Holiday sector set to be hit by weak currency
While many assumed that the UK holiday sector was relatively recession proof due to the fact that many people in the UK are unwilling to give up their annual holidays, the weakness in sterling could have a major impact over the next two years. The drop against the dollar is concerning many holiday companies but the drop against the euro is of more concern as this takes in more holiday destinations from the UK.
This will see a substantial reduction in the spending power of UK holidaymakers overseas which will at some stage impact upon the profitability of holiday companies and their various overseas operations. This has the potential to cause a credit crunch in the holiday sector were even some of the larger companies have struggled over the last few years. A reduction in spending power could lead to falling holiday bookings as more and more people come to the conclusion they can not afford a holiday next year.
Bookings for the next few months should be fairly secure as many of these have already been made and paid for earlier in 2008 which takes the pressure off the holiday sector in the short term. Whether we see some kind of increased competition or less holiday destinations available remains to be seen but there would appear to be a need for change in the short term.
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