The cheapest holiday destinations in 2014

A stronger pound and falling prices mean Bali is the cheapest holiday destination this year.

The Indonesian island of Bali is the cheapest destination for UK holidaymakers this year, according to the eighth annual Post Office Holiday Money Report.

The Post Office survey takes a look at currency trends in the year gone by and makes predictions for the year ahead. To find the best and worst value destinations, the Post Office analyses the cost of eight typical holiday purchases. These include:

• Cup of coffee
• Bottle of local beer/lager
• Bottle/can of Coca-Cola/Pepsi
• Glass of wine
• 1.5l bottle of mineral water
• Suncream (200ml SPF 15)
• Pack of 20 Marlboro Lights cigarettes
• Three-course evening meal for two, with a bottle of house wine

Typical holiday purchases cost the least in Bali coming to £31.48, compared to £115.06 in Auckland, New Zealand, the most expensive destination in the survey.

The Algarve in Portugal emerged as the cheapest European destination with a basket of items costing £35.37.

According to the latest report a stronger pound and falling resort prices in shops and restaurants means budgets will stretch further in more destinations this year. Sterling has strengthened against 33 of the 42 Post Office holiday currencies.

The credit cards that will cut the cost of your flights

The 10 cheapest destinations

Source: Post Office Travel Money

Data relates to exchange rates on 2nd January 2014

The cheapest destination emerged as Bali, where the total cost of a holiday basket came to just £31.48.

The resort has risen from fourth position a year ago to the top of the table, displacing Sri Lanka, which dropped to 15th place after seeing the highest basket price rise (38%) of the 44 countries in the survey.

Bali's currency, the Indonesian rupiah, has slumped by 29% against sterling compared to last January and holiday purchases were overall 19% cheaper. The strength of sterling at the moment means £500 will buy nearly £113 more rupiah than last year.

Spain, which shared the top spot with Sri Lanka last year, has fallen to sixth place as prices have risen 15% in the Costa del Sol resort. A 22% increase in the cost of a meal accounts for the overall rise to £39.14 for a basket of holiday items.

The pound was only marginally weaker compared to the Euro (-1.9%) year on year, but Portugal’s Algarve has seen prices tumble 18%, making it the cheapest destination in Europe for the first time since 2010 and second only to Bali worldwide.

Apart from Portugal, Turkey saw the biggest European price fall of 19%. Bargain hunters will get 21% more for their pound here. The fall in the value of the Turkish lira is likely to make Marmaris and other Turkish resorts more attractive as it has now hit a five-year low, worth 62% less than in January 2009.

The biggest fall in resort prices was by 32% in the Gambia, followed by Japan (31%) and Jamaica (30%).

The best cards to use abroad

The 10 most expensive destinations

Source: Post Office Travel Money

Data relates to exchange rates on 2 January 2014

The most expensive destination was Auckland in New Zealand where the cost of the same basket of holiday items came to £115.06 (£83.58 more than Bali), followed by Darwin in Australia (£113.06) and China Town in Singapore (£108.22).

However, prices have actually dropped 17% in Australia and almost 3% in New Zealand compared to last year.

Italy remains the most expensive European destination, costing twice as much as either Spain or Portugal.

The best cards to use abroad

Getting there

The Post Office figures provide a good picture of how far your pound can stretch on holiday, but what about the cost of getting there?

Of the cheapest destinations a fair few like Bali, South Africa, Gambia and Vietnam are quite a distance from the UK.

The cheapest return flight I found for travel from London Gatwick to Denpasar, Bali in the first week of February was for £737 with Emirates.

And the cheapest return flight I found for travel from London Gatwick to Da Nang, Vietnam in the first week of February was £696 with Singapore Airlines.

However getting to Turkey, Spain, Portugal, Hungary, the Czech Republic and Bulgaria is comparatively much cheaper.

I found a return flight from London Southend to Faro, Portugal in the first week of February for £74 with EasyJet.

While travelling further to Turkey from London Gatwick is still affordable with a return flight costing £169 during the first week of February with Turkish Airlines.

So as you can tell flight costs to long-haul destinations will always be more expensive, so European countries tend to be the cheaper option if you are looking to save on the overall cost of a holiday.

Destination hotspots for 2014

The Post Office has picked out ten destinations it predicts will be popular this year. This is determined on new flight initiatives, resort costs and the strength of the pound.

The hotspots for 2014 are as follows:

• Bali
• Croatia
• Dominican Republic
• Japan
• New Zealand
• Oman
• Portugal
• South Africa
• United Arab Emirates (Dubai and Abu Dhabi)
• Vietnam

Bali has been singled out because of its weaker currency, which mean UK visitors will have 29% more cash in hand than a year ago. The little island saw double digit tourism growth in 2013 and currency sales of the Indonesian rupiah rose 20%.

Meanwhile the Post Office predicts no slowdown in the popularity of Croatia, as its first waterpark will open in Istria to attract families and Dubrovnik is upgrading its hotels.

Vietnam has also been tipped as a destination to watch for the third year running as more direct flights are introduced and new luxury resorts open up. The Post Office reports Vietnamese dong sales have risen over 200% in two years.

The Post Office also predicts established resorts will have to contend with competition from emerging destinations like Burma, Qatar and the Philippines.

How to get the cheapest holiday money

If you’re already planning your summer break, it’s important to avoid getting ripped-off when you exchange money.

Cost-conscious holidaymakers should include a comparison of exchange rates for all destinations before coming to a final decision about where to go in 2014.

To get the most bang for your buck make sure you shop around and avoid the pitfalls by taking a look at our article How to avoid being ripped off on your travel money.

The credit cards that will cut the cost of your flights

More on travel:

The worst summer holiday rip-offs

Get a free flight with your credit card

The best debit cards to use on your travels

The best credit cards to use on your travels

The best prepaid cards for spending abroad

The best and worst airlines to travel with