If you are old enough to remember when there were last minute holiday offers abound and sitting in front of the television watching Teletext holidays, hoping to get the information and contact details written down before the screen moved on and having to wait for 33 pages to scroll by, or turned up at the airport with your suitcase packed asking “where can I go to today?”, then things have changed dramatically, or have they?
Assuming price is your overriding factor, a notable website that offers trip advice has done some analysis on various destinations around the world and arrived at a conclusion on when is the best time to book for each. Another purely looked at flight prices and determined that in 2016 it was 54 days before but in 2017 it was 70 days, so if you had followed the advice based on 2016, you would have lost out the year after, probably double so, as when air seats are booked, accommodation tends to follow!
If it was that simple, everyone would just book all of their planned travel X number of days ahead. So many factors are at play and are potentially different for every departure and destination combination. So, maybe those last-minute holiday offers were only there because so much demand was saved up to the last minute, until holiday companies got wise to this and were prepared to fly an empty seat than cut the price below cost.
The age of the internet has driven us towards a ‘price above everything’ mentality and the search for the lowest price has become almost an obsession. It tells you everything when a man who sold a well-known money saving website became a multi-millionaire overnight when he sold his web business. Factors such as quality and service tend to fall by the wayside with this mentality as well as the amount of time spent searching, not to mention the ‘stress’ caused by worrying if you have paid too much.
As any good economist will tell you, it all basically boils down to the laws of supply and demand. So, what are the factors that affect this balance?
Here are some of the key external factors but remember they all potentially affect each other;
School holidays (not just ours!)
Seasonal climate at destination
Politics, War and Terrorism
One-off events, e.g. Football World Cup
Time of year
In addition to the above there are personal factors, for example, if you want to get married at, or go on honeymoon to, a specific location at a specific date, you might be more concerned with getting everything booked than getting the cheapest price.
Usually, the biggest factors affecting the cost of a holiday and are subject to the biggest fluctuation in price are flights and accommodation, as even if other elements change, it is usually a small effect on the overall cost. Other things can be a big factor, such as theme park tickets but these tend to have a seasonal price rather than a price that changes with supply and demand.
Remember, flights are not just for ‘holidays’, there are likely to be people travelling for business or to attend family and social events. These are all demand factors, so will be affected by different things; is there a major conference or sporting event happening at the destination? Most major cities around the world are likely to have a number of events going on at any point in the year. Airlines also switch capacity – Thomas Cook switched 200,000 seats from Spain to Turkey this summer as people flocked back to Turkey.
The opposite obviously happened in the past as Turkey was hit by terrorist and migrant issues. The collapse of Monarch badly affected UK to Europe air capacity as many of the take-off and landing slots were not taken by other UK to Europe operators. Airlines are also struggling to obtain enough short haul planes, as the demand in other parts of the world, particularly China, has restricted the amount of airplanes available, as the airline industry cannot quickly ramp up supply and much focus has been placed on building the super planes, such as the A380 and the Dreamliner.
The impact of the so called ‘Low cost’ airlines, Ryanair and Easyjet amongst others, has been hailed as bringing prices down, however, most low prices are only available on a small number of seats and if you book early. Both scheduled, charter and ‘low-cost’ airlines tend to get more expensive the nearer to the departure date, sometimes dramatically so.
Many factors that affect flights, also affect accommodation, however, the key difference is that accommodation is affected by the total of all demand regardless of departure destination. So, an airline(s) that increase capacity to a certain destination will likely reduce the price, so the demand for accommodation goes up in that destination. In the short term, this is likely to reduce the overall cost of a holiday there, however, eventually the increased demand will push up price, particularly if the destination gets towards full capacity.
Generally, this year there has been lots of accommodation availability across the Mediterranean, however, there hasn’t been flight availability. So, this has pushed up flight prices but doesn’t seem to have reduced accommodation, possibly due to exchange rates as the pound has weakened over the last couple of years and that when accommodation owners factor in under-occupancy to their costs, it keeps the prices relatively flat. Also, Spanish hotel chains have had a deliberate policy to not discount in an attempt to up the class of visitor. For example, it is near impossible to place a group booking in Benidorm now as they try to move away from its historical image.
This is a well-known factor in the cost of a typical family holiday from the UK to the most popular destinations. Prices in the week leading up to the school holidays increase dramatically day by day as the official school closure date approaches. This effect is compounded at certain times of the year when major travelling countries line the UK and Germany have overlapping school holidays.
Seasonal Climate at destination
It goes without saying that seasonal climate affects demand depending on the type of holiday typical for a given location. For example, many ski resorts are busy in the summer for lakes and mountains, the Caribbean tends to be better value in September and October due to the rainy season.
Politics, War and Terrorism
We have seen many areas become popular or unpopular over the years due to changes in these factors. Turkey, Egypt and Tunisia have all suffered and recovered from such factors. Paris and London tend to have had more short-term impacts following terrorist acts. Eastern Europe, parts of South America, the Far East and Africa have all seen effects due to these factors over the long term.
These can have not only a short term impact whilst the event is taking place but can also have a long lasting effect. Most recently, Russia hosted a World Cup that beforehand was supposedly going to be marred by mass hooligan and gang warfare, yet it was probably one of the calmest World Cups from that perspective in recent memory. Unless the political situation hampers it, Russia has the potential to become a more popular tourist destination.
We have probably been exposed to more exchange rate turbulence recently than for a long time, however, generally, the Pound has weakened against the Euro and US Dollar. Remember when there were 2 or more US Dollars to the Pound and 1.6 Euros to the Pound?
Time of year
There is a finite window for booking travel. Usually, scheduled airlines release their flights approximately 11 months before the flight, which for a holiday effectively means 11 months before the return date. Charter carriers and particularly the package operators tend to publish a full schedule for the following calendar year at some point during the preceding year, so potentially there is 18 months or more availability published.
Whereas last minute used to be when the ‘best’ value was to be had, the biggest season for booking holidays is from Boxing day through to the end of January and in to February and March. This has been propagated by many travel operators bringing out what seem like the best deals during this period too. I wonder if a well-known travel advice site will do a study on whether the deals in this period are better than at any other time for a given itinerary.
So, it is probably safe to say that there are so many factors affecting supply, demand and ultimately price that it is impossible to predict when is the best time to book. My best advice is to book as soon as you see a price you are happy with to guarantee the holiday that you want, making sure that you are happy with the service level you are likely to receive before, during and after you book and travel on your holiday!
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