- Big travel firms are already marking up prices for summer 2018
- The hikes come as major currency contracts begin to expire
- TUI and Thomas Cook have declined to say how much prices will rise
Neil Craven And Sarah Bridge, Financial Mail On Sunday
The cost of a package holiday could jump by 9 per cent next year, according to analysis of two of the country’s biggest tour operators.
Big travel firms are already marking up prices for summer 2018 as major currency contracts which have protected them and their customers from the worst rises begin to expire, according to research stockbroker Bernstein prepared for investors.
Travel operators use ‘hedging’ contracts as insurance to protect them for as much as 18 months after currency shocks.
Staying closer to home? The cost of a package holiday could jump by 9 per cent next year, according to analysis of two of the country’s biggest tour operators
But once the contracts expire, prices rise in line with currency inflation unless they can cut costs in other ways such as using cheaper hotels. The protection is likely to unwind altogether on holidays booked for this winter and next summer.
Bernstein leisure analyst Richard Clarke, whose firm has collected information from Thomson Holidays owner Tui and Thomas Cook websites, said operators have already begun to increase prices.
That has led to an average increase this summer of 8 per cent, he said. But he added worse pain for holidaymakers was yet to come.
‘Everyone has been focused on this summer, thinking that is where the big impact will be. But at the moment operators are looking OK and bookings are flat. But consumers will definitely have to pay more this time next year,’ said Clarke.
Meanwhile, a clampdown on companies charging for payments by credit or debit cards could lead to higher holiday prices as travel companies pass the charge on, experts warn.
Big travel firms are already marking up prices for summer 2018 as major currency contracts which have protected them and their customers from the worst rises begin to expire
From January next year, the second EU Payment Services Directive known as PSD2 comes into force.
It will ban surcharges on credit and debit card payments for most transactions, including for flight and holiday bookings in-store and online.
The UK Cards Association’s latest card expenditure statistics for the year to April 2017 showed consumer credit card spend with travel agents totalled £7.5 billion.
Consultants at RSM estimate the cost to the travel industry for lost charges could be up to £150 million.
TUI and Thomas Cook declined to say how much prices would rise.
Holiday Money Deals of the Week