British holidaymakers are finding prices up to three times higher in cities in the Eurozone than in those outside it, research has shown.

In an analysis of the price of holiday essentials in a dozen European cities, the Post Office found that items ranging from drinks and postcards to airport transfers and hotel rooms in Budapest, Warsaw and Prague cost about a third of those in cities such as Athens.

Eastern European cities have always been cheaper than their Eurozone counterparts, but the strength of the euro has exacerbated this, the report found. Since last March the pound has fallen by nearly 17 per cent against the euro to €1.02 (at the tourist exchange rate).

British tourists, meanwhile, will get more for their money in Warsaw and Budapest than a year ago, as sterling has strengthened against the zloty and forint. Compared with the Polish zloty, sterling has strengthened by more than 10 per cent.

As a result, the average price of a room in a three-star hotel in central Warsaw is £53 per person, in contrast to £106 in Athens and £147 in Barcelona. However, the Catalan capital remains relatively cheap for everyday items. For example, in Budapest a cup of coffee costs £1 and a beer £1.67; they cost £1.18 and £1.96 respectively in Barcelona and £3.92 and £2.94 in Athens.

In a poll of Telegraph readers this week, nearly two thirds said the weakness of the pound is putting them off travelling to eurozone countries. Travel companies are already being forced to cut back on flights, hotel rooms and holidays in traditional summer destinations such as Spain, France and Greece.

“Spring has traditionally been the time when British holidaymakers plan city-break trips to Europe, but this year there have been doubts whether the explosion in short-break travel will take place because of the high costs in eurozone cities and the continuing weakness of the pound,” said Andrew Spice, of Post Office Travel Services.

Earlier this month, Inghams cancelled its summer city-break programme, blaming a lack of demand. British Airways this week ended services from Heathrow to Dublin, Zurich and Geneva (sterling has fallen by 17 per cent against the Swiss franc), and Ryanair is to close its East Midlands-Paris route from July.

The fall in demand for holidays in countries in the Eurozone in favour of mid-haul destinations such as Turkey and Egypt has seen Thomas Cook cut its short-haul capacity by up to a third for this summer.

Its chief executive, Manny Fontenla-Novoa, has said that Spanish and Greek hoteliers in particular will need to lower their prices to attract British holidaymakers.

TUI, which owns the Thomson and First Choice brands, said that bookings to Egypt and Turkey were up by 18 per cent and 8 per cent respectively compared with the same period in 2008. However, prices have risen in Turkey on the back of its growing popularity.
All-inclusive bookings with Thomas Cook have risen nearly 50 per cent in the past month while TUI reports that all-inclusive deals are up by 13 per cent year on year. (Via Telegraph)