Why Has the Cost of Holidays Increased Over the Last Year?
Date: 04 JULY 23
In the past year, many travelers have noticed a significant increase in the cost of holidays. What used to be an affordable getaway has become a more expensive endeavor. From flights and accommodation to dining and activities, prices seem to have soared. In this blog post, we delve into the factors behind the rising costs of holidays and explore why travelers are experiencing this upward trend.
Airfare and Fuel Costs:
One of the major contributors to the increased cost of holidays is the rise in airfare and fuel prices. Airlines are grappling with higher operational expenses, such as increased fuel costs, which they often pass on to travelers. The volatility of oil prices and the impact of geopolitical events can directly affect the cost of air travel, making it more expensive for holidaymakers. The ongoing war in Ukraine was the catalyst for higher fuel prices and even though the wholesale prices have fallen these savings are not being passed onto the end consumer.
Post COVID-19 Problems
Although the pandemic has all but faded from memory a new set of challenges for the travel industry presented itself. Many hotels laid off their staff and have struggled to recruit them back to the hospitality industry as they sought out other employment in different industries. airline staff, airport staff, hotel staff and baggage handlers have all been able to negotiate higher rates of pay and these costs have to be passed onto the end consumer.
Pent-up Demand and Reduced Capacity:
Despite a cost of living crisis in the UK and the world, there has been a surge in pent-up demand for travel. The sudden spike in demand, coupled with reduced capacity due to airlines and hotels operating at lower levels, has created a supply-demand imbalance. This allows travel providers to increase prices to meet the high demand while accommodating the reduced capacity. Passengers will scrimp and save and forego other luxuries in order to go on holiday - further fueling the demand for foreign holidays.
Inflation and Currency Fluctuations:
Global economic factors, such as inflation and currency fluctuations, can impact the cost of holidays. When a destination experiences inflation or its currency weakens against major currencies, it becomes more expensive for travelers. This is particularly noticeable when exchanging currencies, booking accommodation, or engaging in activities in countries with unfavorable exchange rates. Turkiye is a prime example of this with surging inflation and a weak currency it has seen locals abandon the Turkish Lira in favour of the Euro/USD.
Higher Operational Costs for Hotels and Resorts:
Hotels and resorts have faced their own set of challenges during the pandemic. Enhanced cleaning protocols, reduced room capacities, and increased operational costs to ensure guest safety have all contributed to higher prices. Additionally, supply chain disruptions and increased costs for goods and services have further influenced the prices charged by accommodation providers.
Rising Demand for Domestic and Outdoor Activities:
With international travel prohibitive for some people, travelers have turned to domestic destinations and outdoor activities. This surge in demand has led to higher prices for accommodation, tours, and attractions in popular local destinations. The limited availability of these services in high-demand areas has allowed providers to charge more for their offerings. In some cases, hotel prices in the UK's popular holiday spots outpace the costs of foreign hotels.
Train strikes, Air traffic control strikes, baggage handler strikes, pilot strikes, and security staff strikes have resulted in massive disruptions to the airline industry either directly or indirectly. When French ATC go on strike it means no flights can even fly over France and so impacting flights to Spain, Portugal and mainland Europe. Again this reduces capacity and further fueling the pressure and costs on Airlines and Travel agents.
The War in Ukraine:
As well as the impact on fuel prices airlines are not longer able to fly over Russian airspace resulting in longer flights, detours, and cancelled routes to Eastern Europe and Asia.
While the increased cost of holidays may be frustrating for travelers, it is essential to understand the underlying factors that have contributed to this trend. From the impact of the pandemic and increased operational costs to supply-demand imbalances and economic fluctuations, multiple elements have influenced the rising prices.
By being aware of these factors, travelers can better plan and budget for their future holidays, by booking early and looking out for last minute deals you can still get away for a bargain break abroad if you look hard enough.