Cut the cost of your holiday

Published by Nathalie Bonney on 01 June 2009.
Last updated on 23 August 2011

Beach towel

Despite times being tough, the last thing we Brits want to sacrifice is our annual holiday, according to a survey by Thomson Holidays. Indeed, so it should be: that precious week or two away from work can be a vital way of recharging your batteries.

And it doesn’t mean you have to spend the rest of the year with a financial hangover, either. By knowing how to take advantage of the best deals on the market and avoid the most common pitfalls you can enjoy your holiday without having to spend a fortune.

So to help you along the way, here is our guide on how to become a canny holiday-shopper.

Where to go

The destination you choose can make or break your budget; the distance you need to travel, the exchange rate and the amount of money you have to spend once you’re there will all influence how your final bill tots up.

As all these things are time-sensitive, a destination that might have been cheap five years ago could now be rather expensive. For example, a couple of years ago, a camping holiday in France would have been considered a budget option, but today’s poor exchange rate means that heading somewhere a little further away could be the cheaper option.

“The non-eurozone countries, such as Turkey, Egypt, Morocco, Bulgaria and Tunisia, and those further afield, like Canada, the Far East and South Africa, are all booking well,” says Bob Atkinson, a travel expert from “They’re perceived to be good value once you get there, compared with the euro destinations, which are far more expensive on arrival.”

The Post Office’s Worldwide Holiday Costs barometer compares the cost of eight common tourist items, such as a cup of coffee and insect repellent, across 27 countries. Hungary and the Czech Republic are the two cheapest countries, making Budapest and Prague great for city breaks.

Turkey, Bulgaria and Croatia all make the top 10 too and are ideal non–euro beach getaways. Meanwhile, South Africa, Thailand, Malaysia and Kenya are among the top 10 long-haul hot spots.

But while the barometer is useful, it doesn’t provide the definitive answer for everything. For example, it quotes the price of a three-course meal with a bottle of wine at a ‘local’ restaurant in Kenya as £40.47. However, this kind of price applies to restaurants in tourist areas rather than a typical local restaurant, where you could eat out for considerably less.

As well as these destinations, Tom Hall, editor for travel publisher Lonely Planet, recommends other countries that aren’t necessarily ‘hot’ on the Post Office’s barometer: “Namibia is excellent value too, and Argentina has been a cheap destination for a while – it will probably cost you about £600 on a flight, but once there, the cost of living is low.”

Although the poor exchange rate might dissuade you from venturing to the US, Atkinson says: “The volume of domestic travel in the US is so low at the moment that their tourism industry is suffering, so there are some good deals and low rates on offer. 
Plus, the US is ‘Coupon Country’ at the moment, with loads of 2-4-1 deals on meals and attractions.”

When to go

Being flexible about dates and times will give you more choice and more chance of getting a good deal.

Avoiding peak season, which falls during the school holidays, is the most obvious way to shave some of the cost off. “Try and go off-peak – if you can squeeze in on one side of the school holidays it will make a big difference,” advises Hall.

However, if you are set on a cheap family holiday, make sure you approach your children’s head teacher first to see what the school’s policy is on taking children on holiday during term time.

Your child’s age and the number of days you propose to take off will affect their answer. But if they have a ‘no tolerance’ policy, try and book in the last two weeks of August, which tend to be cheaper than the first fortnight of the month.

Also, follow the rule of ‘early out, late back’, and make sure your departure date falls between Monday and Thursday.

The good news is that because the tourism industry is fighting a sales slump, there are more knock-down prices available even during the most popular times.

Nikki Davies, marketing manager at travel agencyTrailfinders, says: “We’re seeing a lot of destinations release low-season prices at peak-season travel times, and we also have plenty of offers for high-demand destinations, such as New York or Dubai, that have never had to discount in the past.”

When to book

As a rule, it’s cheaper to book scheduled flights as far in advance as possible, whereas chartered flights only get cheaper at the last minute, when operators try to flog spare seats. So, should you plump for a package deal or do all the groundwork yourself?

“Earlier in the year, package holidays are the best for deals,” says Atkinson. “But as the year goes on, and other companies struggle to shift stock, it’s important to check DIY prices as well. However, remember that package holidays are Air Travel Organisers’ Licencing (ATOL)-protected (meaning that you’re covered should your airline go bust), but with DIY holidays you’re not.”

But package holidays, and all-inclusive holidays in particular, won’t appeal to everyone. Although all-inclusive is a great budgeting device, with your holiday expenses accounted for before you’ve even decided what film to watch on the plane, sticking within the resort’s confines won’t give you the most authentic taste of the country you’re staying in.

If you decide to book your own flights instead, try to keep costs down by keeping an eye on the extras. Holidaymakers often forget that meals on the plane may not be included in the ticket price, and overlook the costs of travel to the airport. Bringing your own food or getting a taxi if there’s a group of you will often be cheaper.

Also, watch out for the variation in prices for checking in and baggage – Ryanair, for example, charges £20 for checking in at the airport, whereas if you do it online it’s free. Checking in one bag online will cost you £30 compared to £40 at the airport; two bags will cost you £70 and £80, respectively.

Where to stay

Youth hostels are an increasingly popular option with older people and families these days because they offer convenient locations for city, countryside and beach breaks, and are such good value for money.

While some youth hostels are keen to push the ‘youth’ element of their accommodation, with bars and late curfews, many hostels are increasingly marketing themselves as family-friendly places with private en-suite rooms, offering the security and privacy that older people and families generally prefer. Check on the hostels’ individual websites or through sites such as for age restrictions.

“Keep costs down by looking for ones that have a kitchen and include breakfast in the price,” recommends Colm Hanratty, spokesperson for 

Camping is another great budget option, and if you go to countries where consistent sunshine is a given, you won’t have to worry about the weather as much as you would sleeping under canvas in the UK.

Another way that you can keep accommodation costs low is to try house-swapping. Some websites, such as, charge membership fees (£16.95 for three months) while others, such as, are free and you just need to register.

The majority of people who participate in a house-swap 
holiday find they are happy with their choice, but you need to know what you want before you come to an agreement. “You have to be very clear about what you expect and what you want from the exchange,” warns Hall.

With the recession affecting the hotel industry, you could also snap up a few good hotel bargains. “Hotels are suffering at the moment, and the upside of this is that there are some great deals around,” says Atkinson.

From extra free nights to complimentary room upgrades, ‘special’ offers are increasingly becoming everyday offers. To get the most competitive prices, however, it’s still best to look at travelling outside of the peak August season.

Travel insurance

While there are plenty of ways to cut the cost of your holiday, 
cutting out travel insurance shouldn’t be one of them; you don’t want to end up with your holiday turning into a financial nightmare if things go wrong.

However, travel insurance doesn’t have to cost a fortune. To find the best deal for you have a look at a couple of comparison websites such as and, or go straight to one of the bigger travel insurance companies’ websites.

But when looking for a ‘cheap-as-chips’ policy, be aware of the following guidelines so you can measure how much – or how little – your policy covers you for. The basic level of recommended cover in any travel insurance policy is 
£2 million for medical expenses; £1 million personal liability; 
£3,000 cancellation; £1,500 baggage and £250 cash.

Of course, if you know your holiday costs less than £3,000, you don’t need this level of cover on your insurance – if you’re taking a backpack with a few t-shirts and a pair of flip-flops, you will obviously need considerably less cover than if you’re packing your laptop and BlackBerry.

“Medical cover is the most important thing to look out for as repatriation and hospital costs are incredibly expensive,” says Kelly Ostler–Coyle, spokesperson at the Association of British Insurers. For example, an air ambulance from the Canary Islands would cost between £12,000 and £16,000, going up to between £35,000 and £40,000 from the US – and that’s not even including medical bills.

If you’re planning to go away a couple of times this summer one of the easiest ways to save money is to opt for an annual policy instead of individual ones. For example, multi-trip worldwide cover with costs £41 for its ‘bronze’ or most basic policy, compared with £29.20 for a one-week trip with the same level of cover.

If you’re travelling in Europe, you should carry a European Health Insurance Card (EHIC) as well. This will entitle you to receive either free or reduced cost on any medical treatment when visiting any European Union country, Iceland, Liechenstein, Norway or Switzerland.

However, bear in mind that this is not a substitute for travel insurance. “The EHIC card will pay for your treatment, but if you break your leg trekking and need to be flown back home, it won’t cover these costs,” explains Atkinson.

Travel Money

If you get your holiday money at the airport you’ll get a poor exchange rate, and the same goes for changing money at a resort, as you’re in a captive market.

“My advice is to use the internet to find the best current deal,” says Atkinson. You can order currency online to be delivered to your home. 

Another option is to use your credit card while you’re abroad, but watch out for hidden charges. Santander recently relaunched its Zero credit card, which waives fees for overseas transactions. The Post Office’s card offers the same fee-free service. But these are the only cards on the market at the moment to do so.



Until recently, Thomas Cook and Nationwide didn’t charge overseas fees. However, Thomas Cook now charges a 2.99% foreign exchange fee, and Nationwide adds a 1% charge if you use its credit card outside Europe.

If you’re taking travellers’ cheques, cash them at a bank rather than your hotel to get a better rate. Although this is time-consuming, you’re at least guaranteed a refund if your cheques go missing or you don’t use them all. Remember to keep your receipts separate from your cheques, in case you need to get a refund.

Finally, don’t forget to tell your bank you are going abroad if you intend to use your card while you’re away – if it thinks your card has been stolen, the bank will block it.

What to do if 
your flight company goes bust

Your invoice from your tour operator should show whether your holiday is ATOL-protected. Alternatively, you can check whether your operator has an ATOL licence by looking on the Civil Aviation Authority website.

But remember that if you buy tickets through an airline and are then redirected to a separate website for accommodation this doesn’t count as a package holiday. In this case, you need to check with each company to find out what you are protected for.

Booking flights directly with an airline will leave you unprotected; this means if your airline went bust you wouldn’t get your money back and would have to make your own way home. However, if you booked those same flights through a travel agent you would get the ATOL stamp of approval.

Alternatively, if you paid for your flight by credit card, you could claim your money back, as you would be covered under section 75 of the Consumer Credit Act for purchases above £100 and up to £3,000.

You could also take out extra travel insurance that includes SAFI (Scheduled Airline Failure Insurance) if you’re really concerned about your flight company going bust.

If you want to claim money back from an airline that has gone into administration, contact the appointed administrator, or get the details direct from the airline or the Air Transport User’s Council website.

Avoiding holiday rip-offs

1. 0% commission

Nearly two-in-five travellers think that 0% commission or commission-free service means currency providers don’t charge for a service. In fact, they simply build their margin into the exchange rates, so you get a poorer rate.

The true cost to consumers ranges from between 3% and 5% at high street providers to between 7% and 12% at London airports, and up to 15% at some regional airports.

2. Dynamic currency conversion

If you are ever asked whether you would like to pay your credit card bill in sterling or the local currency, opt for the latter. If you choose to pay in pounds, the payment is converted from the local currency into sterling and the retailer or bank will add their own conversion fee, whereas if you pay in the local currency, the card provider will handle the conversion charges.

3. Airport parking

Even if it’s on the same day, booking online will still save you money. Drive-up prices at Heathrow’s long-stay car parks are £15.70 a day for one to four days, or £15.10 a day for over five days.

But if you pre-book on the airport’s website, it will cost you £30.90 for three days, compared with £47.10 on the day, saving you £16.20, or £98.10 for a fortnight’s holiday. Heathrow has a 24-hour advance limit on booking, but you can check availability on the day on

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