March 20, 2015 / 11:11 AM / in 3 years

What the Superdollar means for summer travel

NEW YORK (Reuters) - Jane McManus can hardly believe her luck. The New York-based sportswriter for ESPN.com is planning a summer vacation with her family in Ireland.

Following the strength of the U.S. dollar, McManus upgraded their travel plans, reserving a swankier hotel room in Dublin and booking a couple of days at an actual 13th-century castle. The overall cost will be about 30 percent less than last summer’s vacation to Italy when the dollar was much weaker, McManus estimates.

“Wow, it’s so different,” she marvels.

With the Superdollar near parity with the euro, airfares to Paris are down 14 percent from a year ago, according to popular travel site Orbitz. Hotel rates have sunk 10 percent from last year.

London, Rome and Barcelona are among other popular locales with cheaper hotels and airfares than last year, according to Orbitz data. Travel expert Brian Kelly, known as “The Points Guy” (www.thepointsguy.com), also singles out Japan, thanks to the weak yen; Finland, the only Scandinavian country to use the euro; and South Africa, whose currency has sunk by almost half over the last few years.

You do not have to leave North America to feel the impact. Next-door neighbor Canada’s currency has slumped to around 80 cents on the dollar.

As a result, travel trends are already shifting: International air traffic for U.S. citizens in January was up 7.2 percent over the previous year, according to the National Travel & Tourism Office.

Of course, it is still only March. Currency markets are famously volatile and could turn at any moment. That is why some travelers are wondering how to lock in these favorable exchange rates, and make sure that they are able to see Europe or Canada or Mexico on the cheap.

   

CURRENCY MOVES

People relax in the sun near the fountains at Trocadero square near the Eiffel tower in Paris March 23, 2012. REUTERS/Charles Platiau

One easy move is to prepay at current rates - not just buying your flights as soon as possible, but hotel rooms and excursions as well.

“Hotels that used to be $160 a night in U.S. dollars are now $130,” says Carl O‘Donnell, 23, a New York-based reporter for Mergermarket who is planning a summer jaunt with his girlfriend to historic French-Canadian Quebec City. He is thinking about locking in some prices now.

O‘Donnell is tacking on additional days to their trip, and adding pricey excursions like boat rides through fjords in the Quebec countryside. “It feels great to be getting a big discount,” he says.

You can even hedge your cash needs with a foreign-currency bank account. Florida-based EverBank offers a variety, ranging from the Indian rupee to the Chinese renminbi, that you buy at today’s rates to hold and spend later. 

People enjoy sunset on the banks of the River Seine on a sunny summer evening in Paris, August 10, 2013. REUTERS/Christian Hartmann

“Usually, most of our clients are investors,” says Chris Gaffney, president of world markets for EverBank. “But recently, with the euro hitting multi-year lows, we have seen more people coming to us to lock in travel-related expenses.”

EverBank’s foreign-currency deposit accounts do not charge monthly fees, but do require a $2,500 minimum. Before you depart, Gaffney suggests buying a bank draft, or having the money wired overseas, so you do not have to convert cash back and forth (and get hit with fees both ways).

Another way to hedge your bets is to secure some traveler’s checks now, or load some money onto a prepaid card like the Travelex Cash Passport. (That does come, though, with a card-purchase fee and foreign ATM withdrawal fees at about $2.50 a pop.)

You can even buy a few euros at your local bank to spend later, although you have no consumer protections if that cash gets lost or stolen.

Superdollar savings can be significant. If you had planned a summer trip to Europe that was going to set you back 7,500 euros, and the euro drops from nearly $1.40 to $1.07 (as it has in the past 12 months), you are talking about more than $2,000 in your pocket.

Do not blow any exchange-rate windfall by using the wrong credit card, though.

With every $100 trinket you buy, you might be getting knocked another $2 or $3 for foreign transaction fees without even realizing it. One card Matt Schulz, senior industry analyst for CreditCards.com., likes: Barclay’s Arrival Plus World Elite MasterCard, which has no foreign transaction fees.

Editing by Lauren Young, Beth Pinsker and Richard Chang

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