Times are tight – but there’s always cash for a holiday

Credit crunch, economic slowdown, whatever we dislike to call it, the current gloomy financial climate has not seemed to dampen British spirits as much as predicted – at least when it comes to booking our holidays.

In the past three penny-pinching months, travel is the only consumer services sector to report growth in business volume (according to a report from the Confederation of Business Industry Survey in May), revealing that holidays are valued higher than other luxury commodities even when our disposable income is under pressure.

This was backed up by a recent study from self-catering holidaylettings.co.uk (a website providing information on at least 24,000 properties in about 110 countries). It said that 75 per cent of its polled holidaymakers regarded holidays away from home as "essential".

The company also said that it has seen no tapering off of bookings in the past quarter and is, in fact, currently recording record traffic of inquiries to its website (1.5 million per month). Forget cancelling holidays: the company said that 45 per cent of its customers are simply considering destinations where currencies are more competitive against the pound and a further 34 per cent said they planned to holiday outside the eurozone to beat the crrency exchange and the rising costs of transport and living in the UK.

The study also highlighted another trend; that 25 per cent of those surveyed were taking a few long holidays rather than lots of short breaks, thus avoiding rising costs of travel, particularly air travel. It seems that families value their foreign breaks but want to avoid the repeated cost of getting there. Current data from kayak.co.uk suggests this trend for seeking deals, rather than cancelling holidays, is a key tactic employed by holiday loving Britons. It revealed that 66 per cent of people will make more of a conscious effort to search for a holiday "deal" this year and 60 per cent said that deal would mean opting for self-catering.

Self-catering is a burgeoning area of the holiday accommodation market. Mintel figures show that 22 million trips taken in 2006 were self-catering, compared with 14.9 million package holidays. It predicts that self-catering breaks will reach 34 million a year by 2011, with those in private homes likely to dominate.

It used to be that you had to scan piles of travel brochures or, more commonly, advertisements in the back of local newspapers or shop windows to find private self-catering properties to rent. Now advertising websites including holidaylettings.co.uk, holiday-rentals.co.uk and ownerssyndicate.com make millions of private properties available for browsing at the click of a mouse.

Self-catering almost always significantly reduces costs for travellers, but just how much? According to the Holidaylettings survey, average hotel accommodation costs per week are double those of a self-catering property, although self-caterers spent more than double on groceries and eating out than hotel guests.

This, however, was where travellers felt that they were getting a richer experience and, in many ways, better value for money. Travellers believe self-catering offers more choice and flexibility and the knowledge that they are contributing more to the local economy than they would on a package holiday.

Another positive side of the credit crunch for holidaymakers is that more rental properties are coming on the market than ever before, as people who have invested in a second home or a buy-to-let property are having to make their assets work harder for them. And the more properties that come on to the market, the more competitiveness for the self-catering holidaymakers.

A recent report from the World Tourism Organisation showed that we in the UK put a high value on our travels, rating Britons as the third biggest spenders on tourism (behind the Germans and Americans). A trend report from expedia.co. uk earlier this year showed that people are still spending big on holidays. Half of those polled were said to "fly cheap, sleep expensive", using low-cost airlines to save money that could go towards a more expensive hotel. According to the report, Britons are more likely to splurge on an expensive hotel than the French or Italians, and that the way their hotel is furnished and its services and facilities are more important than the price.

Yet price does play a part when people decide where to stay. This year's Hotels.com price index report showed that people prefer to holiday abroad, not least because foreign hotel prices almost always compare well with hotel rates in the UK.

Overall, it said, hotel rates globally fell by 0.4 per cent, but while prices in the US and the rest of the world fell, Europe and Asia experienced increases, with London home to the second biggest price rise (15 per cent) of the major European cities, after Oslo. The UK posted a year-on-year price rise of 12 per cent to an average hotel price of £106 per night, making it the most expensive country in Europe for hotels.

So if British hotels are out, where are the 33 per cent of Britons who are staying on home soil for their holidays (according to a survey published by Norwich Union last week) planning to take their break?

Rather depressingly it seems that these stay-at-home Britons might be bound for B&Q. Another study by Legal and General revealed that of the 4,400 people it surveyed, 39 per cent planned to just spend the time at home and 29 per cent said that this time would be spent on DIY and home improvements.

However, the Norwich Union report also revealed that half of the 1,000 people it surveyed planned to forgo travel insurance to save money and almost two-thirds of those questioned said they hoped to dip into their savings to pay for their holiday, rather than using a credit card. It seems even when times are tough, we think holidays are worth paying for.

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