Buy high, spend low: overseas trips cheaper than ever

The strong Aussie dollar and falling fares make heading overseas cheaper than ever, writes Jane E. Fraser.

If your feet are feeling itchy, now is the time to scratch them. Not only are air fares incredibly cheap, the strong Australian dollar has reduced overseas holiday costs by up to a third. Many international tour operators have reduced their prices by between 10 and 20 per cent, with some cutting prices by as much as 30 per cent.

Independent travellers can also benefit from double-digit increases in buying power in many countries, thanks to the swing in exchange rates.

Add to this a plethora of hotel bargains and value-added offers such as free meals or sightseeing and you have the ingredients for the perfect time to take an overseas trip.

Figures produced by foreign currency specialist HiFX for show the Australian dollar has gained more than 20 percentage points against the US dollar over the past six months, with double-digit increases against the British pound, Singapore dollar, Japanese yen and Thai baht.

Given the Australian dollar has a habit of moving south quickly, these savings can disappear just as quickly.

It has also gained nearly 10 per cent against the euro, representing good savings on traditionally expensive European destinations.

Exchange-rate fluctuations do not have an automatic effect on tour prices, due to the different buying practices of operators. Some contract their arrangements up to a year in advance and some are better at currency hedging than others.

However, many operators have reduced their prices as the Australian dollar has strengthened.

Tours offered by Globus and Cosmos have been reduced by up to 22 per cent, representing a saving, for example, of up to $1456 a person on a 20-day tour of Alaska.

Globus Australasia's managing director, Stewart Williams, says price reductions will apply to every Globus and Cosmos tour next year, with an average saving of 15 per cent.

Contiki Holidays has reduced prices for its Europe tours by between 3 per cent and 30 per cent next year, with an average saving of 10 per cent.

Contiki's stablemate, Insight Vacations, has savings of up to 10 per cent on its fully escorted tours of Europe.

Travel Indochina has reduced prices on its small group range of trips by between 15 and 30 per cent and says about half these savings can be attributed to foreign-exchange savings.

Managing director Paul Hole says the strong dollar is also allowing the company to offer an extra 5 per cent discount for early bookings.

But he warns: “Given the Australian dollar has a habit of moving south quickly, these savings and incentives can disappear just as quickly.”

Travel Indochina is among operators offering a price guarantee once a deposit is paid on a trip. Travellers should take this into account when choosing and booking a trip for next year.

A few operators work on the exchange rate of the day, so savings (along with price increases) get passed on immediately.

Ski Japan Travel, for example, sells its ski packages on the rate of the day, so any currency-related savings on accommodation and ski-lift tickets are automatically passed on. Currency savings are not limited to organised tours, with Creative Holidays, a major independent travel wholesaler, reporting price reductions on many independent travel components.

Creative gives the example of a five-night trip to California, including flights, accommodation and car hire, now available for $1895 a person, compared with $2065 in November last year.

Harvey World Travel managing director David Rivers says Travel2, one of Harvey World's main in-house wholesalers, is also passing on currency savings, with price reductions ranging from 1 and 19 per cent.

Currency-related savings can also apply to cruises, depending on the currencies in which the cruise line works.

The director of sales and marketing for Discovery Cruises in Australia, Philippa Baker, says the increased value of the Aussie dollar against the British pound has enabled Discovery to offer Australian travellers 20 per cent off its entire Europe 2010 brochure.

The loser in the story is Australia's own tourism industry, with travellers expected to abandon Australian holidays in favour of cheap overseas trips.

But for those who do want to holiday at home, ABS figures show that while the savings are not as great, domestic holidays are also cheaper than they were a year ago.

Save on the air, spend on a room

Grab a cheap air fare and the savings you make can easily pay for the first few days of your holiday.

An analysis by Flight Centre of flights to Los Angeles shows fares are at least $600 less than they were at the same time last year.

And a quick search of finds four-star accommodation in LA for about $130 a night, meaning the savings on the air fare would pay for four nights.

Flight Centre spokesman Haydn Long believes air fares remain one of the biggest drivers of overseas holidays.

“I think the fares are the most important thing but the strong dollar is certainly a bonus,” Long says.

“People are well and truly ahead at the moment.”