For Americans abroad, no dollar news is good news

Written by admin on September 3, 2008 – 2:58 pm -

The dollar is stronger than it’s been for a long time, and some American travelers and expatriates are breathing a sigh of relief, hoping this is only the beginning. Many of them are tired of living on a diet of bread and pasta.

Maybe you don’t think currency markets are exciting, but lots of people monitor the exchange rate. They cheer when the dollar rises — and cry when it falls.

The U.S. dollar has risen to $1.45.16 to the euro, the highest since Feb. 14, 2008.

According to Meg Browne, vice president of foreign-exchange research at Brown Brothers Harriman & Co., the dollar is on an uptrend. “Growth and monetary-policy differentials are beginning to shift in favor of the U.S. dollar,” she said in a recent interview.

Two analysts — Standard Chartered Plc and BNP Paribas SA — have reportedly raised their forecasts for the dollar. London-based Standard predicts the dollar will rise to $1.44 per euro by year-end and $1.36 by the end of the first quarter of 2009, compared with previous forecasts of $1.49 and $1.42.

The decline in oil prices, plus Europe’s weakened economy, is contributing to the dollar’s rise. But neither Americans, nor people in the hospitality industry who depend on US tourists, are resting easy. The dollar has a long way to go until people feel it’s a good travel buy. And that’s not factoring in the increased airfare costs and airlines’ decreased service.

It’s too soon to forecast how soon Americans will return to Europe but the rise in the dollar can’t hurt. Part of it is a matter of psychology.

But the news is something. Let’s hope it continues.

Karen Fawcett is president of Bonjour Paris


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Despite higher dollar, fewer Americans visiting Europe

Written by admin on August 27, 2008 – 3:03 pm -

Even though the dollar is finally a few cents stronger, don’t go out and count your euros and expect to be in consumer heaven when you visit Europe.

Americans are hardly rich, even though there’s talk of a psychological barrier being passed, now that the dollar is clocking in at less than 1.50 euros. Europeans are watching the currency market as if it’s the hottest game in town.

Americans aren’t heading to Paris they way they used to. The weak dollar, the U.S. economic downturn, and the high cost of airline tickets, due to the rocketing cost of fuel and the airlines’ own misguided efforts at nickeling-and-diming travelers, all convince a lot of people to stay home. And many just have sworn off dealing with airport security and being treated as criminals.

According to the French Government Tourist Office, 1.5 million Americans traveled to Paris in 2007, a drop of 5.5 percent from the previous year. Since January 2008, statistics reflect a further decline of 14 percent.

Paul Rol, director of the Paris Tourism office says, “the number of U.S. visitors has been decreasing since June 2007 and the downward trend is growing steadily.”

But as fewer Americans are coming to the City of Light, other nationalities are making up the slack. Paris has recorded an overall increase of tourists by 2.3 percent. During 2007, there were 8.76 million tourists, many of who came from Britain, Belgium, the Netherlands and Switzerland.

Americans still comprise the largest number of tourists in Paris—just fewer, currently. But they’ve shunned France before. There were fewer between 2001 and 2003 following the September 11th attacks and the Franco-American row over the U.S. invasion of Iraq. However, U.S. tourism rebounded in 2004, and many people feel it will again after the upcoming presidential elections if Barack Obama is voted into the Oval Office.

Imad Khalidi, president of Auto Europe, predicts the dollar will become stronger if a Democrat is elected president. “Look back at November 1991, the French franc was very, very strong—4.6FF to the dollar. Once Clinton was elected, the dollar climbed to 6.4FF to the dollar. Let’s hope that’s the case again.”

Khalidi admits that the car rental business is down in the EU. But firms like his have more than made up for the loss by renting to Europeans who are vacationing in the U.S. and, because of the currency exchange, people living on a euro income feel rich and are making the most of their buying power. Walk into any big-city department store in America, and the locals will wonder if they’re in bargain basements when they hear the tourists exclaiming how cheap everything is. It’s reminiscent of the Japanese forming lines to gain entrance to Louis Vuitton on the Champs Élysées.

Travel industry experts agree that the very rich will travel when and wherever they want. Whether or not it costs more or less isn’t a big factor. The swanky Meurice Hotel, located near the Place de la Concorde and facing the Tuileries Gardens, isn’t crying the blues over losing its American clientele because it hasn’t. Eighty percent of them are from the U.S – except during August when the hotel is filled with families from the Middle East because they love Paris and want to flee from the heat at home.

What J.P. Morgan said about maintaining a yacht—”If you have to ask how much it costs, you can’t afford it”—applies here where the least expensive room begins at €650 per night, and a lovely Continental breakfast in the Michelin two-starred restaurant, Le Meurice, headed by Yannick Alleno, costs a mere €36. Since most of us have to ask, it’s pretty obvious we can’t afford it.

Another take is from Bill O’Such, who owns a super apartment in the Marais. “If reservations for our apartment— The Elzevir—is any indication, we have people reserving into 2010. It hasn’t affected Americans’ desire to travel to Paris.” In talking with them, they do cut down on what they do (i.e. fewer dinners out, less shopping, etc.) which costs a lot of money. They search for less expensive ways to come travel. “One theory I have is that hotels are now so expensive in euros that people are considering apartments even more than before. The other trend we’ve seen is we have more Australians and Canadians as clients.”

Of course the dollar is stronger against currencies that are pegged to it, so traveling in Asia, for example, may be a better bet than traveling to Europe. “In fact,” says a San Francisco resident, “I can fly more cheaply to Beijing than to Paris.”

So, the exchange rate is only one factor. The cost of flying may be greater, depending on your destination. It’s not easy to balance. And naturally enough, what we love is often what we’re willing to pay for, not matter what.

For instance, author Nancy Bruning says that she doesn’t know about others, but she’s booked to come to France this summer. “I’ll simply be sparing when it comes to spending. But, I love Europe so much that I’m not going to forgo my France fix.”

I don’t know about others either, but I will just be “sparing with the spending” and hope my credit card doesn’t melt.

For people who live here, we’re holding our breaths and eating a lot of pasta and drinking a wee bit too much wine.

Karen Fawcett is the president of Bonjour Paris


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