All-inclusives: a familiar story. When the economics of holidays get tough, demand for them rises. | R.I.


Leading UK tour operators reported today that, due to the sharp fall in the strength of the pound against the euro following the Brexit vote, there has been a marked increase in the number of consumers wanting all-inclusive holidays.

Despite claims by the Balearic government that the all-inclusive market has levelled out and that it is about to begin regulating the sector, businesses in resorts disagree. Some bar owners, in particular in Magalluf, are claiming that this is one of the worst summers for years, with everyone coming either on all-inclusive packages or taking up the offer on arrival.

Figures released this week indicate that hotels in all of the main resorts are, on average, 95 per cent full, but a large majority of those are all-inclusive complexes which do little for the local resort economies.

And what little availability is left in all-inclusives is going to be snapped up by UK holidaymakers who have watched the pound lose 15 per cent of its value against the euro since the referendum: further depreciation in sterling’s value is not being ruled out.

UK tourist industry sources have said that UK consumers are adjusting their summer holiday plans, with 3 per cent even opting to cancel in the wake of the Brexit vote. This is according to travel deals publisher Travelzoo, which is warning of higher costs ahead in the price of holidays.

It carried out a survey on holiday attitudes in the week after the referendum result. At that time, the pound had sunk in value against the euro and was at its weakest against the dollar since 1985 - down by 11 per cent - following a rush for holiday money as people looked to make their cash go as far as possible abroad. Sterling hit new 31-year lows against the US currency early on Wednesday.

Travelzoo said the plunge in the value of the pound was the core reason for the three per cent cancelling trips - a number it described as "minimal". As an aside, nine per cent of all respondents have admitted concerns about being treated negatively abroad in light of the EU vote.

Travel firms agreed interest in all-inclusive breaks had spiked for destinations worldwide - not just in Europe. Travelzoo said 26% of the people it questioned were now actively considering all-inclusive options. The US is remaining popular, despite the currency issue, because of the lack of availability in Spain and the Balearics.

It highlighted concerns in the industry for the future - with the risk that foreign destination contracts for next year will cost operators more to buy - with those additional costs being passed on to UK consumers in the form of higher prices.

Holiday firms have the power to raise surcharges on breaks by up to 10 per cent to cover higher costs, but it is understood few have imposed such a move yet or intend to in the short term.

A Thomson and First Choice source said: "We have not seen any signs of consumers putting off booking their holidays and our summer and winter holiday programmes continue to sell well. People still want to get away from it all and spend time with their families as normal, to recharge their batteries and get some sun and adventure. And as more than half of our holidays sold in the UK are all-inclusive, these customers don’t have to worry about currency impact on in-resort spend."

So, despite the Balearic government’s forecast, Brexit will have an effect on the tourist industry this summer.