The dollar and the euro are equal for the first time in 20 years: What that means for summer travel
Editor's note: This post has been updated with new information.
Trying to plan a European vacation but worried about ever-increasing travel prices? We have good news for you: For the first time in 20 years, the dollar is at parity with the euro.
At press time the exchange rate is $1 = 1 euro.
With the strong dollar to the euro exchange, Americans will see a nearly 15% discount on purchases compared to the same time last year when the exchange rate was $1= 1.19 euro, and a 12% discount since the beginning of the year when the $1 = 1.13 euro.
That means once you arrive in Paris, Amsterdam, Rome or any other city in the 19-country European Union, you'll be able to make purchases without running conversion charts in your head or worrying about the built-in markup on everything.
If you're wondering why the euro is losing value, according to a report from Reuters, a recession looms across Europe — the result of "Russia's move to cut off gas supplies to Bulgaria and Poland" and the fear of gas restrictions throughout the rest of Europe.
That's coupled with "the twin headwinds of a surging dollar and sweeping COVID-linked lockdowns in China, a major market for bloc exports."
The dollar is expected to continue to increase in value against the euro.
This exchange rate was last seen nearly 20 years ago, in December 2002, and it's good news for anyone planning a trip to Europe this summer, according to Leslie Overton, the director of travel operations at travel advisor consortium Fora.
"It would be difficult for there to be more interest in Europe than there is right now," said Overton.
She also noted that while summer is always a popular time for Americans to visit Europe, it feels "more urgent now" with travelers eager to return to pre-pandemic travel.
The problem? Although interest is high, affordable hotel availability isn't.
This is because some hotels remain closed after the pandemic and some properties are facing staffing shortages. There's also an overall surge in interest, making everything seem "tight," according to Overton.
Recent hotel data backs up this trend, with hotels in Europe the last week in June performing 11% better than the same time in 2019, according to data from hospitality analytics firm Smith Travel Research (STR). The figures were also a nearly 3% increase from the prior week.
The silver lining is the advantageous exchange rate, Overton said.
"Travelers who had been on the fence about pulling the trigger on trips have been suddenly ready to commit after seeing parity come into view," she said. "I had a client call me at home last night and say, 'I want to pay for this right now!' in case the exchange rate goes back up."
Overton added that within her company's advisor pool, there are always clients looking for rooms in the $200 to $300 range in Paris, which wouldn't have been possible a few months ago but can actually happen now given that exchange rate.
"My advice is for anyone who's been thinking 'maybe' about booking hotels in Europe this summer is take advantage of the exchange rate and lock it in, and don't miss this opportunity," Overton said.
One note from TPG: It's always best to find a hotel deal that will let you cancel and rebook instead of locking you into a nonrefundable hotel rate.
Related: Traveling to Europe this summer? Here's what to expect
The strong dollar also bodes well for shoppers who would gain even more purchasing power if the euro continues its devaluation.
One sweet spot, according to PurseBop: luxury goods from companies such as Chanel and Louis Vuitton. These internationally popular brands use what the site calls a 'price harmonization strategy' that makes prices equal across the globe.
Here's an example from PurseBop: Chanel priced a medium classic flap bag at 7,800 euros and $8,800 in February 2022, when the exchange rate was 1.13 euros to $1. When converted, the euro price came to $8,814, about the same as the U.S. dollar price.
At press time in early July, that euro price hadn't been adjusted — which means U.S. shoppers buying that bag in Europe, for now, will receive the equivalent of a $1,000 discount.
Of course, these luxury companies could adjust their pricing soon to reflect the changing euro value.
However, if you're headed to Europe in the near future and are in the market for an investment bag or designer goods, now just might be the time to crunch the numbers — and get shopping.
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