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21.12.2006

Holiday Euro Winter 2006:
Higher competitiveness of Austrian holidays reduces value of holiday euro abroad in last five years

  • But stronger euro makes long-haul holidays cheaper than last year
  • European destinations losing ground on Austria because of higher price hikes

The 'holiday euro' of Austrians this year will be worth roughly the same as compared with December 2005. "Price cuts at long-haul destinations are contrasted with higher price hikes in Europe", according to Stefan Bruckbauer at Bank Austria Creditanstalt (BA-CA). The USA and Asia in particular have become cheaper as holiday countries in comparison to the previous year, which is primarily attributable to the strong euro. "In the USA and in Asia the euro is today worth around 10 percent more on average than one year ago", said Bruckbauer.

Overall, the average value of the holiday euro in winter 2006 is EUR 121, i.e. 21 percent higher than in Austria.

Nevertheless, the strong euro of recent months has not been able to assert itself in the most popular holiday destinations for Austrians. High inflation in Italy, Croatia and Greece is leaving its mark, while there has also been a slight currency appreciation in Croatia. However, in Switzerland, a significant country in terms of winter sports, the holiday euro goes slightly further this year. "The depreciation means that the holiday euro in Switzerland is worth tangibly more than last year, yet still less than in Austria", explained Stefan Bruckbauer.

As was the case in 2005, tourists will still find their holiday euro goes furthest in Turkey. With 163 euros Turkey is still considerably ahead of Croatia (137) and Hungary (137). "The holiday euro is again worth more in Turkey than last year. This is due to the fact that prices are rising more slowly than the currency is depreciating", said Bruckbauer. In the neighbouring countries of Eastern Europe the value of the holiday euro remains higher than in Austria, although the difference did narrow again in the course of 2006. This was due in part to appreciations (for example in the Czech Republic) but also to higher price hikes (Hungary and Slovenia).

Germany lost some ground in price competitiveness vis-à-vis Austria with the Austrians gaining again, which can be traced back to the higher rate of inflation in Germany. The increase in the rate of value added tax will lead to a substantial loss in value for the holiday euro in Germany in 2007.

Looking at the development of the holiday euro over a longer period it transpires that holidays in Austria have gradually become more competitive while the holiday euro abroad has steadily lost value. Since the holiday euro is a benchmark for varying price levels in Austria and abroad, the fall of around 10 percent in the holiday euro since 2001 can chiefly be attributed to the increase in value of the holiday euro in Austria. "The price advantage of holidaying abroad has shrunk by almost 10 percent over the last five years because of the increased competitiveness of Austria", explained Stefan Bruckbauer.

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.

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Enquiries: Bank Austria Creditanstalt Economics & Market Analysis
Stefan Bruckbauer, Tel: +43 (0)5 05 05 51951
E-mail: stefan.bruckbauer@ba-ca.com