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UK Holiday Spending Habits

The rising cost of living has dominated UK headlines in 2022. Every which way we turn, someone is talking about increasing petrol prices, out of control utility costs, and exponentially rising food prices.

Against this backdrop, it’s only natural that we all take a look at our spending habits and make some sacrifices here and there. When we want to tighten the old purse strings, it’s usually the luxuries that we examine first – and quite often, the annual (or biannual) holiday is the first thing impacted.

But has the rising cost of living really impacted the UK holidaymaker? Research conducted by HSBC in September 20221 shows that 66% of Brits say “yes”, it has.

How Did Covid-19 Impact Our Holidays?

There’s no denying that the Covid-19 pandemic of the past couple of years has had a dramatic impact on tourism. Strict lockdowns prevented us from travelling abroad at all, which led to much of the population falling in love with staycations.

Since travel restrictions were lifted, overseas travel has started to recover with UK residents making some 20.4m visits abroad in Q2 2022 compared to 1.2m visits in the same period in 2021. Travel association ABTA reported that 45% of people had a foreign holiday in 2022, compared with 64% in 2019 (pre-pandemic), which equates to 70% of 2019 numbers – that’s no mean feat considering travel was still heavily restricted for the earlier part of the reporting period.

Despite these seemingly buoyant figures, visits abroad remain lower than pre-pandemic levels, and look set to be further impacted by fears over inflation and a weak pound.

What’s the Impact of the Cost of Living on Our Holidays?

Interestingly, it seems that after the challenges of the pandemic years, going on holiday remains a high priority for many of us, despite the cost of living crisis. Some figures suggest that only 14% of people are planning to not go away in the next 12 months.

But for the remaining 86% of people who fully intend to go on holiday next year, cost of living struggles are forcing them to scale back their plans. According to HSBC’s report:

  • 1 in 5 people are travelling out of season to save money; and
  • More than a quarter of people are setting stricter travel budgets.

Perhaps surprisingly, some people are opting for foreign travel over the staycation because of escalating costs in the UK. Instead, UK holidaymakers are going abroad with all-inclusive packages, so they know their costs upfront, or package deals, in order to save money.

Hidden Holiday Costs

Going on holiday is all about making some memories that will sustain us when we get back to reality. So when we go on holiday, we tend to spend our hard-earned cash on experiences like sightseeing, eating out, and shopping. Of course, accommodation and transportation also take a big chunk out of our holiday budgets.

Even though many of us are spending more time shopping around for a good holiday bargain, and setting ourselves careful, daily budgets once we actually arrive at our destination, there are more than a few hidden holiday costs that catch out even the savviest of holidaymakers.

Hidden Costs in Your Transport & Accommodation

Some of the more obvious hidden holiday costs include baggage fees, seat reservations, and room taxes. If you’re travelling with a low-cost airline, you may find that it charges you to check in an item of luggage or to pre-select your seat (which can be important if you want to sit with your family… or not, as the case may be!). Don’t forget about the overweight baggage charge on the return leg of your holiday, which may catch you out if you’ve bought one too many souvenirs.

Hidden Costs in Your Payment Methods

A much less obvious hidden holiday cost is credit and debit card fees. Many people don’t realise that when using their travel money outside the UK, they may have to pay a fee when buying things with their debit or credit cards, or making a cash withdrawal from a cash machine. Incredibly, some 56% of travellers don’t actually know how much their debit card provider charges them.

Fees vary by provider, but a typical debit card transaction fee can range from 2.79-2.99%. So for every €100 you spend on a trip to the EU, you pay an extra €2.79-€2.99 (approx £2.39-£2.56, as at 02/12/22). That’s soon going to add up when you’re away!

If you make a purchase with your debit or credit card, you’re often given the choice to pay in the local currency or in pounds sterling. Since we use the pound every day, having costs expressed in pounds is more relatable as we know what the equivalent cost would be at home. However, paying in pounds overseas can be more costly as the currency conversion takes place at the moment you swipe or tap your card, using Dynamic Currency Conversion (DCC). If you want to avoid any hidden fees, you can obtain a travel money card and use as a local currency card in any country, if you’re an avid traveller.

Top Tips to Save Money on Holiday

With all the doom and gloom of the past couple of years from Covid-19 and the cost of living crisis on top, we all need something to look forward to. A holiday abroad could be just the ticket. So, we’ve got a few hints and tips to help you stay on budget.

Before You Go

  1. Pre-book an Airport Lounge: Rather than pay airport prices for food and drink while you wait for your gate, check into an airport lounge. Not only could you save money, you’ll also have somewhere to wait in comfort.
  2. Get Your Reading Material in Advance: We’ve all tried to kill some time at the airport by buying a book or two to read on the plane. One way to save some cash is to borrow some books from your library or pick up a couple at charity shops or second hand bookstores before you leave.
  3. Pre-book Your Parking: Often, the earlier you book your parking (particularly at the airport!), the cheaper it will be.

During Your Trip

  1. Use Public Transport: Not only is it greener, but it’s often cheaper than renting a car and in some places, like Luxembourg, public transport can even be free!
  2. Don’t Rent Your Car from the Airport: If you absolutely must use a car, you may be able to avoid airport surcharges by first taking public transport into the city and then picking up your rental.
  3. Be Savvy to Your Debit / Credit Card Fees: Make sure you understand your fees before you go. Better yet, use a debit card designed for travel, like HSBC’s Global Money Account debit card, which has no fees for making a payment or withdrawing cash abroad.
  4. Always Pay in the Local Currency: The exchange rate is fixed by Visa or Mastercard at the time you make the payment, rather than by DCC, which applies when you pay in pounds sterling and can carry an extra conversion fee.
  5. Only Withdraw the Cash You Need: Since fees are charged as a percentage of the amount withdrawn, the more you withdraw, the more you’ll be charged. Additionally, if you end up with excess foreign currency, you’ll have to exchange it when you get home and may be impacted by poorer rates and yet more fees.
  6. Get Familiar with Tipping Customs: It’s worth knowing the culture around tipping at your destination, so that you don’t inadvertently tip more than you need to.

Bon Voyage!

When all’s said and done, 2022 has been a little bit dismal at times and many of us have had to look at our spending in light of the cost of living crisis. Even so, we all need a little joy in our lives and many of us are choosing to keep our annual holiday in the sun, albeit on a pared down basis. Staying savvy to hidden holiday costs and following our tips means you can enjoy a memorable holiday, even on a budget!

Footnotes

1. Based on research conducted by Censuswide on behalf of HSBC UK, between 2-6 September 2022. The survey was conducted online, with a sample size of 2014 UK adults.

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