Pricey Paris, Rome out of Reach

Oct. 18, 2007 — -- The value of the U.S. dollar continues to weaken, with the currency hitting a new record against the euro today.

One euro now costs $1.43. When the euro, now used by 13 EU nations, debuted in 1999, it was actually worth less than the U.S. dollar. The two currencies were near parity for some time before the dollar declined and the euro spiked in recent years.

Though today's new high is good news for companies that export goods, for most Americans it means that traveling abroad is going to be that much more painful.

A hotel room in Paris that might have cost $200 two years ago now costs $240 a night. That bottle of soda in Amsterdam is close to $3.

"There are a lot of comments upon returning about how expensive it is," said Mary Peters, owner of Friendly Travel in Alexandria, Va.

Peters said that the poor exchange rate really didn't hurt this summer's sales, but she is concerned about next summer's bookings.

"People that had planned to go went — a lot of moaning and groaning — but they did go," said Peters, who is also vice president of the American Society of Travel Agents. "I think next year we're going to find that people will take the inclusive tours as opposed to going on their own."

Mauro Galli, owner of TourCrafters in Illinois, has been working with an Italian tourism organization on a discount card for food and attractions to make travel abroad more appealing for Americans.

"A vacation in Europe is not a vacation you are going to take every year," he said. "The people who call for booking, they don't seem very concerned about the exchange rate."

At least yet.

Diane Clarkson, a travel analyst with JupiterResearch, predicts an impact on the industry, but said since this latest run-up occurred after summer trips were booked, the effect has been muted.

"The impact is not as great as it might have been happening in March," she said.

Still people are taking note as they think ahead to next summer or even destinations in the Caribbean that aren't pegged to the U.S. dollar.

Clarkson said tourists are looking to find cheaper hotels or spend less time in London or Paris. Instead they are looking at places in Eastern Europe that are cheaper, such as the Czech Republic, Poland and Hungary.

Friendly Travel's Peters has been trying other tactics to sell trips that don't break the bank. A seven-night trip to the Caribbean now becomes a five-night vacation.

The low dollar and strong euro has also made it more appealing for Europeans to travel, pushing up demand and some prices in places like the Caribbean, Peters said.

Europeans are also traveling to America, which is essentially on sale for them.

"Roughly they are going to be saving 5 [percent] to 10 percent in their travel costs," Clarkson said. "The U.S. is now on the radar as a more affordable holiday."

She noted, however, that the United States has made it more difficult post-Sept. 11 to enter the country and that some Europeans are also boycotting trips here because of the war in Iraq.

And now for the first time in decades, Canadians are being targeted. It's bargain time for people north of the border as the Canadian dollar has reached parity with the greenback for the first time in three decades.

The New York state tourism board is running ads in Toronto newspapers and Florida has been aggressively marketing both here and in Canada, Clarkson said.

There are other campaigns too.

The Greater Fort Lauderdale "Beachmobile" will go to London this winter in pursuit of tourists. The marketing device usually heads to northern cities such as New York, but is now heading across the Atlantic for the first time.

The British pound has also appreciated against the U.S. dollar. It now costs $2 to buy one pound, compared with $1.40 in 2002.

So as Europeans come here and traveling there gets more expensive, analysts will be watching to see whether Americans change plans. For now, Peters said they aren't. But, she adds, "They're watching their pennies a little bit more."