Florida fans
hit by crash of sterling
This summer, the biggest headache for families heading for Florida was squeezing the best value package from the leading travel operators.
As the pound sinks against the dollar, the big worry could soon be finding enough spare cash for the Sunshine State. Turmoil on currency markets could turn trips in dollar territory – currencies in South America, the Caribbean and Africa are also dollar linked – into complex financial calculations.
Suddenly, both the yen and the dollar are in demand, with the wheezy sterling among the also-rans.
If fears about our debt mountain persist, our foreign travel plans, and other areas of household spending, might need a rethink.
This summer, two adults and two children got 14-day Disney Ultimate Tickets to Orlando’s big four theme parks – Magic Kingdom, Epcot, Hollywood Studios and Animal Kingdom – and several smaller ones for around £630.
At Attraction Tickets Direct (ATD), managing director Oliver Brendon says the current price is £786, largely because he hedged enough currency to hold a conversion rate of $1.75 to the pound against a current New York tourist rate of around $1.50.
ATD customers can pay a ten per cent deposit to guarantee the current ticket price for summer 2009, or less if the price falls.
“In two months, the pound has lost 27 per cent against the dollar, hitting the spending power of Brits in Florida,” Brendon says.
The good news for holidaymakers is that cash strapped operators are cutting prices to early bookers for summer 2009. Thomson’s Al Fresco camping division, for instance, offers seven nights for a family of four on Spain’s Costa Dorada next April from £249, including the Channel ferries, saving £280 on the 2008 brochure price.
Some of the 800,000 Britons with holiday homes abroad might do even better from the mayhem.
At currency specialist FC Exchange, managing director Nick Fullerton says: “A Eurozone home sold at €200,000 would give its British owner in the region of £157,500 – about £22,000 up on the value of a year ago.
“With the euro strong and sterling taking a battering, and no improvement likely in the foreseeable future, investors may be better off taking advantage of currency rates, selling a Eurozone home to bring money back to the UK.”
Don’t do anything as drastic as that though, says Stuart Law, chief executive of property investment company Assetz. He says savvy homeowners in France and possibly Spain and Portugal too, if they own plenty of equity in their home – can raise loans on homes abroad to settle debts in Britain, with euro mortgage rates below those in Britain.
“In France, until the last couple of years, there hasn’t been much scope to raise money against property, and many British owners paid cash some years ago,” Law says.
“At €1.24 to the pound, it may be efficient to use a euro-mortgage in France – typically a repayment loan over 10-15 years – to raise funds against the credit crunch in the UK.
