Is a Weak Euro Good for U.S. Travelers?
Europe's financial crisis is leading to a weaker euro and more travel deals designed to attract American tourists. According to media reports, the state of the euro might make a trip to Europe more affordable in 2010.
In the summer of 2008, the euro traded for about 1.58 U.S. dollars. This week, one euro traded for $1.22. With both the euro and the British pound falling to new lows, experts are saying it might be the best time in recent years to travel to Europe.
Financial troubles in Europe are expected to continue through 2010, leading to favorable predictions for American travelers, and a slew of reports that Europe is becoming more affordable. But not every travel cost is predicted to be lower this summer. Here's where you might save, and where you'll probably pay more:
Lodging and shopping
CNN Money reports that travelers can expect to find heavily discounted hotel rates meant to attract tourists:
If you traveled to Europe six months ago, a 5-night stay in a hotel room at a rate of 100 euros per night would cost 500 euros or about $750. But if you travel there now, that same stay would cost you only $620.
With the uncertain euro-zone economy, would-be travelers are likely to cut discretionary spending, forcing hotels to reduce prices to attract tourists. This, combined with the strengthening dollar, should make hotel stays more affordable for U.S. travelers.
Similarly, European store owners have started to discount prices to stay competitive. In 2007, Europeans shopped in major U.S. cities for the “laughably” low exchange rate, but now deals are looking better for Americans shopping in Europe.
One area travelers aren't likely to save is on airfare. Airlines are increasing surcharges to offset higher oil prices, bumping the cost of a round-trip ticket by $80+ over fares from 2009. Most airlines have also added surcharges for peak domestic flights.
In addition to surcharges, airlines have scaled back on the number of tickets sold per flight to offset reductions in travel, according to USA Today Travel:
Delta and American, for instance, cut the number of seats this April by 21% and 14.2%, respectively, from April 2008. On the flip side, U.S. airlines say the number of leisure travelers has nearly returned to 2008 levels. Business travelers also are returning, though not back to pre-recession levels.
Fewer seats means more expensive tickets. Though the airlines are charging more, many in the travel industry predict that with a stronger dollar, the total cost of the trip will still be a bargain compared to 2009.
Don't bank on a weak euro
Despite the positive predictions from the travel industry, it's still wise to be cautious. The euro has been unstable, and Dr. Chris Hughen, professor of finance at the University of Denver's Daniels College of Business, advises travelers not to count on a stronger dollar:
I think anybody who tells you to have a lot of confidence in what's going to happen over the short run is probably lying to you. What has changed, though, is that people are starting to question the viability of this European monetary union. What that means is, over the short run, we could have enormous fluctuations.
Basically, there's a lot of speculation. Nothing is certain. If you're thinking about going to Europe this year, it's not a bad idea to see what deals are out there.
When you travel overseas, does the state of the dollar affect your plans? Have you ever delayed a vacation or chosen another destination based on the exchange rate?