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Travel Trends – A Stonger Dollar May Make Europe Affordable Again

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By Bobby Hickman

April 16, 2010 – With the U.S. dollar strengthening against both the euro and the British pound, experts say 2010 could become the best time to travel “across the pond” in recent years.

Both the euro and the pound have fallen to lows not seen in many years. (Yesterday, the euro was equal to 1.35 U.S. dollars and the pound was worth 1.54 U.S.) With financial troubles in Europe expected to continue through the year, experts are predicting currency rates will continue to improve to favor U.S. travelers – triggering a flood of media reports that leisure travel to Europe is becoming more cost-effective.

“We are seeing more inquiries due to the falling euro” and the weakening British pound, said Ann Lombardi, co-owner of Atlanta-based The TripChicks (www.TheTripChicks.com), which specializes in customizing small group trips to Europe and other international destinations. ”We tell people to prepare for an unexpected curve ball when it comes to currency conversion rates – they’re always moving.” Still, she added, “We’re happy when the euro is under 1.50 U.S.”

Lombardi said when there is media publicity about better exchange rates, her agency gets more calls from the general public. She said people who think they need to stay close to home because “Europe is too expensive” tend to make more inquiries and book more trips when the dollar is stronger. “We also tell them you can go to places that are not dependent on the euro within Europe to save some money,” she added.

There are actually several rates of exchange, Lombardi said, so consumers should make sure they are using the correct rate for planning purposes. The most commonly cited is the interbank rate, which “nobody can get except big banks,” she said. There is also a credit card rate, which is usually the interbank rate plus 2%; and a cash exchange rate (typically interbank plus 4%). Lombardi said, “If you do your calculations based on the interbank rate – which is not available to tourists – you can really mess up your budget.”

For those who want to plan ahead, Lombardi suggests using Oanda (www.oanda.com). The currency exchange monitoring site includes a travel exchange rate page where you can select the interbank, credit card or cash rate. The site also shows historical trends in exchange rates. “You can see if there is a pattern in rate peaks and drops that indicate a better time of year to travel to another country,” she added.

Also, there are a number of countries in continental Europe that use their own currency rather than the euro. There are 16 countries in the European Union’s “eurozone” – countries that use the euro as their only legal tender. Lombardi said some of those countries are popular destinations, such as Italy. Many others outside the eurozone “are under the tourist radar,” she said, including such Eastern European countries as the Czech Republic, Romania, Bulgaria, Croatia and Slovenia.

Many of those countries offer a European vacation at lower prices, Lombardi said. “When you go to Slovenia it’s like being in the Alps in Austria or Switzerland.” Without being concerned about the Euro rate, “you can get like a mini-Austria experience if you go to Slovenia,” she said. Similarly, one can have “a mini-Greek experience” by visiting Croatia: “beautiful islands, similar food, outstanding scenery, hospitable people, and fascinating history,” Lombardi said. “So there are a lot of alternatives to countries that are based on the euro as their main currency.”

Robert Holub, coordinator of North America media relations for Switzerland Tourism, noted that his country still uses the Swiss franc. “The franc is actually stronger than the euro,” Holub said, which translates into “affordable travel” for U.S. tourists. In fact, over the last 10 years, the Swiss franc has outperformed the euro and its conversion value is often close to the value of the U.S. dollar. (Yesterday, the franc was worth 95 cents US, versus $1.35 for the euro.) Holob said favorable rates mean Switzerland “is a better value than the eurozone countries.”

Switzerland has “a reputation as being expensive but that’s not really the case,” Holub added. “It’s really a great deal.” For example, Holub said, tips and taxes are included in the initial cost of dining out, so a $15 meal in Switzerland is equal to a $20 meal elsewhere. He also said the country has suggestions for budget-friendly and free activities on its web site, www.MySwitzerland.com.

Lombardi agreed Switzerland is “perceived as an expensive country but it’s really not.” She said travelers can find excellent values by staying at a smaller inn where breakfast and dinner is included in the package. “Eating out can be expensive if you stay in a hotel and dine out every morning and evening,” she added.

Both Holub and Lombardi pointed to the Swiss rail pass as an “excellent value”. The pass provides access to public and private rail systems; lake steamers; postal buses that access mountain villages — even admission to more than 400 museums. “Some of those museums are pricey at $30 to $40 person,” Lombardi added.

Lombardi said her company does “see the dollar getting stronger, which is great.” But even when “the euro is a little high,” she added, “there are still ways to have a good time in Europe at an affordable rate. You just have to plan ahead and do your research.”

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