Data credit: Hipmunk.com
For United States consumers, a European vacation is right at their fingertips. The global economic conditions are ripe and now would be the time to make that happen.
The U.S. dollar has been surging rapidly and hit an 11-year high in February, though recently it has slowed and stabilized. A stronger dollar means many things for the health of the global economy, but for Americans, it means it's time to open the pocket books for leisure spending.
According to data compiled by online travel company hipmunk.com on it's bookings and travel searches, so far in 2015, consumers have been finding bargains across the board for European travel.
Airfare prices are down for flights to the Eurozone from virtually all U.S. major cities and hotel rates have decreased from a year ago and are expected to keep falling with the predicted steady decline in the euro over the course of the year.
As of Thursday evening, the euro was trading at $1.08, down from trading at around $1.50 in 2008, which opens up the possibility for a spending spree by foreigners with stronger currencies traveling in the continent. Shockingly, some economists and researchers believe the euro might dip to around $0.80 by the end of the year.
Airfare prices to Italy, overall, have increased since last year, according to hipmunk.com. Currently, the average price for a flight to Rome, among rates found in 24 major cities, is $1,631 with the most expensive flight listing coming out of Sacramento, Calif. ($3,021). The cheapest flight on average is to Dublin, Ireland at $1,108 with the cheapest flight listings being reported from New York City, surprisingly, at $871. But, the average hotel rate in Dublin has risen from $143 in 2014 to $144 so far in 2015, according to Orbitz.com.
Ireland is considered a highly popular tourist destination by hipmunk.com. It ranks fourth on the cheapest average per person budget for travel in the country ($1,961), ahead of Germany ($2,036) but behind Belgium ($1,868).
Ironically, as the euro continues it's expected gradual fall aginst the dollar, the tourism industry will become more and more important for the 19-country euro area since it will effectively work to create a hefty amount of jobs--albeit temporarily, in the short term.
In a 2012 report on the the European tourism market published by the European Commission, tourism generates more than 5 percent of the EU GDP with around 2 million enterprises employing around 5.3 percent of total labor force.
Also, the report said that tourism arrival rates grew consistently from 1950-2008, peaking in 2006, but fell from the start of the financial crisis until 2010. Since then, the industry has been recovering and is expected to return to it's peak level.
So, despite a murky landscape for growth and a global economy that's on crutches, the surge in the dollar and a boom in tourism would be an effective shot in the arm for the Eurozone economy.
The fall in oil and energy prices over the last year weakened the global economy but helped the United States more than anyone else.
Gas prices have plummeted, which has put more disposable income in the pockets of U.S. consumers. Also, oil is traded in the U.S. dollar, which has surged against other major currencies over the last five years. These variables makes it easier for consumers to purchase foreign products and services and travel abroad.
Moreover, alarmingly strong numbers in job creation over the last several months has the Federal Reserve on the brink of raising interest rates to attempt to slow down the economy to keep it from overheating, this will effectively draw global investors to the U.S., as they will seek higher rates than what they’re offered abroad.
The presence of more investors will work to drive up the dollar even more against other currencies, making a trip overseas even more appealing.
“What we’re experiencing is a cyclical recovery and it’s much boosted by the decline in oil prices,” sais Anna Grimaldi, who is a senor economist at Intesa San Paolo. “From the Spring forward, we should be seeing an impact of the exchange rate as well, and we should start seeing the effect of falling interest rates and easier financial conditions for households and corporates on their spending decisions.”
The forecast seems bright for U.S. consumers who want to Prices remain low and the forecast shows a continued boom in the U.S. dollar, so foreign consumers with a stronger currency can take a European vacation and splurge on an expensive bottle of European wine without looking at their bank accounts with too much regret.
Happy traveling. Let's go to Dublin.