When it pays to travel

War in Europe, the collapse of the Asian markets, the continuing strength of the pound - smart travellers know that global events can result in holiday bargains. By Teresa Hunter

Most people think of their annual summer holiday as an investment and so choose their destination with care, but if we study exchange rates there are some real bargains to be found by choosing places where the local currency is weak against the pound. The Cornish Tourist Board claimed this week that the hype surrounding the eclipse had been so exaggerated that bookings are actually down. Has no one told it about the black market in full swing in the county, where clandestine trades in eclipse-week lettings change hands for several thousands of pounds? Travelling almost anywhere in the world will be cheaper than holidaying at home.

The cost of a holiday to Turkey has collapsed because of recent political unrest and a chronically weak currency, while bookings to Greece have been badly hit by the Kosovo crisis. In the Far East, Thailand, Bali and Singapore are begging for a visit following last year's currency freefalls.

Closer to home, France is looking more attractive to the UK traveller than it has in recent years, because the franc has been dragged down by the general malaise of the Euro. And although the pound has slipped against the US dollar to around $1.57, compared with $1.67 last year, the lower cost of living in the US still leaves a trip across the Atlantic affordable. Fred Tiller, a senior foreign-exchange dealer at Thomas Cook, says: "The US offers good value to British travellers; when it comes to spending your money, things are cheaper. You can practically compare dollars with pounds."

When looking for a holiday which offers value for money, you need to study prices as well as exchange-rate movements in the countries you would like to visit because inflation caused by local events, or by falling exchange rates, can wipe out currency gains. But Tiller believes that some Far Eastern destinations are still ridiculously cheap, despite rampant inflation. He advises travelling now to Bali and Thailand before their currencies strengthen and prices soar.

The Thai baht has already begun its bounce back, rising by 18.8 per cent against the pound over the past few months, whereas in February it had fallen 67 per cent compared with the previous year. Tiller says: "In some of these countries we have seen currencies devalued by more than 25 per cent against the pound and that puts a great deal of buying power into your hands. Of course there's also been rampant inflation, but Thailand and Bali are still cheap and this may well be your last chance to buy at these prices."

Greece tops the best buy list for American Express's Christine Ball, who predicts that a collapse in confidence will lead to heavy discounting which has already begun. "Although the Greek Islands are some distance from the Kosovan troubles, holiday bookings have slumped," she says. "Some tour companies have already begun discounting packages, and I would expect others to follow shortly. Greece is always cheap, but cheaper still after the devaluation of over a year ago. Your pounds will go a long way."

The Kosovan troubles have also depressed the major Euro-based currencies by about 7 per cent compared with sterling, because of their proximity and investment exposure to Eastern Europe. This has left Portugal and France looking particularly cheap. A three-course tourist meal for two with wine will cost about pounds 15, as cheap as Turkey and Florida.

However, demand for rooms in both Spain and Portugal from holidaymakers avoiding Turkey and Greece is expected to hold prices up. There are unlikely to be many if any left-over bargains at the end of the season.

Italy remains a favourite destination, whose popularity even the current conflict is unable to puncture. Despite its proximity to the war in former Yugoslavia, both bookings and prices in Italy are firm. "There are no signs that Italy is dampening down. It is an expensive location, but it offers a kind of holiday which is not readily available elsewhere," says Ball.

Further afield, South Africa also looks attractive, even though, at 9.6 to the pound, the rand has rallied slightly against its five-year low last August of 10.3. However, it is still more than 40 per cent weaker against the pound than two years ago and a whopping 85 per cent lower than in January 1996.

Elections are looming in early June, but despite the political uncertainty, a steady stream of tourists continue to enter the country on fly/drive holiday package tours. (Only 5,000 rand, the equivalent of a little over pounds 500 can be taken into the country.)

However, this is probably not the best of years to visit Australia. The pound is down slightly, wine is expensive and with Sydney getting ready for the Olympics, there's a lot of building work going on.