In the past few weeks the US Dollar has gone down in relation to the Euro and GBP by approx 10%.
At what point does the exchange rate affect your travel plans?
What adjustments do you make?
Go for a shorter time?
Book lodgings a notch lower than you might have otherwise done?
Fewer fancy restaurants?
Not go?
Is the softening in airfare prices enough of an offset?
Or is a 10% difference not meaningful?
Oh, 10% does make a difference. We might make minor adjustments, but we still travel. Kind of a YOLO philosophy. I'm not sure that international airfare prices are "softening" that much--yet, but its worth watching.
We travel fairly modestly, anyway. We aren't shoppers, we don't buy souvenirs. We tend to do "grocery store" breakfasts and lunches and eat at modestly priced restaurants. So, maybe make a few different choices, but nothing substantial.
By itself, it's not enough to change current plans. I can remember traveling when it was $1.35USD to €1.00. But in the context of other impacts on the broader economy, yeah it's a longer term issue. Even domestic travel can be impacted.
Did you plan your holiday around THE day with the highest dollar value? The average the last 12 months was $1 bought about 0.93 euro, now 0.88 euro. That's closer to s 5% drop.
Go East where travel is 20% to 30% less expensive.
And the Euro isn't the only currency. The dollar is down about 3% against the average of the forint the last 12 months. Check the other currencies.
Tourism in Hungary is generally >25% less than a place like Berlin or Vienna or London or Paris. But the real bargains are Bulgaria, Romania, Montenegro ... most any place in Eastern Europe except maybe Croatia.
I first traveled to the UK when the exchange rate was 1GBP to 2 dollars. Now, anything else still looks good.
The exchange rate doesn't really impact my trip too much at the time. I will still do what I want to do. Where it could possibly impact is for future trips. It may take me a little longer to save up for the next trip.
This is why I travel to Europe in what could be considered the off season — late autumn or early spring. I go when the masses from North America are not traveling so I can get cheaper airfare & more affordable accommodations. I plan 9-12 months in advance so there is no way to plan for the exchange rate. That’s totally out of my control. Most of my big-ticket expenses have already been paid for by the time I travel anyway. I watch my daily expenses accordingly.
I first traveled to the UK when the exchange rate was 1GBP to 2 dollars. Now, anything else still looks good.
I hear you! I remember visiting London when the exchange rate was £1 = $2.15 nearly 20 years ago. After that experience, travel has looked much more affordable!
When you compare travel to Europe costing 10% or 20% more, it’s still a bargain compared to a 7% mortgage versus a 6% mortgage ( or a 3% mortgage- remember those)? And it’s still a bargain compared to a car costing $10,000 more due to tariffs.
Everything is relative. And this year could well be the last chance for some to go to Europe for quite some time.
Carpe Diem!
It’s nicer when the dollar goes further, but as one gets older and future travel time becomes less certain, one still makes the trips. No benefit in waiting for a cheaper time, unless the exchange rate becomes much tougher.
It was $1.13 to the Euro today - I checked this afternoon, and I remember our 2008 trip to Belgium, traveling by bicycle, when it was over $1.50 to the Euro! We’ll cut back a couple fancier restaurant dinners, but otherwise, the exchange rate isn’t completely putting the brakes on our upcoming planned trips, next month and then this fall.
But 2008 was a Great Recession, and that could very well be looming on the horizon again …
When you compare travel to Europe costing 10% or 20% more
How did we get to 20%? The average rate of exchange for the euro in 2024 was about 92.4 euro cents to the dollar. Today its 88 euro cents or <4.5% lower.
The inflation rate in Europe as a whole was a little less than that in the US for 2024 so that hasnt added to the cost relative to the cost of staying home.
Sounds like air ticket prices might come down, and they wouldnt have to come down much to offset the 4.5% exchange rate difference.
I imagine that places like Barcelona have gotten more expensive, but that is demand driven.
Americans are lucky with those exchange rates. When I looked last week, the Canadian dollar to:
USD 1.45
Euro 1.63
Swiss Franc 1.72
Pound 1.88
I try to put it out of my mind and not let it bother me. When it still does, I do the math to remind myself that a 1% change is only $10 for every $1000 that I spend (feels better than thinking of a 10% change).
Good question Joe32F. You got me thinking so I pulled out the big guns.
Since the beginning of year the dollar has been falling faster than green grass through a goose!
I asked Microsoft’s Copilot how soon the dollar will decline to be worth only half of a Euro:
To restate your question: If we annualize the year-to-date decline rate
of the US Dollar against the Euro (28.8%) as calculated earlier, how
long will it take for the exchange rate to drop from the current 0.88
EUR per USD to 0.50 EUR per USD?Using this annualized rate of decline, we can calculate the time
needed for the dollar to lose its value relative to the Euro: The
formula is based on exponential decay: Time (in years) = ln(Final Rate
/ Current Rate) / ln(1 + Annualized Decline Rate) Substituting the
values: Time = ln(0.50 / 0.88) / ln(1 - 0.288) Time ≈ ln(0.568) /
ln(0.712) Time ≈ -0.566 / -0.340 ≈ 1.66 years So, if the decline
continues at this annualized rate, it would take approximately 1 year
and 8 months for 1 USD to be worth 0.50 EUR.
Based on the AI analysis which is using the world fastest NVIDIA chips and a team of programmers from the best universities, I’ve decided I should drink twice as much beer on this trip so that I can have four times the fun I would have in a year and half. First because of the better price and second because it’s colder in winter and who wants to chug beer when it’s colder.
Maybe I should go back to the AI and ask which beer is best for taking one’s mind off the crashing dollar? Of I could switch to grappa which can be more economical….
Either way, travel now is essential!!!
Happy travels.
In 25 years, I have traveled when a euro cost $0.85 and when the euro was $1.40, and I still traveled and enjoyed myself. To be honest, the euro at $1.14 is maybe more typical than high, I will be in Spain in a bit over a week for a month, and I am not concerned in the least. Right now, I am not planning on changing anything, but then we are pretty frugal travelers, but not penny pinchers.
If anything, I am more concerned about costs at home, Spain will still seem like a bargain, and I have stopped looking at my investment accounts.
But in January 2025, the euro was 1.02 for a couple of days.
An excellent holiday, one that was planned and financed months ago, one that may be an excellent choice if you are concerned about the exchange rate later in the year: ............ A Rick Steves Tour.
We went to New Zealand during January/February of 2024. To us, it seemed everything was quite inexpensive, but we were hearing people talk about how expensive New Zealand was for them. I realized it was Canadians, and I didn't know how soft their dollar was against USD and the Kiwi (their currency). Prices in Hawaii for Canadians must feel oppressive.
Taking a Rick Steves tour is indeed a way to chase the "Exchange Rates Concerns" away! His tours are optimized for fun, learning and amazement. A bargain!
Also now is a good time to lock a tour for 2026!
Happy travels.
I think one aspect to this question though is the demographic on this forum, most are not hurt or would even notice even a jump of 20%. The advice to use a tour is fair, but if you can afford as a couple to drop $10K on a two week trip, plus air and a decent amount of spending on top, fluctuations in the exchange rate are way down on the list of thoughts.
Traveling independently, I expect cost for my month in Spain will be higher than the month I spent there last year, hotels alone have gone up a good 10%, not including exchange rate, and I am sure inflation has had it's toll on other costs. The cost of a two week tour gets me easily my Month of leisure, plus probably my airfare, so while a tour is not a savings method for me, it does represent a "known fixed cost" for many, and there can be comfort in that.
Good point. Exchange rates are a complex system. And one's reactions to them can be individualistic.
When complex systems undergo critical transitions by changing a control parameter λ through a critical value λc, a structural change in the dynamics happens. The previously statistically stable state ceases to exist and the system moves to a different statistically stable state. The system undergoes a bifurcation, which for λ sufficiently close to λc can happen in a limited number of ways rather independent from the details in the governing dynamics.
There are early-warning signals, statistical quantities, which also change before the tipping happens. These are a) critical slowing down (increased autocorrelation); and b) from the Fluctuation-Dissipation Theorem increased variance in the signal. The latter is also termed “loss of resilience”. The two EWSs are statistical equilibrium concepts. Thus, using them as actual predictors of a forthcoming transition relies on the assumption of quasi-stationary dynamics.
Modeling and detecting the critical transition
One can model it by a stochastic process Xt, which, depending on a control parameter λ < 0, is at risk of undergoing a critical transition through a saddle-node bifurcation for λ = λc = 0. The system is initially in a statistically stable state, i.e., it follows some stationary distribution with constant λ = λ0. We are uninformed about the dynamics governing the evolution of Xt but can assume effective dynamics, which, with λ sufficiently close to the critical value λc = 0, can be described by the stochastic differential equation (SDE):
dXt = −(A (Xt −m)2 + λ)dt +σdBt,
where m = μ − √|λ| / A and μ is the stable fixed point of the drift, A is a time scale parameter, Bt is a Brownian motion and σ2 scales the variance.
Thus, it is seems pretty clear that exchanging all your funds into gold, traveling to Switzerland and wearing a false mustache is a good strategy to maximize your traveling dollars.
Happy Travels.
EDIT: never mind. Math error. I forget to carry the 4. So... yeah... just keep on traveling!
