Devaluation Creates Short-Lived Bargains

News of devaluation of foreign currencies immediately raises the image of bargains for American travelers.

Sometimes this is true. However, the time for buying these bargains can be short. Hotels, restaurants, stores and other services usually adjust their prices upward to make up for the reduced value of their currency, except where there is government controlled prices.

The sooner you visit a destination that has had its currency devalued, the more likely you are to find good deals.

Determining when new adjusted rates go into effect can involve some homework. Travel agents and foreign government tourist offices can help.

Quick Pricing

For an example of how a devaluation works, consider the Mexican peso.

The devaluation caused quick pricing changes by all involved with travel to and within Mexico: airlines, tour operators, hotels, stores and restaurants.

International air fares to or from Mexico are set in dollars and weren’t affected by the peso devaluation.

On domestic routes in Mexico, airlines are allowed to raise their fares up to 200 pesos a day on banking days to compensate for any loss in the value of the peso in relation to the dollar, according to John Rodriguez, regional manager of Mexicana Airlines.

“If the value of the peso goes down 27, we add 27 to the fares,” Rodriguez said. “If the fare was 250,000 pesos, it would become 250,027 pesos.”

Consumers living close to Mexico sometimes travel to Tijuana to buy airline tickets in pesos rather than in dollars in the United States. The move can save enough money to justify the excursion, depending on how many people and how much expense are involved in getting to Tijuana.

Agreements Signed

On buying in Tijuana, Rodriguez said the difference in price ranges from $40 to $60. “For a party of one, is it worth it? For a family of four, it might be worth the trip to Tijuana.”

U.S. tour operators offering packages to Mexico had signed agreements with Mexican hotels and other suppliers. Such agreements generally have prices quoted in dollars.

As a result, most package prices haven’t decreased due to the devaluation.

“There has been very little impact on the consumer with this devaluation,” Gary Brankle, general manager of Mexico Travel Advisors, a Los Angeles-based tour operator, said.

“The rate of inflation in Mexico creeps up daily and outpaces the devaluation, and everyone makes adjustments in prices. Salaries are raised in Mexico, too. Prices are very good, but travelers shouldn’t expect any great break due to the devaluation of the peso.”

The Mexican government exerts control over price increases in many areas, and has asked that consumer price hikes be held to a minimum. Violators may be fined, which doesn’t stop some from raising prices beyond what they should be.

The devaluation only allowed travelers to save money for about 10 days to two weeks, according to Carlos Hampde, regional manager of the Mexican Government Tourism Office. While hotels can set their own prices, airlines, restaurants and stores have to apply for permission to raise prices, Hampde said.

“No more than a 15% increase has been allowed,” Hampde said, with these amounts based on inflation. Restaurants in areas where tourists are prevalent are more likely to get approval of price hikes, he added.

Popular tourist destinations are places where price adjustments are likely to be invoked quickly. Less popular and inaccessible areas will probably take more time to increase prices.

Incidents Reported

Travelers who think they have been charged unfair prices can report incidents to the Mexican government’s Office of Consumer Protection in Mexico City.

One store, Sears in Puerto Vallarta, has been fined for unauthorized price increases, Hampde said. A tobacco store in the lobby of a major hotel was found selling film at three times the going price.

However, the traveler doesn’t get a refund for any overpayments.

Hampde said that some stores have signs in windows indicating they will take dollars at higher than official exchange rates. “This is legal and it provides more of a bargain.” But department stores won’t give this break.

The point is, don’t assume automatic bargains. Knowing the current worth of the dollar compared to foreign currency will help your shopping. Also, a pocket calculator will come in handy when figuring currency conversions.