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Routine currency movements cause British travel firms an average of £53,000 per year.
Last updated: 13 February 2026
In an era of unprecedented uncertainty, British travel firms are rightly focused on profit protection and reducing risk along the booking curve. However, research has shown that a majority of UK small and medium-sized enterprises (SMEs) are losing sizeable chunks of their margins to hidden currency costs.
According to Fintech Finance News, over 50% of SMEs lost money due to currency volatility in 2025. With an average hit of £53,000, it’s easy to see why businesses are anxious to avoid those losses. The issue is that many lack the infrastructure and tools to limit the damage. Some are even entirely unaware of the risks this creates – a dangerous situation that threatens to undermine your profits.
A year like no other
2025 was one of the most extraordinary years for businesses around the world. The return of Donald Trump to the White House heralded a new era for diplomacy and the global financial system. Old assumptions shifted and rules were challenged. With seismic news arriving on a daily basis, the only thing that was a guarantee was volatility.
The pound had a mixed year, performing well against a weak US dollar but giving up ground to the euro. For its part, the euro was able to partly ascend towards safe-haven territory, a status the European Central Bank (ECB) made no secret of targeting. But the risks are high, high enough even for the Bank of England to warn markets hadn’t fully grasped their impact.
Have a look at the graph below to see how the pound performed against the US dollar. You’ll note the sharp movements, which often took place in the space of a few hours and with little warning. Would your business have been able to absorb the cost of a 5-10% movement in the exchange rate across booking seasons?
GBP/USD: 2025
The hidden cost of currency
With exchange rates moving wildly, travel firms were more exposed than ever to cashflow shocks caused by cancellations.
But it isn’t just currency causing headaches. In order to deal with these payments, a sizeable number of SMEs rely on painstaking reconciliations, creating operational bottlenecks and the risk of manual error.
Industry reports show that almost every travel business says manual reconciliations are wasting their employees’ time. Moreover, almost half of UK-based travel firms say they spend over 1.5 hours on this task every week. That’s time and money seeping out the door, eroding margins and reducing your capacity for absorbing currency corrections.
Travel currency risk
With high seasonality and difficult to predict booking curves, the travel industry is more exposed to currency risk than many others. The scale of the gap between when a customer books a trip to when they take that trip means the likelihood of cancellations is very high. Final sales volumes can also be extremely tricky to forecast, putting pressure on your cashflow.
If enough customers requests a refund at the same time, it is often enough to blow your entire revenue projections off course. That is a particularly stark risk given the exposure to multiple currencies, the value of which moves frequently from one day to the next.
What can I do to protect my profits?
Travel businesses require a comprehensive solution that protects their profits through volatility. Ideally, these solutions would serve to both reduce the risks to their cashflow and profits, as well as reducing admin and streamlining inefficiencies.
Smart Currency Fintech provides expert solutions that protect your profits. Our cutting-edge technology provides support right through the payments journey, bundling in FX hedging to ensure you’re protected even during volatility. You can read more about our approach here.
To get started, give a member of our team a call on 020 3433 1328 or email [email protected]
Frequently asked questions
What is currency risk and how does it affect travel businesses?
Currency or FX risk is the chance that your business could be materially impacted by changes in the relative value of key currencies. This affects travel businesses by influencing profit margins, straining cashflow and making it difficult to forecast revenue across booking curves.
What tools are available to manage currency risk?
A number of treasury management tools exist to help travel firms manage currency risk, including forward contracts, FX options and APIs.
How does Smart Currency help travel firms?
With a deep knowledge base in the travel sector, Smart Currency provides comprehensive solutions that promote stable cashflow, limiting currency risk and reducing admin and manual processes.
