Q – We are planning either an October cruise to England an d Ireland on Celebrity or a trip next May/June. Our cruise will be less than 10 days but we want to add a week or so at the beginning and the end so this trip will be in the range of three weeks plus. We stopped watching the news a few weeks ago and, like many travelers we talk to, no one has a really clear answer to the question how far will the dollar go this year versus next? May I ask what you are advising your clients regarding costs in Europe for the near term and into next summer?
A – We’re sure that you understand that anything we say that is specific will change in the next hour or so. But you were kind enough to reach out so let us try to offer some generalizations we feel comfortable making:
Let’s start with some good news: We think you may stumble onto some favorably-priced airline tickets to London or Dublin. International travel is down for non-luxury travelers, or those for whom cost is a significant issue.
But that is overshadowed by the fact that the dollar has declined for the first half of this year against peer currencies at the steepest rate in more than 50 years. To be specific, the Dollar Index, which tracks the dollar against a handful of major currencies, has turned in the worst performance for American travelers overseas since 1973.
Today, a single British Pound now costs (as of today) $1.17 to purchase versus $1.08 only one year ago. No one knows where the dollar will be next year as our nation’s Tariff policy will be a major influence on future rates.
It is difficult to give you specific advice – for which we apologize. But let us end this way – if the cost of your vacation is really important we would travel in October this year as cruise costs will be going up for certain given demand. But we would suggest that whatever travel arrangements you are making in advance be paid for before you leave in dollars so the amount of dollars you have to exchange at lousy current rates is minimized. Independent travelers who need to cash large amounts of US Dollars when they arrive abroad will take the biggest financial hits in the months to come. Consider a pre-paid tour (in USD) instead of winging it when you get there.
Finally, let’s take a broad look at the American Traveler and the state of overseas travel plans: The tourism market research firm, Future Partners, found that about 47% of all Americans who will take a vacation in the next year will travel abroad. BUT 35% said uncertainty about US policy decisions has already caused them to either cancel or reconsider those plans.
But there is scant evidence that so-called “Affluent Travelers” have any intention to cancel or postpone overseas travel plans despite projected higher costs.
