iahphx

If you're not closely following the currency markets, you'll like be surprised that the decade-long weakness of the US dollar has gone -- poof. Today, March 11, the Euro is only worth $1.05. Less than a year ago, it was still in the $1.30s.

While the move isn't surprising -- you had to be in a cave not to think that the Euro was fundamentally over-valued the past decade -- the suddenness of the move is startling. It's undoubtedly a result of central bankers around the world devaluing their currencies to try to jump start their struggling economies.

Logic will suggest this will have an impact on world travel trends. The Europeans have been living high off the hog for over a decade now. But I don't think that fundamentally changes, since almost ALL currencies are depreciating against the US Dollar. It will still be affordable for Europeans to travel -- just not so much to the USA. I would think the hoteliers of NYC will suffer a bit, as Europeans will travel elsewhere.

The bigger impact will be on Americans travelling abroad. Mexico, Canada and other Western Hemisphere destinations are cheaper now, and there are major changes in Asia/Pacific, too (especially Australia), but the big impact is going to be Europe. It's hard to imagine there not being a rush to plan European vacations this summer.

The biggest obstacle to this (other than Americans limited vacation time) is airfare. While industry execs talk about "over-capacity" in the transatlantic market, airfares to Europe are certainly higher than they used to be. Like check-out NYC-LON fares for July. You won't find anything below $1000. Five years ago, you could have flown that for $600. So now you're "rich" in Europe, but you're $400 poorer getting there. Probably not a good trade, but perhaps the perception helps. At least it's better than last summer, where there were high airfares AND a bad exchange rate.

GUWonder

As a USD-earner, I can bet that the strong dollar makes my international travel in the aggregate more affordable than the "peso" which the dollar had become some years before. Also, this has already helped with making some non-US-originating roundtrip travel to the US even cheaper than it already was relative to US-originating fares.

iahphx

Actually, to the extent he even thought about it, I'm sure Obama was happy with the "Bush peso." Your overseas wealth seems to be largely a product of foreign actions: call it the Draghi Dollar.

Of course, while things are now all sunshine and rose for us USA-based foreign travelers (including me!), I'm not sure this is so great for the US economy. Want to sell something made in the USA overseas now? Hmmm, seems like a problem. And you'll also face much cheaper imports. The saving grace might be oil: hard to see that rallying since it's priced in dollars, and higher prices would be a huge burden overseas.

Braindrain

A high currency forex rate for any country is bad for the economy as a whole.

A couple of friends I know changed their vacation plans from visiting the US to going to Europe/Asia (non-US $ pegged countries) instead. Came out the same or cheaper in the end. I'm sure they're not the only ones.

Gardyloo

In our weird little niche of RTW travel, the USD has made premium-cabin RTWs a pretty good deal, provided you can get to one of the starting places where the dollar's value against the local currency has risen sharply. For example, a 4-continent business class Oneworld Explorer ticket (16 segments, good for a year) bought in South Africa costs the same today - around $5000 plus taxes/fees - as one I bought in IST in 2005. (For the math-challenged, that works out to around $375 per segment after T&F - okay for ORD-SFO, dynamite for JFK-SYD or LHR-EZE.) Screaming deals from TYO or CAI too, e.g. $5400+ for a 3-continent/16 segment RTW starting from either.

Ocn Vw 1K

Let's help keep the thread open in this forum by continuing to focus on the effect on travel of currency value trends without political commentary that would close the thread or force it to be moved to OMNI/PR.

Thanks to the members who've helped in this effort! Ocn Vw 1K, Moderator.

BearX220

I think it's been many years since peak-season TATL tickets were anywhere near $600. For several years now, at least since the so-called Great Recession, summer SEA-LHR coach nonstops have crossed the $2,000 mark. It's not just currency rates but reduced capacity and competition that drive international airfares.

Tchiowa

I think the above analyses are missing a couple of points.

1) Many currencies, such as the Thai Baht, are pegged to the US dollar, or to a basket of currencies in which the USD is prominent. This means that us USD earners may get a benefit in some areas where we travel (Europe) but not so much in Asia.

2) For the same reason, travel costs for Europeans going to Asia may go up markedly. Hotel, food, etc. that are priced in local currency are simply going to be 20% or more higher because of the exchange rate.

3) Oil is priced in USD. This is going to undo some of the effects of low oil prices for Europeans including higher air fares, higher costs of local products, etc.

RustyC

Yeah, SE Asia's a pretty good deal, but nothing like it was circa 1998. With the baht it's undeniably better at 32.2 vs 29.5, but that's maybe a 10% swing and you've got lots of prices over there in baht going up with the usual inflation. The ringgit looks like it has softened a bit vs. the 1-10 ratio it had with the baht for some time, but again not a huge move.

Having been nostalgic for well over a decade for the days when the dollar was higher than the euro, maybe it's time to plan a trip over there.

iahphx

I don't think Europeans will suffer much. Yes, there are a few countries -- other than the USA -- where the Euro has declined a bit. Thailand is one of them. Worse are the few places like HKG which either have a direct peg or use dollars. But these countries are few and far between. It's pretty much "business as usual" for European tourists (avoiding Switzerland, of course!). The big difference is for Americans, who now get to enjoy the world as the Europeans have for the past decade.

AppleApe

does this mean it will cost foreign airlines a lot more money to buy Boeing jets?

Tchiowa

Yes. That's kind of what iahphx was referring to. American products just became more expensive to overseas buyers. However, most jet sales are on contract and the price was fixed a few years ago so the impact may be more on future contracts that current sales.

behuman

The good news is that our US American friends will find it again reasonable coming to Europe. Countries like Italy have been too expensive these past years. May I ask my US fellow FTalkers a big big favor: :-: DO NOT TIP :-: in Europe. Our salary and social system is not the same as in the US and by tipping you ruin OUR service culture. I never ever tip under any circumstance in Europe and this is how locals behave.

Unfortunately I fear that US products becoming more expensive on the world market they will be less in demand, making more people jobless and slowing down the travel flow.

We will definitely suffer in SE Asia (not at home because our economies will recover), but there are encouraging news from Malaysia which may soon detach from the USD. Thailand will hopefully follow as their economy is struggling already (rice).

jpdx

I don't think this is at all true if you're talking about Asia -- HKD, CNY, MYR, THB, NTD, SGD, IDR are all down 15-25% from last summer vs the Euro -- and the impact will be felt by European travelers and local tourism economies. Even if the Euro stops its slide or even rebounds a bit (which isn't particularly likely, IMO), this will be a VERY painful years for European travelers venturing outside the Eurozone.

daberlin

We were in Bali in 2012. 9,900 IDR to the USD. Today? 13,150. We are going back to Bali in May and just booked a 4* spa in Ubud for three hours. Cost? $24 USD. Boom. I flew to Jakarta last week (as part of my AA Executive Platinum Challenge). Had lunch in the high end mall. $3.77. It has been almost 13 years since we've seen the USD strong overseas. I for one am THRILLED.

How are US travelers going to react? Well, I'm going to Bali in May, just booked Singapore (for the Formula 1 GP) in September, and hitting up U2 in London/Germany in October. ^