UK hotels hit by the credit crunch are slashing prices in the hope that it would encourage more people to consider a holiday at home not abroad.

This means that holidays in the UK are getting cheaper by the day as the economic recession continues to bite the domestic tourism sector. Figures from the annual Hotel Price Index survey by hotels.com show that hotel prices fell in the fourth quarter of 2008.

According to the statistics, prices dropped from typically £105 per room per night in the final three months of 2007 to £93 in a similar period last year. The study shows that the biggest decline was seen by Blackpool which recorded 22 per cent and Manchester 19 per cent, while Brighton saw a 17 per cent drop.

The fall in hotel prices means that families choosing to go on a domestic holiday can now save money which they can use to meet the cost of a single-trip travel insurance policy for their vacation.

Visit Britain director Patricia Yates was quoted saying the report “underlines that Britain is a great place to holiday right now”. “There are some fantastic deals to be had and you can enjoy all this country has to offer for less than you've ever paid before.”

Reports further suggest that although hotels are getting cheaper for domestic travellers, air fares could soon be increased under plans to cut the aviation industry’s carbon footprints.