Travel Industry News
Foreign Exchange and the Travel Industry
Tuesday, 22, June 2010
How foreign exchange fluctuation is dealt with by travel operators is a matter of some controversy. In the period between a booking and the actual date of departure the value of the currency in which the holiday was paid will of course fluctuate against Sterling constantly and, occasionally, considerably. A holiday, therefore, costing £20,000 at time of booking could, 6 months later at the time of departure, cost substantially more, or less depending on the fluctuation in the value of the particular currency against Sterling.
Of the difference in cost incurred by these fluctuations, a travel operator is legally allowed to pass on a surcharge of up to 10% (after this the client has the option of cancelling the booking with a full refund) to the consumer. Many consumers have therefore found themselves presented with considerable surcharge bills for forex swings against the pound on the eve of their holiday. Of course, when currencies move in Sterling’s favour, the consumer will not see this money discounted, rather it will serve as a nice little booster to the company’s profits.
