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Holiday deals: Your pounds will go further than you think with these bargains...

Can you afford a holiday this year? With the economic squeeze still in full effect, you would be forgiven for thinking it might be best to put travel plans on hold. This would be a huge mistake.

Despite a fall in the value of sterling against other currencies and in the face of steep increases in other costs (such as air passenger duty), foreign holidays are somehow continuing to remain competitively priced. Here are some of the reasons it's a good time to travel...

Cheapest deals: Praia de Tres Irmaos near Alvor on the Algarve

Prices are falling

The latest report from the Post Office Holiday Costs Barometer says that despite the pounding taken by sterling against the euro, holidaymakers planning trips to a European hotspot may find their cash stretches further than expected.

The exchange rate may be worse, but prices have fallen in many popular resorts. Although sterling is worth 4.5 per cent less than in April 2012, this year's barometer reveals prices are down by up to 20 per cent in Spain and 15 per cent in the Algarve.

Portugal has just pipped Spain to the top spot for value thanks to low prices for meals and drinks. However, ten holiday items cost just 16p less in the Algarve (£46.34) than in Torremolinos on the Costa del Sol (£46.50) and only 80p less than in Javea, on the Costa Blanca (£47.14).

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Tumbling resort prices in the Costas – down 19 per cent yearon- year in the Costa del Sol and 20 per cent in the Costa Blanca – helped Spain to keep within a few pence of Portugal. Sunny Beach, Bulgaria (£47.32) fell to fourth place in the table because of a 3.4 per cent rise in local resort prices but remains within 98p of top-placed Albufeira in the Algarve.

Fierce competition to attract back UK holidaymakers at these resorts means there is now a gap of £8-£9 between the top four resorts and fifth-placed Majorca (£55.46), where prices have fallen 8.8 per cent in a year. In the US, even though sterling is 4.1 per cent weaker than last year against the dollar, holidaymakers heading to Orlando, Florida, will find prices much lower in the theme-park capital.

The ten typical holiday purchases surveyed for the barometer – a three-course meal, cup of coffee, bottle of beer, glass of wine, soft drink, bottled water, suncream, insect repellent, cigarettes and a newspaper – cost 21.2 per cent less than in 2012 (£58.16).

Value for money: Prices have risen at Bulgaria's Sunny Beach but it remains one of the cheapest options

All-inclusive deals

If you're looking for a holiday that offers price assurance – the security of knowing that your spending money can be kept to a guaranteed total – going all-inclusive is the answer.

In the past five years, bookings for all-inclusive holidays have grown by a third. The level of success can be gauged by the fact that leading tour operator First Choice, part of the TUI group, specialises solely in all-inclusive packages.

One of the most successful operators in recent years has been Mark Warner, which with its accent on family activities and kids' clubs, claims to offer 'the perfect family holiday'. The holidays are a canny combination of sun and sand mixed with top-class watersports and tennis facilities, free mountain-bike hire, health spas, fabulous food, excellent childcare and superhelpful staff at resorts in Greece, Turkey, Sardinia, Corsica and Portugal.

When booking an all-inclusive, read the small print to make sure you know what is included and what's not – a recent survey found that more than three-quarters of travellers on an all-inclusive holiday ended up paying for things they had expected to be covered within the initial package price.

This is particularly important when it comes to alcohol. In some resorts, it will be locally produced drinks that are included, meaning better-known wines and spirits will cost extra. The question of activities, such as watersports and childcare, can also be complicated, so check before you book.

On the right track: Zermatt in Switzerland is now within easy reach

A new 'euro-star'

Do you think a low-cost flight is the cheapest, easiest and quickest way to get to your continental holiday destination? Think again. This summer catching a train may be the answer.

French Railways has launched its answer to the no-frills flight – a no-frills train service. Check out the website for Ouigo (ouigo.com) and you will discover a new train service offering journeys of up to 500 miles for as little as £8.

As with a no-frills airline, the service leaves from a more remote departure point (Marnela-Vallee, the Disneyland station east of Paris) but heads to places in the south (Lyon and Marseille) and south-west (Montpellier) where you can reach a wide range of holiday places.

Just like no-frills flights, there's minimal customer service: you book on the internet (tricky as, at the moment, this is a French-only service) and you will probably want to take a packed lunch. But if you want to save money – and who doesn't – it's hard to resist. This summer, standard rail services to Europe are also proving competitive without the no-frills treatment.

A few weeks ago I left on the 7am Eurostar from St Pancras to Paris and, following a swift Metro journey across the French capital to the Gare de Lyon, I was soon on the TGV to Geneva. Here, I raced to board another train for the hour-long ride to Montreux, arriving shortly after lunch.

Getting a no-frills flight to Switzerland might have been quicker and cheaper but it wouldn't have been half as relaxing or so much fun. On a plane you barely exist, on a train you can eat, drink, read, work or simply watch the world go by (gazing through the window offers a delightfully fleeting gallery of still lives: people gardening, horses skittering in fields).

I stayed at the Fairmont Le Montreux Palace hotel, which, like Montreux itself, is famous for its musical links, not just Deep Purple (whose hit Smoke On The Water was inspired by the town) but also for its connection with Freddie Mercury, who made his home on Lake Geneva's shore. It was certainly the Montreux Palace that was favoured by Freddie as a base when he was looking to buy a house in the area and it now has a Freddie Mercury suite at the top of the hotel.

Zermatt, a couple of hours by train from Montreux, is now the ultimate in swish chic ski resorts attracting millionaires and celebrities (Abba's Anni-Frid is a year-round resident: she has, by marriage, become Princess Reuss, Countess of Plauen).

Zermatt's appeal is clear. Despite rapid growth it remains a large village that has long pursued a traffic-free policy. It's not hard to see what attracts people. Not just the views but also the hotels. The Mont Cervin Palace – and its chalet-style annexe Le Peter Cervin – is a particular delight. Transport around the village is either on horse and carriage or via electric taxis.

A double room at the Fairmont Le Montreux Palace (montreuxpalace.ch) costs from £250 per room. Accommodation at the Mont Cervin Palace (montcervinpalace.ch) in Zermatt costs from £350 per night.

Family fun: Mark Warner holidays are all-inclusive and the company claims to offer 'the perfect family holiday'

All abroad for a bargain

During the ski season Eurostar (eurostar.com; 08432 186 186) runs a weekly Swiss Alps service that carries enthusiasts from St Pancras and Ashford to the heart of Swiss ski resorts including Verbier, Zermatt, Saas Fee and Gstaad.

With an easy connection in Lille on to a high-speed 'TGV Lyria' service, passengers can travel direct to Aigle, Martigny, Visp and Brig for onward transfers to their resorts. Return fares start from £189pp, with Standard Premier from £299pp, the latter giving more spacious seating, light meals and drinks served at your seat. Tickets for the 2013/2104 ski season go on sale in July.

Eurostar is also running a trial service direct to Lyon, Aix and Avignon, with plans to launch permanently in 2015, and is about to launch a new website with a booking process for connecting destinations.

Travellers will be able to book their entire journey from more than 300 stations in the UK to hundreds of destinations across the Continent in a couple of clicks. The transformation is part of a wider investment into the business, including £700million on the refurbishment of existing carriages and the purchase of ten new trains.




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