Cape Town is the holiday hotspot where your pound will stretch the furthest in 2023

The world’s best-value holiday hotspots for Britons in 2023 have been revealed in an annual report and it’s Cape Town in South Africa that tops the ranking.

It’s here where their pound will stretch the furthest, followed by Marmaris in Turkey in second place and Sunny Beach in Bulgaria in third.

Meanwhile, Reykjavik in Iceland has been named the worst-value holiday destination for British holidaymakers.

This is according to Post Office Travel Money‘s Worldwide Holiday Costs Barometer, which compared the cost of eight everyday tourist items in 40 cities and resorts worldwide to see where Britons will get more value for their hard-earned cash.

The basket of goods that were compared includes a three-course meal for two with wine, a cup of coffee, a bottle of local beer, a can of cola and suncream.

The world’s best value holiday hotspots for Britons in 2023 have been revealed and it’s Cape Town in South Africa (above) that’s number one in the ranking

Marmaris in Turkey is the second-best value destination for Britons. This is according to Post Office Travel Money’s 17th annual Worldwide Holiday Costs Barometer, which compared the cost of everyday tourist items in 40 destinations to see where Britons’ pound stretches the furthest 

The survey, which is part of Post Office Travel Money’s 17th annual Holiday Money Report, found that despite falls in the value of sterling and inflation abroad, holidaymakers can still strike a bargain by swapping to a destination where prices have fallen or are only marginally higher than a year ago.

Although prices are up in 80 per cent of resorts and cities, the report – produced in partnership with the online travel agent Travel Republic – found that prices have fallen year on year in six of the 10 lowest-price destinations.

The excellent value in first-place Cape Town – rising from fourth place last year – is boosted by the South African rand’s sharp fall of almost 16 per cent against sterling in recent months and keen pricing in restaurants and bars, the report reveals. 

This year, the holiday basket costs just £51 in the South African city – 8.4 per cent cheaper than last year. 

The same basket of goods is priced at just below £58 in second-place Marmaris – last year’s number one and one of only three European destinations to make the top 10. The Turkish city has seen a 19.2 per cent fall in the value of the Turkish lira, but prices have more than doubled since last year because of inflationary pressures and a 55 per cent rise in the minimum wage required in Turkey’s bars and restaurants, the report found. 

Third-place Sunny Beach, meanwhile, is only 71p more expensive than Marmaris at £58 but here too, prices have risen steeply by 20 per cent.

Meanwhile, Mombasa in Kenya, where resort costs have fallen by 3.4 per cent to around £59, is fourth overall.

In fifth place, Portugal’s Algarve is the cheapest of the nine Eurozone destinations surveyed but prices have risen by a third since last year to £60.

The survey found that despite falls in the value of sterling and inflation abroad, holidaymakers can still strike a bargain by swapping to a destination where prices have fallen

Sunny Beach in Bulgaria is third in the ranking, though prices here have risen steeply by 20 per cent since last year

Three Far Eastern destinations have returned to the top 10 after being off-limits to overseas visitors until recently, Post Office Travel Money notes.

At £60 for the barometer basket, Hoi An in Vietnam ranks sixth. Moving down the ranking, Kuta in Bali and the Japanese capital of Tokyo are in seventh and eighth place respectively – prices have dropped by two per cent to around £71 in Tokyo and by 1.8 per cent to £68 in Kuta.

Meanwhile, Colombo in Sri Lanka (£73) jumps seven places up to ninth position with a 2.2 per cent fall in prices, helped by a collapse in the value of its rupee due to last year’s political unrest, the report found.

Tenth place is claimed by the Red Sea resort of Sharm el-Sheikh in Egypt (£73), its position partly due to the dramatic fall of the Egyptian pound in recent months. Post Office Travel Money says that ‘Sharm is likely to benefit from a resurgence in demand after years when flights to the region were suspended’.

Reykjavik in Iceland has been deemed the worst-value holiday destination for British holidaymakers

The barometer price has risen in European destinations such as Spain’s Costa del Sol (11th, £74); Paphos, Cyprus (12th, £78); Funchal, Madeira (14th, £85) and Sliema, Malta (20th, £91) – four holiday hotspots that have dropped out of the leading 10 destinations this year.

However, increasing costs are less of an issue in Corfu, the report found – the Greek resort has risen five places in the table to 13th with a small 4.2 per cent barometer price rise to £81.

At the other end of the table, barometer costs in worst-value Reykavik (40th) are £198. There, a bottle of beer is £8.51, a 200ml bottle of suncream costs £20.42 and a three-course evening meal for two with wine is £135.87.

Other costly destinations include Mahe, the capital of the Seychelles (39th, £192) – although a fall in the value of the Seychelles rupee means that prices are 17.6 per cent lower than in 2022.

Commenting on the survey’s findings, Ed Dutton, Portfolio Director for Financial Services at Post Office, said: ‘Despite the volatility of sterling, it is still possible to bag a bargain with careful planning. Check exchange rate movements and the cost of holiday essentials before booking to see where you might get more holiday cash for your pounds but be aware that sterling gains can be cancelled out by big resort price rises as the increase in Turkey proves.’

Looking at other sections of the report, Post Office Travel Money says that sales of holiday currencies provide a good indication of where Britons plan to travel this year.

The basket of goods that were compared includes a three-course meal for two with wine, a cup of coffee, a bottle of local beer, a can of cola, suncream and insect repellent

Post Office Travel Money’s currency sales have risen year on year in the first two months of 2023, with the euro and US dollar proving particularly popular – the euro has registered gains in popularity of 45 per cent and the U.S dollar of 23 per cent.

However, the ‘stand-out stars’ are the currencies for New Zealand and Japan, which re-opened to overseas visitors in the second half of 2022.

Sales of both currencies reveal pent-up demand from British holidaymakers, Post Office Travel Money reveals. Growth of 2,134 per cent has taken the New Zealand dollar to fourth place in the Post Office’s bestselling currencies table. Sterling is also worth 3.6 per cent more against the NZ dollar and prices in Auckland (31st, £129) have fallen by over two per cent.

Even more dramatically, sales of the Japanese yen, 10th in the bestsellers table, have risen by 8,040 per cent in the year to date and are 84 per cent higher than in the period immediately prior to the Covid-19 outbreak. Sterling is worth 1.9 per cent more against the yen and prices for meals and drinks are down in Tokyo. 

As a result, New Zealand and Japan have been named ‘Post Office Holiday Hotspots for 2023’, along with Egypt and South Africa. A 53 per cent drop in the value of the Egyptian pound against sterling will make trips to Egypt’s historic sights and Red Sea beach resorts very affordable, Post Office Travel Money adds. 

In general, the barometer found that prices are up in 80 per cent of resorts and cities

By contrast, Britons planning trips to Costa Rica or Mexico will get far less for their pounds. The latest Post Office Exchange Rate Monitor, published in the report, reveals that holidaymakers will get 23.7 per cent fewer Costa Rican colon for their pounds this year, over £155 less on a £500 currency transaction, while those planning holidays in Mexico can expect 13.5 per cent less in peso – £78 on a £500 purchase.

The report also looked at Britons’ priorities for travel in the coming year. It found that millions of Britons who have taken trips abroad rate holidays as their biggest priority after paying for food, energy and other essential bills.

Over two in five (41 per cent) say they will dip into their savings to afford a holiday abroad, while more than half will do without home improvements or spending on cars. 

Antonio Fellino, Managing Director, Travel Republic, said: ‘Britons are considering their options more carefully and really looking hard at how they get great value from the package they book and the destination they’re travelling to. So, it’s not surprising that places like Egypt and Turkey are seeing a significant increase in popularity this year because of the all-round amazing value they offer.’