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Getaways: How to Take a Vacation from the Diving Dollar

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april11homespunweb.jpgRISMEDIA, April 11, 2008-(MCT)-Is all the bad economic news leaving you feeling like you need a vacation? Brace for sticker shock. Rising gas prices, airline fuel surcharges and the plunging value of the U.S. dollar are boosting the cost of travel for Americans, just in time for spring break and summer vacation planning.

“It makes us progressively poorer and poorer,” says budget-travel guru Rick Steves, who huddled recently with a group of his guidebook researchers.

His message: “Crank up the cheap tricks.”

Rather than pay $20 each for a hotel breakfast during a recent winter break in Rome, Steves took his family on a morning picnic where they sat on the steps of the Pantheon eating a meal of prosciutto, fresh bread and juice, at a fraction of the price.

“Get used to it” is his advice for anyone waiting for things to get better. “This is where America is.”

The dollar’s freefall against the euro, British pound, Canadian dollar and many other world currencies means even experienced travelers are struggling to find ways to make travel affordable.

With the dollar hitting record lows against the euro, a hotel room in Paris that in January 2007 cost 100 euros, the equivalent of $132, is now $154, up nearly 17% using the current exchange rate of $1.54. That price is up 50% from five years ago, when the room would have cost $105.

“It knocked me in the face, I have to say,” says Tom Meyers, editor of EuroCheapo.com, an Internet guide to budget travel. Meyers just returned from a trip to Berlin and Brussels and Bruges in Belgium.

“I stopped getting the (International) Herald Tribune because it was getting increasingly depressing. They just kept repeating the same headline: `Dollar hits another low against the euro.’”

Adding to the pain, notes Anna Johnson of Scan East West Travel in Seattle, are higher airfares due to increasing fuel surcharges, airline taxes and fees. “You can get an airfare in the $600-$700 range, but by the time you add on everything else, it’s over $1,000,” she says.

Last year at this time, Scandinavian Airlines tacked on fuel surcharges of $150 per round-trip ticket on nonstop flights from Seattle to Copenhagen, Denmark, Johnson said. This year the fuel surcharge is $240, and taxes add an additional $112.

“The major thing we’ve seen is a shift in destinations,” says Simone Andrus, owner of Wide World Books & Maps in Seattle. “We’ve seen a huge shift to the southern part of South America _ Chile and Argentina,” where the dollar buys more than in Italy or France.

“People are changing their minds a lot,” she’s noticed. “One couple came in and returned their Italy books (after friends canceled out on them), and bought books on Prague, Budapest and Krakow.”

After paying $8 a gallon for gas and $40 for a pasta-and-salad dinner for two in Bruges, Jim Grant of North Seattle says he and his wife won’t be going back to Europe soon. The couple spent three weeks driving through Belgium, Luxembourg and Italy in January and February.

“The food costs were huge,” he said. “Tolls from Paris to Bruges came to 30 euros ($45).”

Where will he go next? “Mexico, Hawaii, Asia-somewhere where the dollar still buys something.”

Others say they won’t be deterred.

When Barb and Pat Hepler of Edmonds, Wash., began planning a three-week trip to Italy a year ago, they estimated their costs at around $5,000.

Their budget is about $10,000 now, including two airline tickets at $969 each and their part of the rent on a Tuscan villa they’ll share with seven friends.

Still, they plan to be on a plane this week, hoping for the best, even as some financial experts predict the dollar will continue its slide.

“It would be nice if it were cheaper,” says Barb Hepler, 51, “but it won’t stop us from going.”

Q&A: How to Travel on the Cheap

Q. How low will the dollar go?

A. Tour operators spend a lot of time trying to figure this out when they price their tours for the coming year. Most estimated the dollar would be at around $1.30 to the euro when they priced their 2008 tours. Obviously they were wrong, and a few have added currency surcharges to cover the increased costs.

The U.S. dollar seems to have settled in at par with the Canadian dollar. Some market watchers predict the euro-dollar rate may improve slightly in the coming weeks after hitting a record low of $1.59 but could spike as high as $1.60-$1.70 if the Federal Reserve keeps cutting interest rates.

Q. What international destinations are cheapest for Americans right now?

A. Almost anywhere in Asia-China, Indonesia, Malaysia, Thailand; South Africa; the Middle East; Mexico and other Latin American countries; and the Central and Eastern European countries that haven’t adopted the euro: Hungary, Slovakia, Croatia, Bulgaria, Romania and others.

The dollar has fallen against many of these currencies, too, but things are still much cheaper for Americans than they are in Western Europe or Canada.

Q. If I’ve already bought airline tickets to go to Europe, should I consider canceling?

A. Not unless you’re prepared to pay a stiff penalty-usually $200 on a nonrefundable international ticket-and that’s to rebook to another destination within a year.

But let’s keep things in perspective. If you did your budget estimates at the beginning of this year, when the rate was $1.47, a week in a 100-euro-a-night hotel would have cost $1,029. If the euro goes to $1.60, you’ll pay $90 more-an amount you could make up by substituting an expensive dinner with a meal in a local cafe, or by taking public transportation instead of taxis. Consider that a one-way train ticket from Fiumicino Airport in Rome to downtown is about $15 compared with $60-$80 for a cab.

Q. What are some other ways I can cut costs and still enjoy myself?

A. Spend smartly: One way is to minimize foreign-currency transaction fees when using credit cards or withdrawing cash from automated teller machines in other countries, including Canada and Mexico.

Use cards that carry a maximum 1% fee on each charge or withdrawal (available from small community banks, credit unions, etc., as opposed to bigger national banks that charge 3% or more). Capital One (www.capitalone.com) issues a no-annual-fee Visa or MasterCard with no foreign currency transaction fee.

Scale back: It’s easy to save just by tweaking your style of travel. Choose a two-star hotel instead of a three, or take the stairs to the second floor of the Eiffel Tower for $6.30 instead of the elevator to the top for $19.

Do free stuff: “Go straight to the tourist-information office when you arrive and get a list of free things to do,” advises Tom Meyers of EuroCheapo. “Every city in Europe knows about this issue and is doing something to help restore American confidence in the feasibility of traveling there.”

Eat cheap: Skip the restaurants in high-rent tourist areas, and eat ethnic. A growing immigrant population means you’ll find Ethiopian restaurants in Paris, Turkish pizza in Amsterdam, and Chinese and Indian food just about anywhere.

Q. Should I stock up on Canadian dollars, euros or other supplies of foreign currency before I go?

A. Some people feel better having a small amount of foreign currency with them in case they can’t get to a bank machine right away. But, in general, the high fees involved in obtaining currency here outweigh any savings, even when the dollar is falling.

Q. Why does Canada suddenly seem so expensive?

A. Without factoring in exchange rates, estimates are that products are priced about 25% more in Canada than in the United States, due to Canada’s tax structure and overall economic policies. This has always been the case, but it’s more apparent to Americans now that the buying power of the U.S. dollar has declined.

Q. Even so, with the way things are going, hotel and restaurant owners must be making out like bandits.

A. On the contrary, they know Americans are paying more due to poor exchange rates, so many are holding off on raising prices even though their own costs are going up.

Letzia Mattiacci, the owner of Alla Madonna del Piatto, a small farmhouse inn near Assisi in Italy, has kept her room prices at 80 euros-$123 at current exchange rates-for three years.

“I wish I could lower them,” she says. “I cross my fingers every day that the dollar stops falling.”

© 2008, The Seattle Times.
Distributed by McClatchy-Tribune Information Services.

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