nice, France (45th) have risen 27 per cent to £153.03, making it by far the most expensive European destination surveyed.
At £92.78, prices across the US/Canadian border in Toronto are almost half those of the same items in New York. In 18th place, Toronto is rated the best value of eight new destinations featured this year. In addition to Toronto, Mahé and Hawaii, the new destinations featured are Cairns and Melbourne, Australia; Rio de Janeiro, Brazil; Santiago, Chile and Lima, Peru.
Post Office Travel Money, the UK’s largest provider of foreign currency, says that currency sales are a useful indicator of where Britons are choosing to visit. Over the past year these indicate a growing demand for travel further afield to long haul destinations – particularly Far Eastern and South American ones.
Notable among these are the sales gains made by the Japanese yen, Thai baht and Indonesian rupiah, all three of which boast destinations (Tokyo, Phuket and Bali) in the Worldwide Holiday Costs Barometer best value top 10.
Another consideration may be the value of sterling. Although it has proved volatile in the wake of the US presidential election, sterling remains strong against many currencies. More than three-quarters of Post Office’s top 30 currencies – including the euro and most other European currencies - have weakened since last March and all barring the Polish zloty are worth significantly less than two years ago.
Laura Plunkett said:
“Despite fluctuations and some uncertainty about sterling when it fell against key currencies earlier in the year, it has now bounced back from its January dip and currently looks stable. More encouragingly, the two-year rate comparison in our Exchange Rate Monitor shows that sterling has risen in value against practically every holiday currency since March 2023. This is a reassuring trend for holidaymakers planning trips abroad this year.”
The biggest year-on-year gain for sterling has been against the Mexican peso, which had surged in value in the early months of 2024. Sterling has recovered well from that low point and the peso has now weakened by over 21 per cent, giving visitors £87 more on a £500 purchase.
Taken over two years, sterling has risen by over 22 per cent against the Mexican currency, giving Britons more than £91 extra in pesos on a £500 currency transaction. As a result of the sterling surge, prices have fallen 19 per cent in Cancun (£103.80), which has risen to 27th place in the Worldwide Holiday Costs Barometer.