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Stronger Dollar, Less Demand Bring Deals

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By MICHELLE HIGGINS

The New York Times

Published: October 19, 2008

For travelers who have been putting off that European vacation because they don't want to pay $400 a night for mediocre hotels or $6 for a can of Coke, relief is in sight.

The economic turmoil in the United States has spread to Europe, and the financial jitters are beginning to affect the travel market. Airlines are rolling out deals on trans-Atlantic flights - especially for those cushy seats at the front of the plane. Hotels are beginning to offer sales. And rather than jack up their rates from the year before, as has been the trend in recent years, many travel companies are holding prices steady or taking them down a notch.

Although autumn typically brings lower prices, part of the price drop can be attributed to declines in demand as consumers seem to be cutting back on their travel budgets.

But another reason is the rising dollar. "Your dollar goes farther in Europe today than it did in the summer," said Tim Quinlan, an economic analyst at Wachovia. Since July, the dollar has firmed about 14 percent against the euro, to $1.39, and 11 percent versus the pound, to $1.78, bolstering Americans' buying power.

The Icelandic krona lost nearly half its value against the dollar in the last year, making the historically expensive country an increasingly affordable getaway for Americans. A hot dog in downtown Reykjavik (210 krona) was about $2 at 105 krona to the dollar in early October versus $3.50 last year. A one-day trip with Reykjavik Excursions to Snaefellsjokull glacier, at 11,500 krona was about $110, down from $192 a year ago. Hotels that were prohibitively expensive have become more reasonable. Rates at the popular 101 Hotel in downtown Reykjavik start at 41,900 krona or about $400, down from nearly $700 last year.

Although not exactly bargain basement, the combination of a strengthening dollar and softening demand means Europe is more affordable for Americans than it has been for quite a while.

Airlines are introducing sales in bursts. Earlier this month, Eurofly, an Italian carrier, offered a five-day sale with fares as low as $679 for one traveler and a companion to fly round trip to Rome this fall. Icelandair recently advertised fall fares from Boston to Europe starting at $478 round trip. Last week it was offering winter airfare specials as low as $400 round trip to Reykjavik from New York or Boston. And Delta recently advertised flights as low as $518 round trip from New York to Dublin, Ireland, and $558 to Amsterdam, Barcelona or Madrid. (These Delta fares do not include taxes and fees, which can range from $90 to $150 a person.)

Don't wait if you want to nab a deal. Airlines are being very careful not to start a fare war, said Joe Brancatelli, publisher of Joesentme.com, a subscription travel site. "The deals are very tactical - book now, do it fast," he said.

Jetting around Europe is getting less expensive, too. Ryanair, the low-cost Irish carrier, said its average fare in October is 41 euros, down from 46 last year. Just last week the airline offered a million "free" seats in a three-day sale, enabling travelers to fly round trip from London to Dublin for as little as 33 pounds, including taxes and fees.

Some of the better hotel and cruise deals are also at the high end. "What is especially interesting as it relates to the economy is that the luxury hotel market - your 4 and 5 star hotels - has strategically brought its rates significantly down," Gabe Saglie, senior editor at Travelzoo.com, wrote in an e-mail message. "And in some cases, high-end hotel experiences in major cities are far more affordable than many U.S. tourists might think."

There is also a new wave of European hotels designed with price-sensitive travelers in mind. The budget chain easyHotel, which offers tiny rooms for as little as 25 pounds a night, has had a boost as consumers turn to low-price accommodations. Occupancy rates for its London hotels for July and August increased to 95 percent from 73 percent in 2007, according to the company.

Don't forget about package deals that bundle airfare, hotel and car rentals into one low-price. They offer some of the best bargains at the moment.

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