Americans Toast Strong Dollar While Downing Cheap Wine in Europe

May 21, 2015

(Bloomberg) - Of the many wonders to behold in Greece, Matt Derr has found a gem: local wine at $3 a glass.

During a nine-day getaway to the land of the gods, he’s sampled Greek salads and grilled meats for as little as $7 a plate and learned how to pick the freshest fish for dinner. As a foreign-exchange strategist at Credit Suisse Group AG in New York, Derr has been tracking the dollar’s 19 percent gain against the euro over the past year. That hasn’t stopped him from being pleasantly surprised by how far his dollars stretch.

“It’s been all about the seafood,” Derr said by e-mail Wednesday from the island of Crete, after stops in Athens, the birthplace of democracy, and Santorini, famed for its sunsets. “The biggest benefit I see is just how cheap wine and food more broadly is -- as well as the tipping.”

Americans are getting more bang -- or 90 euro cents -- for their buck when traveling in the shared currency’s 19 member nations. Derr follows an influx of tourists flocking to Greece, where U.S. visitor arrivals jumped 25 percent to 23,200 in January and February, according to data from the Bank of Greece.

The dollar has advanced against all of its 16 major counterparts since July, bolstered by a stronger economy and the prospect of the U.S. Federal Reserve raising interest rates for the first time in almost a decade. At the same time, the euro has been debased by the European Central Bank’s unprecedented stimulus plan.

The dollar has risen to $1.11 per euro from $1.37 in July. While the greenback has slipped 6 percent since mid-March, its broader gain is a boon to Americans making a transatlantic voyage -- and analysts see the exchange rate getting even more favorable through next year, forecasting a euro drop to $1.07.

Stunning Prices

Michael DuCharme, head of currency strategy at Russell Investments Group in Seattle, and his wife traveled to Rome and Italy’s Amalfi coast last month, where they marveled at the towering columns of the Colosseum and the intricate tile mosaics in the ancient ruins of Pompeii.

The couple found bargains everywhere: a reasonably-priced hotel near the ruins of the ancient forum, affordable leather goods for their kids and, of course, cheap pizza and pasta.

“I was just stunned at the prices in euros,” DuCharme said in a phone interview Wednesday. “We would just look at each other and shake our heads and say ‘this is so much cheaper than back home.’”

He’s already eyeing another trip, next time to Normandy in France.

“If you’re going to go to Europe, now’s the time to go,” DuCharme said.

‘More Affordable’

The mightier dollar means U.S. residents are traveling abroad in bigger numbers and spending more when they arrive, said David Huether, senior vice president of research at the U.S. Travel Association, an industry group in Washington.

“The Americans I meet keep things easy by simply thinking of one euro as one dollar,”Rick Steves, author of more than 50 European travel books, said in an e-mail from Rome. “At dinner, that makes a bottle of fine wine rather than a carafe of house wine suddenly much more affordable,” said Steves, who also hosts travel shows on public television and radio.

The currency benefits are evident even before travelers set off. Greg Farmer, a tourist taking in Madrid’s Museo del Prado art museum, said bargain prices tempted him to extend a family trip to two and a half weeks, including stops in Barcelona and Seville in Spain, as well as Lisbon.

“It makes a difference when you’re planning your trip -- looking for hotels and flights there’s definitely better value for money,” said Farmer, who lives in Washington.

Discounted Packages

Europe is the third-most popular region for U.S. citizens heading abroad after Mexico and Canada, accounting for 17 percent of traffic in 2014, Commerce Department data show. The number of American trips to Europe rose 4.2 percent to 840,187 in March versus a year earlier.

That’s helping to provide an infusion of cash into Europe’s economy. The region’s tourismearnings rose to $509 billion in 2014, up 3 percent from the previous year, according to the United Nations World Tourism Organization.

Tour companies are expanding offerings and giving discounts in response to a surge in bookings and early summer travel requests, according to the U.S. Tour Operators Association.


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