Study reveals top 10 cheapest tourist destinations as holiday spending costs shrink

A study found that prices for people exchanging pounds for local currency had fallen at more than half (52%) of 44 worldwide destinations surveyed.

Portugal’s Algarve was found to be the cheapest location for holidaymakers, while Cape Town in South Africa had the lowest prices for long-haul travellers.

The strength of sterling and increasing competition were believed to be key factors in the trend.

Research commissioned by Post Office Travel Money calculated the cost of eight typical tourist purchases at each location.

They were: a cup of coffee, a bottle of local beer, a can of Coca-Cola, a glass of wine, a bottle of mineral water, suncream, a packet of cigarettes and a three-course evening meal for two.

The total bill in the Algarve was found to be the equivalent of £29.32, down 18% on last year. A glass of wine was £1.14 while a meal would set couples back £16.77.

The Bulgarian resort of Sunny Beach came in second place, with the same eight goods costing £29.49.

Prices in Spain’s Costa del Sol had risen to £35.61. This put the destination in fourth place and widened the gap between it and the top two from £1 last year to over £6.

Cape Town was one of only two long-haul locations to make the top 10.

The weakness of the rand compared to sterling in recent months meant UK holidaymakers paid £34.55 for tourist essentials in the city.

This was 20% down from 2015, meaning the port city was number three on the list.

But there was no such good news for transatlantic travellers as the dominant dollar had had a negative effect on the prices tourists would pay in the US.

Orlando (£68.54) had emerged as the best value, although prices there were up almost 9% on last year.

Boston was the least expensive of the four US city break destinations surveyed, at £79.88.

Andrew Brown of Post Office Travel Money said: “If sterling continues to hold its value, UK holidaymakers will have plenty of choice in the coming year.

“In Europe the best deals are likely to be in Portugal and Bulgaria, where increased competition to attract tourists has resulted in lower prices for tourist staples.

“Once the exchange rate is factored in, tourists should see their spending costs shrink.

“For those travelling further afield, Cape Town, Bali and Tokyo look good bets for the bargain hunter.”

Post Office currency sales data indicated that exchange rates were influencing holiday bookings.

Currencies used at six destinations – Australia, Vietnam, Japan, Peru, South Arica and Budapest – had all lost ground against sterling and grown in popularity for UK travellers over the past year.

Mr Brown commented: “The evidence suggests that holidaymakers have been doing their homework before booking and checked to see where their pounds would stretch further.

“Aspirational destinations like Australia, Peru and Japan have become more affordable and are among the most obvious beneficiaries of this.”

Here are the top 10 cheapest destinations for UK tourists, according to Post Office Travel Money:

1. Algarve, Portugal (£29.32)
2. Sunny Beach, Bulgaria (£29.49)
3. Cape Town, South Africa (£34.55)
4. Costa del Sol, Spain (£35.61)
5. Marmaris, Turkey (£38.83)
6. Budapest, Hungary (£39.40)
7. Prague, Czech Republic (£40.19)
8. Bali, Indonesia (£40.35)
9. Paphos, Cyprus (£41.58)
10. Corfu, Greece (£43.42)