USA TODAY International Edition
YOUR EUROPEAN VACATION JUST GOT PRICIER
A trip to the eurozone will cost 8% more than a few months ago
So much for that budget trip to Europe this summer.
Americans will have to dig deeper into their wallets for that dream vacation to the French Riviera and other destinations in Europe.
The culprit: a rise in the value of the euro — the common currency of the 19- nation eurozone — to a nearly one- year high vs. the dollar.
The bottom line: Purchases made by U. S. tourists in the eurozone are going to cost about 8% more than they did at the start of the year. A weaker dollar reduces the buying power of Americans traveling in places like Nice, Madrid, Rome, Munich and Dublin.
“The trip across the pond just got more expensive,” said Michael Farr, CEO of money- management firm Farr Miller & Washington. “While it’s only a few percent so far, the cost of a bottle of red, steak frites and penne al pesto will cost you more.”
Europe is still a bargain compared with a few summers ago, he said, but warned, “if this ( stronger euro) trend begins to move higher, Americans should grab the foie gras while they can still afford it.”
The euro climbed as high as 1.139 vs. the dollar Wednesday, hitting its highest level since last summer and fast- approaching 1.14 for the first time since June 2016. That means each purchase made with dollars in the eurozone will cost roughly 14% more than it would back in the U. S. Put another way, $ 1 now buys just 0.88 euros.
The euro is on the rise amid fears that the European Central Bank will begin to wean the economy off the stimulus it has provided, thanks to improving business conditions.
While the euro’s recent rise doesn’t equate to a full- blown budget- buster — the euro was closer to 1.40 at this time in 2014, or nearly 25% higher — it will require American travelers to stretch their budgets.
“If you booked this trip a few months ago when the exchange rate was better, you’re going to have to budget 5% to 10% more for food, train travel, entrance fees to museums and other onthe- ground expenses,” said Greg McBride, chief financial analyst at Bankrate. com.
Americans, for example, will
“If you booked this trip a few months ago when the exchange rate was better, you’re going to have to budget 5% to 10% more ( for expenses).”
have to pay more for European hotel bills at checkout if they didn’t prepay before the euro got stronger. A one- night hotel stay that costs 148 euros translates to nearly $ 168.72 at a euro/ dollar exchange rate of 1.14. That same room would have cost $ 155.40, or $ 13.32 less back on Dec. 30, when the euro was 1.05 per dollar.
Visitors to the south of France will also have to fork over more for French culinary favorites, such as croissants. A glass or bottle of rosé will also cost more. A round- trip train fare from French Riviera favorites Nice to Cannes is going to be higher, too. A 11.80 euro round- trip fare at current exchange rates equates to $ 13.45 in American dollars, up from $ 12.39 at the end of 2016.
Personal finance pros stress that a higher euro now won’t impact any expenditures that were paid for in advance when the euro was weaker, such as hotel reservations, day- trip excursions or transportation.
Another positive: The average round- trip airfare to Europe this year is below $ 800, which is less than what air travelers paid last year and more than 20% below the average $ 1,000 fare in 2015, noted Jeff Kleintop, chief global investment strategist at Charles Schwab, citing data from Hopper. com, a mobile flight- booking app.
“While getting there could still be a bargain, once you are in Europe, good deals may be more difficult to find,” Kleintop said.
Craig Erlam, senior market analyst at OANDA, a foreign exchange broker, said many analysts believe the euro has “seen its darkest days against the greenback” and that it could continue to strengthen. If so, travel to Europe will be even more expensive in the years ahead.
“If Americans are desperate to see the Eiffel Tower in Paris, the Colosseum in Rome or the Acropolis in Athens, or just drink beer at Oktoberfest in Germany, now may still be a good time to do it,” Erlam said.
The big winners in a stronger euro world? Europeans visiting the U. S., as their euros will boost their buying power in the USA. So while a stronger euro isn’t great for American tourists, it is good for American hotels, restaurants and tourist sites catering to European visitors at home.
Greg McBride, Bankrate. com