Where are Prices Heading for 2009

Earlier this week, I was reading the Travel Trade Press and an article on prices written by Amanda Willis, the MD of Virgin Holidays, caught my eye. Of course, the bigger companies are always talking up the price of holidays but this was a lot more sanguine.

We're all aware that the pound has fallen in value over the past few months and as I write, has dropped another 2% against the Euro and 3% against the US dollar. What we often don't appreciate is that this means that the average apartment rental in Gran Canaria has gone up by over £50 for a week in the past year.

But she explained, property owners have largely fixed overheads, If they think they will sell less rooms, then the price per room has to rise to cover these costs.

Finally, she went on, there are also huge flight capacity reductions. Popular gay destinations, such as Mykonos and Gran Canaria were well served by XL and its capacity is not being replaced. On the long haul sectors across the Atlantic and to South Africa and Australia, we're already finding the number of flights reduced often to less than daily. With less competition and choice, prices are slowly but steadily creeping up.

Reflecting on this, the key to me is the flight capacity. If seats are sold out early there will be none that are available for late bookers whatever price they are prepared to pay. And with the economy in such a mess, that price is not very much.

I have just been updating our offers for our Newsletter and was quite horrified to see how much supplier prices have risen in the last month. A US week up over a £100 and even Gran Canaria up around £60.

So where does this leave us all ?

There is no doubt that those who book early are the winners. We have a lot of clients travelling long haul this Christmas. They paid at a USD rate of 1.85 to 1.95, today's rate is 1.40. They've saved literally £100's by booking early. Even our Christmas clients to Gran Canaria are saving over £70 on their week by booking as recently as October.

The moral is clear - don't leave it too late to book. My prediction for 2009 is that prices will continue to rise and reduced capacity will mean that late cheapies will be few and far between. Book early for the best deals in 2009.