holtju2

There should be 30% decrease in hotel rates now that they can freely convert the ARS to USD. Right now this is effectively 50% price hike for those that used Dolar Blue to pay.

HIDDY

A bit of wishful thinking there.

Sorry to say this but quite frankly I don't really have much sympathy for tourists and what they think they should pay. I'm more concerned for those who live here.

Eastbay1K

I'd venture to say that this was a relatively small minority of foreign hotel bill settlement. Pretty much all business travel would be on plastic. I'd expect a large amount of tourist traffic is also on plastic, or prepaid (such as cruise or tour packages).

bakoboy

I don't get why the hotel price is higher after the devaluation down to 15-1.

Before, if I paid for a 450 peso hotel room at the official rate of 9-1 USD the conversion is that I paid US$50 If I paid with cash that I got at the blue rate of 15-1 USD then the hotel cost US$30.

Now the rate is 15-1 USD. No blue rate advantage. If the hotel is still 450 pesos then the rate is still $30.

Am I missing something?

mccomb

Hotels are priced in dollars, not pesos. That is why the rate was so much better.

fanger

What other goods and services were normally priced in USD? I seem to remember AA ceasing to accept payments in pesos because of difficulty moving funds out of the country; presumably this will make doing business easier for everyone.

shonamac

You just have to look at the years of FT discussions on blue dollar transactions to know that tourists who actively leveraged their money were not a "small minority". Those of us who are lamenting this situation are the ones who love Argentina and just sad at the demise of a nice destination...but we love our pocket books even more and will now actively choose some other destination where our $ or € goes further.

HIDDY

Sorry to say but your post is all a bit me,me,me. You obviously didn't visit here when the peso had parity with the dollar.

Argentina is still a great value destination for the vast majority of tourists who come here. If anything I suspect more will be attracted by recent changes than put off.

David Beach

Your dollar will go further in Argentina as the floating market devaluation of the peso increases. Argentina continues to be a great value.

Eastbay1K

(1) FT is a "small minority."
(2) "Just sad at the demise of a nice destination" puzzles me. Argentina has been teetering on the verge of a complete economic collapse again, and would have really been the demise of a nice destination. When high value pricing for tourists just goes to value pricing for tourists, and an economic collapse has been averted for the time being, it is still a value.

As much as this may affect me and a few others here (i.e., that have been paying our local Argentine expenses with a very favorable exchange rate) more than most tourists, I would much rather have Argentina return to the world economy.

My first 3 trips to Argentina were prior to the 2001 collapse. Hotels were horribly expensive (i.e., comparable to NYC or worse at the time), but I found food, taxis, and pretty much everything else reasonable. As it currently is, the US$ price of better hotels is about half of a comparable hotel in New York or San Francisco, without the blue benefit.

So, the tourist who loves Argentina must decide "do I return and spend a bit more or be a bit more judicious in my spending" or "do I now just not love it so much anymore and I'll go somewhere I like even less, to save money."

Schultzois

Very well put. I've been looking for the right words to put around it, but never quite found them.

I expect many of my costs (as someone who spends around half of each year here in Argentina) will go up in dollar terms (my income and savings is all dollar-based). Or at least they'll go up in the short term, after having gone down because of what I'd consider a bit of an anomaly over the last few years.

I have also been expecting this to happen, and for the sake of Argentina's participation in the global economy, I welcome it - even if I don't get to "take advantage" of quite as much savings in dollar terms as I used to.

Even if one's motivations are more selfish, now a lot of things will get more convenient (I will be able to use my US credit cards again!!). So, again, the price in dollar terms may go up compared to what the savvy traveller could do in the last few years, but I don't expect it will spiral out of control, and my economic belief is that if a better degree of market efficiency can be achieved, then everyone's going to eventually come out ahead.

All in all, the currency float changes are something that for a long time have been necessary, predictable, and will ultimately make it easier to get around for most visitors to Argentina.

fiona

There will be many folks who have avoided Argentina because of the carry on exchanging money. Now things will be more straightforward and so it will be back as a tourist destination for them.

Dieuwer

Higher prices won't last if wages do not rise commensurate. Otherwise, people will starve.
However, best thing to do for the government is to restrict the money supply growth to zero and crank interest rates into the stratosphere (basically, what Paul Volcker did in the US).

HIDDY

Indeed.....some have been put off by the tactics of the last Government and will now reconsider coming.
I do feel sorry for those who are on a very tight budget and think it's no longer going to be a financially viable destination for them. Although I suspect the numbers who fall into that bracket are extremely low.

Accommodation here is still very affordable although you may have to replace a stay at the Hyatt with the Sheraton instead.

Schultzois

Adding a data point: I've used one of my US-issued cards for the first time in years in Argentina today, mostly as an experiment (and also as I was running low on pesos).

A transaction of AR$767 is pending on my British Airways Chase Visa for US$57.91, which is a rate of 13,24. The BA card doesn't have a conversion fee normally, and the rate looks in line with what public sources for the de-clamped official rate should be.

So, at least for now, I can start using my credit card again.

I haven't tried exchanging dollars since the de-clamping, but given that I am sitting on a few thousand of them brought in before the change of policy, seeing at what rate those can be exchanged might be my next experiment.

For the moment, though, it looks like things are working, well, the way they would in any normal place. Will be interesting to see what happens next, though, as holiday season and through January is always when rates would go wild as Argentines travelling abroad would change currency. It would not surprise me still to see some pressure on the exchange rate over the next 2-3 weeks.