The pound sterling is having a rough time of it. Amidst the political turmoil the UK is currently contending with, it hit its lowest level in 34 years the beginning of September – falling below the $1.20 mark against the dollar. Aside from the anomalous, mysterious ‘flash crash’ in October 2016, it’s a three-year decade low which will undoubtedly have an impact on businesses and consumer spending alike. There have been subsequent peaks and troughs in improved rates, but nothing to write home about that much improves on the situation.
Hard hit are British holidaymakers; whether heading to the US or to the Eurozone, the cost of a hotel, meal, souvenir or aperitif on a trip abroad will likely look comparatively expensive to what they were perhaps used to. It’s also having a bigger impact on where Brits go on holiday. Before Thomas Cook’s sad demise, they recently commissioned an interesting piece of research that found nearly half of all holidays booked so far this year by British holidaymakers are to destinations that don’t have the Euro currency.
It’s not just holidaymakers who are affected – a study by Homelike found that a third of UK business travellers are travelling less due to weak pound. It’s disappointing news – as their CEO rightly highlighted “the hugely positive impact that business travellers have on local economies around the world”.
The travel industry needs to make sure that their customers – be they a holidaymaker or a business traveller – are aware of the state of sterling against the local currency of the destination they are travelling to. The fluctuating pound could cause even the most careful spender to go over budget. Whilst it might not be in the holiday spirit, taking extra care to track spending when visiting another country have never been more important.
Another consideration for holidaymakers are the payment options available to them when making purchases abroad. In the case of card payments, holidaymakers can opt to pay in their home currency. This method calculates the exchange rate at the point of purchase, includes all fees, and critically means that what the cardholder sees at point of purchase is what appears on their bank statement – all in a currency they are familiar with. This can be invaluable in terms of spend-tracking when travelling. The alternative option is to complete the payment in the local currency; however, in this case the additional fees from the card issuer and bank remain unknown – as is the exchange rate. These factors will only come to light when they appear on the bank statement a few days later. This makes it more challenging to determine precisely what the final purchase amount might be.
A recent YouGov poll of a representative sample of UK consumers revealed over three quarters (78%) of consumers like the familiarity and 79% like the convenience of paying in pounds.
British holiday makers and business travellers alike should not be discouraged from plans to venture abroad. But as the pound continues to struggle, a vacation or business trip in another country requires preparation. Brands in the travel sector can stand out over and above competitors by offering advice to customers on how to make the most of their pounds and pennies away from the UK and the choices available to them when making a payment abroad.