Your holiday pound

During 2008 we saw a reversal in fortunes for the British pound.

For the first half of last year, the pound soared against the US dollar and for a time £1 could buy $2. When looking at prices during our spring road trip around Dixie, we halved everything to determine the cost in pounds.

What a difference a recession makes. All the world is feeling the pinch, but a dive in UK interest rates and the belief we will be one of hardest hit G8 economies resulted in the pound plummeting 26% against the dollar in the year since January 2008. Over the counter at a bureau de change, your £1 buys about $1.38 in cash.

The pound now buys 8% less in Australian dollars than a year ago - 24% fewer Thai bhats - and 40% fewer Japanese yen.

"Quite the suntrap. Emphasis on TRAP, though."

Most symbolically, the pound is at its weakest ever against the euro. For many years after the introduction of the euro, British tourists were used to every 3 euros amounting to 2 pounds: "That €9 meal cost me £6." These days the euro and pound are worth nearly the same. Go to the bureau de change for your holiday cash now and £1 will buy 99 euro cents.

Where else will your pound not stretch as far? Egypt has been an increasingly popular choice for a cheap 'fun in the sun' holiday, but over the past year the Egyptian currency has risen 25% against the British pound.

And what about Turkey, where not so long ago there were 2.3 million lira to the pound? The problem here is that tour operators have spotted the demand and are gouging tourists. Of the package holidays seeing high price hikes, the trips to Turkey are the ones seeing the biggest spikes (22-40% in some instances compared to last year).

And this despite the exchange rate today remaining close to the same level it was last year. Shameful.

"Easy access to local transport links."

But if you are only going to think in relative terms when booking your holiday, you won't go anywhere! Even though your pound may not stretch as far in some places, it's worth remembering that many of these destinations were very cheap to begin with. Despite the price hikes in Turkish package holidays, they remain competitive against other Mediterranean holidays.

By comparison, it will almost always be more expensive to holiday in the UK. Britain has some of the world's most expensive petrol, duty is high on alcoholic drinks and the price we are expected to pay for hotel rooms and train tickets verges on the scandalous. Never mind that summer sunshine is at a premium as well.

In addition, travel operators are predicting cheaper airfares in 2009 as the competition heats up for your travel money and the cost of fuel dips in line with the oil price.

"So much for the sea view. Or any view, for that matter."

Finally, there are other cheap locales out there. Value remains in Eastern Europe (Croatia and Bulgaria for instance) and both Norway and Iceland have gone from being 'very expensive' to only 'fairly expensive'. Not all the eurozone countries are uniformly expensive either, as travellers to Greece will confirm. Further afield and places like Mexico, Brazil, South Africa and Dubai are being recommended by the travel experts.

The best thing to do is put currency issues aside and do all you can to save money booking the holiday itself. This means booking independently, not through a travel agent, and using the internet to whittle down your costs and discover the best holiday for you. Stay tuned for updates over the next few weeks!