Europe’s recent financial troubles, propelled by the debt crisis in Greece and other countries, have given European markets the jitters in the past few weeks. As a result, many investors have turned away from the euro, causing its value to plummet against the US dollar.
As of today, the US dollar is stronger against the euro than at any time since April 17, 2006. This morning the euro was trading at US $1.23, a remarkable drop from its high on December 3, 2009, when the euro hit $1.51.
The financial implications for Americans traveling in Europe now or heading to Europe soon are very real. Simply put, you’ll spend the same amount in euros, but spend a lot less in dollars.
Take, as a very basic example, a hotel room that costs €100 a night. In December, it would have cost $151. Today the same room costs $123. That’s a savings of $28 per night. Now, multiply that sort of savings by every night in a hotel, every meal in a restaurant, every trip on the Metro — and you’ll see how this can really add up.
There are winners and losers in every currency fluctuation. The high euro of the past several years has been great for Europeans visiting the United States, but not so great for the European travel industry, which has seen a sharp decline in American tourists visiting Europe. With a suddenly stronger dollar, Americans will regain spending power that we haven’t seen since 2006. Hopefully, this will inspire more Americans to travel abroad while also benefiting the local economies.
Taking advantage of the exchange rate
Will the dollar continue to get stronger against the euro? Of course we can only speculate. It’s been so many years since we saw it this strong, however, that our instinct is to try to take advantage of these rates now, lest they don’t last.
Americans traveling abroad right now are already taking advantage of the strong dollar with every purchase and ATM cash withdrawal. For those preparing to head over in the next couple of months, it would make sense to “lock in” the exchange rate by pre-paying for anything you can right now in euros. (Unless, of course, you think the dollar will continue to get stronger. If that’s the case, disregard the rest of this post and pay as you go!)
Many (if not most) parts of a trip are paid for during the trip. Hotels, for example, are usually paid for upon check-out. Food is paid for several times a day — and hardly ever in advance! The same goes for most incidental charges.
However, there are some ways you can take advantage of the exchange rate now by pre-paying in euros. These include:
1. If you’re going to buy euros from your bank, do it now.
This is a funny “tip,” as we usually tell readers not to spend much money at all on pre-buying euros. “Wait until you get to the airport, then hit the ATM!” we cry.
However, it is a good idea to have some euros in your pocket upon arrival — after all, the airport ATM could theoretically be out of order. Buying euros from American banks can be an awkward, time-intensive, maddening affair — and you could end up paying a fee or not getting the best exchange rate. However, if you already are planning on going to the bank for some euros before your trip, go now!
Side note: For visitors to almost any European destination, we recommend arriving with just enough euros to get your group into town and get something to eat, if necessary. Once there, head for an ATM.
2. Book any European-based flights between cities now.
You probably won’t see big savings on US to Europe flights anytime soon, as carriers have cut back on the number of flights in order to drive up ticket prices and recoup some recent losses. However, if you’re planning to take European-based low-cost airlines between cities in Europe (which is a budget-friendly, if not environmentally-friendly way to get around), you can pay for those flights in euros and should book them now.
These include flights on Ryanair, Air Berlin, Germanwings, WizzAir, and many others (which we cover in our budget flights guide). Given the dollar’s strength against the British pound ($1.42 yesterday, the lowest since March 2009), this also holds true for booking easyJet flights in British pounds.
3. Book any train journeys now.
Which brings us to another favorite point, book your train journeys directly with the European railways and not through a US-based agent. Companies in the US often charge expensive prices for passes (like the Eurail), which are designed only for Americans — and sold in dollars, which won’t be affected by the changes in exchange rates.
Instead, book point-to-point train tickets directly with the national rail Web sites, be it the SNCF (France), Trenitalia (Italy), Deutsche Bahn (Germany), etc. For much more on this subject, please see this post on booking directly and this for booking an SNCF ticket in French!
4. Ask if you can pre-pay for your hotel.
This request may be greeted with outright laughter, but it’s worth a try.
Most hotels, especially budget-friendly hotels, will only let you pay for your room upon check-out. This is done for a number of reasons — it’s how their reservation agencies work, they may not be able to make a charge for a service not yet performed, it’s too much of a hassle to refund if you cancel, etc. (Most hotels, however, will ask for a credit card number to guarantee your room and will charge it only if you cancel.)
However, you could always ask if the hotel can charge you in advance in euros for your stay. Hey, it’s worth asking!
5. Pre-book airport transportation.
We recommend taking local transportation from your arrival into town. This usually means a train, bus, or subway, most of which will not be able to be pre-booked. However, sometimes you need something more dedicated, like a private shuttle bus, car service, or taxi.
There are numerous companies that offer ground transportation from European airports to city centers or even hotels. One budget-friendly option is Terravision, which runs comfortable low-cost buses from the airports of major cities. Pre-booking these fares, in euros, could save you.
6. Pre-book tickets for tourist sights and museums.
Finally, think of the major attractions that you plan to visit during your trip. You may be surprised to find that many of these offer online pre-booking in euros. From tickets to the Uffizzi in Florence to tickets up the Eiffel Tower in Paris, you can buy them online in euros, and then skip the line.
Some words of caution: Make sure that you’re buying directly from the museum or attraction and not through a third-party company that will be tacking on a commission. (Double check the URL of the site. Also, check out the prices on the “official” Web site and make sure it’s the same price you’ll be paying.)
Also, don’t overdo this. Travel should be fun and spontaneous. Nothing crushes spontaneity as quickly as an overbooked trip, dictated by an overzealous to-do list. (For more on this, read this controversial essay on visiting “Paris without the Louvre.”)
Foreign transaction fees
It’s important to note that many American credit card companies now charge “foreign transaction fees” (up to 3%) for purchases made with foreign companies, even if made from the United States. For much more on this, see our post on fees for ATM withdrawals and credit card purchases in Europe.
Of course, if the dollar continues to grow stronger against the euro, you could find yourself in Europe with an even more advantageous exchange rate than today’s. In that case, you would have benefited from NOT pre-booking anything. Only time will tell.
Either way, one thing is for sure: Travel to Europe hasn’t been this budget-friendly for Americans in many years. If you’ve been putting off that trip, consider this your wake-up call! Happy travels.
Do you have any other ideas for ways that Americans traveling abroad can benefit from the suddenly stronger dollar? Please tell us about it in the comments section below.