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25 Aug 2021

Are UK holidays really a rip off?

Lake Windermere holiday more expensive than Lake Garda, new Which? research finds, but the story behind pricing is complicated

Back in August 2019, staying in private accommodation in Brighton would have typically cost an average of £109 per night. This year the same type of accommodation in Brighton in the same month costs almost twice as much, at £206 per night.

Brighton isn't the only example of significant price increases. The average cost of private accommodation in the UK has soared almost everywhere you book. In St Ives it's up 42%, in Sidmouth 63% and Lyme Regis by a whopping 74%.

Across the whole of the UK, private accommodation in August this year is costing us 41% more on average than in 2019. That translates to the equivalent of an extra £300 per week.

These aren't advertised prices either. The data comes from AirDNA, which collated the prices that people have paid for hundreds of thousands of properties listed on Airbnb and Vrbo. It's no wonder many of us feel our money goes further on holidays abroad. And we're right, in most cases.

In July we compared prices for booking a late August getaway in popular UK holiday destinations and similarly popular places abroad. The UK was more expensive nearly every time, even when flights were included. For example, a week's stay in a highly rated hotel in Lake Garda, Italy, this August was around a third of the price of a comparable holiday in the Lake District.

Even when factoring in £400 on flights, we found that a holiday in Nice is still cheaper than in Brighton

The only holiday Which? found for this August that worked out cheaper in the UK than abroad was a beach break in Tenby, Wales, compared to Estepona, on the Costa del Sol in Spain - but only by £10.

Higher demand for UK stays as international travel was restricted and private accommodation because of Covid-19 is of course part of the reason for the increase. But our research found UK holiday prices were already expensive before the pandemic and have increased more than in many other European countries during it.

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UK hotel prices higher than in Europe

Even before coronavirus struck, the UK was among the most expensive destinations in Europe. The average nightly rate of three-star and four-star hotels in the UK in 2019 was £109, according to data from comparison website Kayak. That compares with £90 in Spain, £89 in Greece and just £61 in Malta.

Of the ten European countries we compared, only Iceland had higher average hotel costs at £144 per night.

But unlike private accommodation hotel prices actually fell between 2019 and 2021, with properties closed for long periods and travellers preferring to book self contained and self-catering properties.

UK hotel prices dropped by 13% on average. However, rates in many other European destinations dropped by as much or more - meaning the cost of a UK hotel rooms remains comparatively high.

A night in a UK hotel last year would have cost you £95, on average, compared with just £71 in Greece, where prices dipped by 20% in 2020. And in Turkey, the average room costs just £42, so you could have stayed in a hotel for two weeks for the price of one in the UK.

It's hard not to feel short-changed. The cheapest available hotel in Skegness in late-August when we looked cost £47 per person per night, while Tui is selling week-long package holidays in Spain and Greece for between £50 and £60 per person per night, including flights.

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The cost of eating out

Our research focused on the cost of accommodation because that is almost always the most expensive part of any holiday.

But the cost of eating out in the UK versus abroad can also make your holiday more expensive. France, Greece and Italy can be a bit pricier for a restaurant meal, depending on where you go, but a three-course dinner for two people and a bottle of wine will set you back just £24.91 in Marmaris, Turkey; £30.49 in the Algarve, Portugal; £41.09 in the Costa del Sol, Spain; and £46.04 in Sliema, Malta, according to research from the Post Office.

Meanwhile, a three course-dinner for two with wine in the Newquay branch of Pizza Express costs £58.45 on average

Are hotels making a fortune?

UK holidays are certainly expensive, far more expensive than holidays abroad in many cases - that much is clear. But are we actually being ripped off? The answer is less straightforward.

Consider seasonality, for example. We looked at prices in August, because that's the height of peak season, when schools across Europe are on summer holiday. But that's not the full picture. The most popular European holiday destinations enjoy more warm weather, and school children often have longer summer holidays - in Italy and Portugal, for example, the holidays run from June to September. That means demand is better spread out.

In the UK, the best weather tends to come in July and August (if it comes at all), coinciding with school holidays. A lot of pent-up demand is condensed into this two-month period every year, which means huge pressure on hoteliers to turn a healthy profit in that period.

Crucially, when you look past the prices being charged to the money being made on hotels and B&Bs, there is no evidence of a rip-off.

Our research looked at what's known as RevPAR - the amount of revenue hotels earn from each room. To maximise RevPAR, hotels need to charge as much as they possibly can while ensuring the price is competitive enough to keep the hotel full every night.

In 2019, average RevPAR for UK hotels was £73.28, according to STR, a global hospitality data and analytics company. That's less than in Spain (£74.87), Croatia (£76.29), France (£76.89), Greece (£87.83), Italy (£88.96) and Malta (£94.12).

So although average room rates were higher over the course of the year in 2019, UK hotels generally weren't taking in more money than their European rivals prior to the pandemic. RevPAR in the UK fell to just £29.17 in 2020, which suggests less an industry inflating prices more one making less money.

Hoteliers in the UK also face challenges over costs that rivals in some other countries don't. Scott McCabe, Professor of marketing and tourism at the University of Nottingham, says: 'In addition to taxes, UK hoteliers have to contend with rising land and property prices and a worsening labour shortage, both of which are likely to be driving up prices for consumers.'

The private accommodation rip-off

Of course, few of those mitigating reasons apply to most private accommodation providers. Owners of apartments and houses for rent have some overheads, but not at the scale of hoteliers. For the most part they aren't affected by labour shortages to the same degree.

The rise in prices for private accommodation then is a result of increased demand and a shift from small properties in city centres to larger houses at the seaside or in the countryside.

But those trends are caused by the pandemic, and you would expect to see the same in Europe where people have also holidayed closer to home.

So when you find out that prices have increased for private accommodation in Spain by just 18%, 19% in Italy and 20% in France versus 41% in the UK it's hard not to feel like we are simply being fleeced.

Whether an 89% increase in the cost of private accommodation in Brighton is simply supply and demand or daylight robbery, only holidaymakers can decide.

Cheaper UK holidays in 2022?

There is better news on the horizon. We looked at our Brighton, Lake Windermere and Tenby holiday comparisons again for July 2022, and we found that accommodation prices were closer to parity with destinations abroad in most cases.

So while Brighton is still slightly pricier than Nice, and staying in the Lake District will still, incredibly, cost you more than in Lake Garda, the cost of flights makes the UK the cheaper option overall - at least for now.

That is likely to change, with people hedging their bets and hoping to travel abroad. Many people will book a UK holiday later, which again will drive up prices. And we will see significant price increases if we face another year when it's difficult to fly to Spain, Greece or Turkey.

In short, book early if you want a better UK price.