|
|
|
Comments (27)
Print
Save/ShareToday the dollar buys about half as much in 13 western European countries as it did in 2001. But it might regain some buying power soon.
Today, you need $1.48 to buy a euro. But within a year's time, you may only need $1.39—or roughly 6 percent less, say surveys of economic forecasters by the Federal Reserve Board. That's not much of a gain, but at least it's something.
Interestingly, U.S. hotels are slightly better off when the dollar is weak, not strong. Here's why:
On average, hotels earn somewhat more money when a cheaper dollar attracts more visitors to our shores and encourages more Americans to travel within the U.S. instead of abroad, say researchers at PricewaterhouseCoopers. The hotels that gain the most from a weak dollar are in Las Vegas, New York City, and San Francisco.
Why is the dollar dropping? You may have heard a sensational reason, namely, that fewer foreign banks, businesses, and governments are doing business in dollars. (In a classic example, a business in one country that buys a product from a business in another country may use dollars to do so, if it thinks that the dollar is a more convenient, stable currency than the local currencies.) Some U.S. analysts worry that if a critical mass of foreigners stop using the dollar—especially foreign banks that stockpile dollars as a way to guarantee of the value of their local currencies—large numbers of banks and countries will stop using the dollar. The value of the dollar could spiral downward, causing a variety of problems for Americans.
Luckily, whether or not such a situation could become a reality, it seems that only a relatively small number of foreigners are switching to the euro and other currencies right now. The Economist recently printed a handy chart to show this point. About two-thirds of the world's money is kept in dollars today, which is roughly the same stockpile as in the early 1990s—and far more than in the 1980s. The dollar's recent troubles have had to do with temporary problems, such as the cuts in U.S. interest rates, the mortgage-industry crisis, and the drop in the value of U.S. debt for foreign investors. These problems will sort themselves out within the next year or two, according to The Economist, The Wall Street Journal, and the Financial Times.
Is the dollar driving you out of Europe? How are exchange rates affecting your travel plans? And how are you keeping travel costs down? Feel free to post a comment below.
EARLIERThe 2008 Hotels Forecast: What budget-minded travelers can expect.
PHOTO BY AMagill via Flickr.
User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.
I haven't been back to Europe in 5 years when the Dollar and Euro were about even. I've been to Asia and South America where my Dollar goes further.
Posted By Cheryl Soriano on December 20, 2007, 12:33 PM
We tend to go to Europe 3 times a year. With BOTH airfares and Euro skyrocketing, we have to cut back, probably only twice.
Posted By Tom on December 20, 2007, 12:54 PM
We were visiting Europe every year. Now we go to Hawaii.
Posted By Nancy on December 20, 2007, 1:05 PM
We have been to Europe in 06 and 07; costs will probably prevent a return in 08.
Posted By Don on December 20, 2007, 1:34 PM
We have a lot of reason to go to Europe. Went to school, lived and worked there and have friends we keep in touch with. However, over the last few years we specifically have not gone to Europe because of the exchange rate. We go on vacation 3x a year.
Posted By Kim on December 20, 2007, 1:51 PM
me and my husband me to germany b/c he just joined the army and we live on army housing but b/c the dollar is so weak over here and he is a private we are basically living like we are poor we would do better back in san diego working a full time minimum wage job than live here with the dollar vs euro rate
Posted By brandy yandoc on December 20, 2007, 1:53 PM
We went to Europe, March 2005 and then again Sept. 2007. We felt the difference in our pocket book. We do plan to go again this next year, we love Europe. We will just adjust our spending. Less expensive hotels, not buying so many gifts to bring home and watching where we eat. It can be done.
Posted By Cheryl on December 20, 2007, 2:09 PM
We have gone to Europe at least once each year for the past several years but next year we are limiting our trip to Greece and will use condos where we will be able to shop at local markets and not go out to dinner as often. We have found dining out to be a major expense. We also will be staying in small cities or towns to experience that Greek experience.
Posted By Shirley Seal on December 20, 2007, 2:27 PM
I have been vacationing in Asia for the past couple of years because the dollar is so week in Europe. Between airfare & hotel alone, I could get way more over in Asia.
Posted By Bianca on December 20, 2007, 2:37 PM
I've been to Europe about 10 times since 1993 and the exchange rate was awful last month. I totally blew my budget because airline tickets were about 66% higher than they usually drop to in the Winter and the exchange rate went up 50% from past times. A medium Coke with no refills is about $4! It was hard to enjoy myself knowing the credit card statements I would be facing back home. That's another thing - credit cards all add a 2-3% surcharge for purchases in foreign currency. It used to be a bargain to use credit cards. I'll definitely go back, but I guess I'll need to postpone the visit so I can save up longer.
Posted By Rebekah on December 20, 2007, 2:51 PM
Two years ago I travelled to Africa where my dollar went a long way. Last year I went to Fiji,New Zealand and Australia, Where it still had some positives for me. This year I'm going to Europe for two weeks, I bought my Euros when the dollar started to drop so, even though the dollar is not as strong as the Euro, I saved money on my last two vacations. I can afford to splurge a little and enjoy europe because of it.
Posted By Bill on December 20, 2007, 2:58 PM
My family and I (4) are going back to Europe for New Year's Eve. I usually pay for everything in advance, hotel, car rental, Oyster cards, etc. Because I plan at least six months in advance, I find I usually save when the dollar starts dropping. One example, I bought Eurostar tickets between London and Disneyland for $395.00, when two months later they had jumped to $562.00.
Posted By Leyne Orosco on December 20, 2007, 3:13 PM
My wife and I and another couple have visited Italy in 2005 & 2007. This last trip in May was extremely cost prohibitive. As much as we would like to return in 2008, it's just going to be too expensive. We'll stay in the USA for awhile.
Posted By Edmund K. Stoy on December 20, 2007, 3:38 PM
I enjoy travel; however the present currency exchange is limiting us to travel within our country.
Posted By Anthony J. Asaro on December 20, 2007, 3:53 PM
We love to go to Italy and for many years, we went every Fall.
Things have gotten so expensive because of the devalued dollar, we are looking for other places to go where the arts, culture and shopping can be fun. We love big cities. This year we went to Italy and stayed in lower priced hotels but it was still expensive. We may just back off Europe for a while and hope the dollar gains strength.
Posted By Dot Blum on December 20, 2007, 5:24 PM
We are taking our teenage granddaughter to Paris as promised but keeping our promise to her is the only reason we're going!
We're considering packaged travel since air/hotels bundled on these seem to be a much better deal than we could get on our own.
We will have a lot of in-room picnics, and will have to cut out extras like going to shows, day trips out of the city which involve steep excursion expenses, and impulse buying. Still, we know she will get a lot out of the trip and even though we'll have less to spend, it will be a joy to experience Paris through her eyes.
Posted By Vera Norman on December 20, 2007, 6:13 PM
We've been traveling to Europe for about 15 years at least once a year. For the past couple of years we've spent more time in Hungary, Slovenia, Croatia and Czech Republic to make the trip more affordable. We stay in rooms in private homes whenever possible (and it usually is) and we plan to eat at least one meal a day from a local grocery store - rolls, cheese, sliced meats, fruit. We find that by skipping the most touristy places, we get to mingle with the people who actually live there. We've made some wonderful friends and seen some marvelous events that most Americans will never experience by traveling cheap. We've already got our tickets to go in May.
Posted By Bonnie on December 20, 2007, 8:10 PM
Note re credit card surcharges. Check all your cc companies. I have always found at least one who does not charge foreign currency conversion or transaction fees. Saves a bunch. Also use the ATM to get the best conversion rate.
Posted By Tim P on December 20, 2007, 9:11 PM
I go to Italy every year and just returned. With careful planning and going off season, the cost us still pretty reasonable. You don't need 4 and 5 star hotels for a pleasant stay. We enjoyed ourselves so much this year, we are already planning on a repeat trip in the Fall of 2008. We don't have the expense of a ticket as we use air miles.
Posted By Ann on December 20, 2007, 9:14 PM
I just got back from london and italy. I blew my budget sky high. the pound was half of what the dollar is and the euro was not far from that. I try to go to somewhere different in europe every year, but this trip scared the crap out of me. Im thinking a cruise to amsterdam (everything but souviners will be paid for) next time or maybe whitewater rafting for 10 days in the grand canyon.
Posted By CORDELLI on December 20, 2007, 9:18 PM
We are planning on renting a boat on the Shannon River in April. The first company I dealt would only quote prices in Euros and the price,in dollars, kept going up. I eventually found another company that quoted the price in dollars so there has been no flucuation in the cost of the trip. Bed and breakfasts have a little more than doubled since we were there in 2000.
Posted By Sharon Borden on December 21, 2007, 10:33 AM
We are currently planning a 2-3 month trip with our two children. Our first comment was "anywhere but Europe". We will either go to Asia, South America or to NZ and OZ.
I also just switched credit cards because of the surcharge. Capital One absorbs the visa surcharge. Now looking for a good ATM card because Citibank really charged me quite a bit when I was in Canada this summer.
Posted By gloria on December 21, 2007, 11:50 AM
since the overvalued euro has been in use we do not go to any country that uses it.We do not believe thatthe way we are overcharged with the can only be stopped is boycotting those countrys.
Posted By jim fulton on December 22, 2007, 9:41 AM
We just got back from Netherlands & Belgium & were totally flabbergasted by the pprices. We stayed in supposed cheaper hotels thatwere in Euros equivalent to an executive suite here in the States. Needless, to say we did not shop at all & will definitely stay away from Europe for as long as it takes. South America, Asia & U.S. look better and better for our travel bucks! I say that we all vote with our wallets and stay away from Europe.
Posted By Larissa on December 25, 2007, 10:02 PM
The dollar vs. euro exchange means you do better if you can purchase your vacation in dollars, rather than going direct to hotels and paying in euros. I went on a tour to Italy earlier this year and the rate was locked in in dollars, which meant I was somewhat protected from the devaluation of the dollar. I only had to pay for a few meals and shopping and used a credit card with no fees for foreign currencies. I got great deals at outlet stores and ate at local trattorias and the big meal of the day was lunch, not dinner. You can still travel to Europe, you just need to be a more educated traveler.
Posted By Helen on December 29, 2007, 11:36 AM
My husband and I had originally planned a 2 week trip using eurail pass to visit 5-6 countries. We now have arranged instead a 1 week trip to 1 country (Netherlands) with maybe a day trip to nearby Belgium or Germany. We plan to picnic more and take advantage of the continental breakfast our b&b supplies. We had discussed going to Paris later in the year, taking advantage of our timeshare exchange so that accommodations will cost next to nothing - but we will wait and see with the euro vs. dollar.
Posted By Denise on January 13, 2008, 5:02 PM
Our April/May 2008 trip to Tuscany is going to cost us a bundle! However, my wife and I (w/no kids) have decided if we don't travel now (we're as healthy as can be at 55 & 49), when will be the perfect time? The best advice I've seen is about not buying souvenirs to send/take home, so my guess is it will be the small shop owners of Tuscany who will lose out because of the weak dollar.
Posted By Ron on March 18, 2008, 11:47 AM