Holiday Euro Summer 2006:
Weaker Currencies Raise the Value of the "Holiday Euro"
- Turkey has once again become cheaper for Austrians
- However, in highly popular destinations like Spain, Croatia and Germany, holidaymakers' money is worth slightly less this year than it was last summer
This year the Austrians' holiday euro will be worth slightly more compared to summer 2005 – although on average by only 1%. "Strong devaluation in a number of countries neutralises the effect of rising prices abroad", says Stefan Bruckbauer from Bank Austria Creditanstalt (BA-CA). "However, this is only an average value. In the most popular holiday destinations for Austrians, the holiday euro is in fact worth slightly less in summer 2006 than it was a year ago."
Overall, the average value of the holiday euro in summer 2006 is EUR 124, i.e. 24% higher than in Austria. It is thus 1% higher than in the previous year, when the figure was 122.
Despite the rise in the value of the holiday euro, Austrian holidaymakers abroad can expect to get slightly less than in 2005 for their money (always calculated in relation to Austria) in the five most popular holiday destinations. According to Bruckbauer, "the reason is that inflation rates are higher in the Austrians' favourite destinations than they are at home. This is true of Italy, Croatia, Greece and Germany." Even in those countries which have the euro or which orient themselves to the euro, the higher rate of inflation leads to a slightly weaker holiday euro. However, the difference to the previous year is slight.
As was the case in 2005 tourists will still find their holiday euro goes furthest in Turkey. With 178 euros Turkey is still considerably ahead of Hungary (147) and Croatia (140). "This year the holiday euro is worth considerably more in Turkey. This is due to the generally lower level of prices and a devaluation of the Turkish lira well in excess of inflation," says Bruckbauer. Specifically, the Turkish lira has been devalued by 22% since last summer, while inflation is "only" some 10%. Beside Turkey, Hungary and Croatia, travellers will get more for their holiday euro than at home in the Czech Republic and Slovenia, although only approximately 30% more. In Greece, the USA and Spain the holiday euro goes 10% further than in Austria. In Germany, the fourth most popular destination for foreign travel, the holiday euro is worth roughly the same as in Austria. Fewer goods can be purchased for the holiday euro in Italy and the United Kingdom, considerably fewer in Switzerland.
The almost 10% higher value of Austrian money compared to 2005 in Hungary and Japan is attributable to currency depreciations well above the rate of inflation. Travellers to the Czech Republic will get distinctly less for their holiday euro this year than in 2005 partly due to a slightly higher rate of inflation, but mainly because of the significant revaluation of the crown by approximately 6%.
The BA-CA economists point out that these are average figures. Individual regions, such as London or Paris can differ considerably. The price level also refers only to the average for goods and services in the individual countries. Furthermore, the fact that the price level in a number of holiday destinations is much more favourable is mainly due to higher incomes in Austria.
If the level of prices in Austria were lower, the income level would also be lower, and in many cases we would not even be able to afford holidays.
Enquiries: Bank Austria Creditanstalt Economic Research
Stefan Bruckbauer, Tel. 05 05 05 Ext. 41951