News, Tips & Bargains : Peso’s Plunge: Boon for Travelers

U.S. travelers looking for bargains should head north or south. The Canadian dollar and the Mexican peso have been seriously weakened recently, and the bad news for Canadians and Mexicans is good news for those of us who live in-between.

Stories of big bargains are already wafting back from over the borders, and they are being passed along by tour operators and travel agents who are seeing their business surge, especially to Mexico.

Since Dec. 19, the Mexican peso has dropped by about 40% against the dollar. Last year, a traveler exchanging U.S. dollars for pesos got three pesos and some change; today a dollar is buying five pesos in some exchange offices on the border, said Charles Nelson, general manager of Sanborn’s, a McAllen, Tex., firm that sells Mexican auto insurance to drivers headed south of the border.

Since October, the Canadian dollar has dropped 5% against the U.S. dollar, bringing it to a nine-year low of about 71 U.S. cents. While the currency devaluation in both countries is a boon to U.S. travelers, the most dramatic savings are to be found in Mexico, because the 40% drop was so precipitous. The Canadian dollar has declined much more gradually--by about 20% since 1991.

Almost every visitor carrying U.S. dollars will see them go further in Mexico for meals, taxi fares, sightseeing tours, local train and bus tickets, souvenirs, Mexican-made clothing and other merchandise and personal services.

Initially, financial experts expected peso prices to increase rapidly to compensate for the 40% devaluation, but this has not occurred, local sources report. So far, prices on an average have risen about 10%. In effect, much of what Mexico offers is 30% cheaper than it was before Dec. 19.

Getting similar bargains on lodging and prepaid tours from the United States is not quite so clear-cut. In popular resort areas catering to Americans, hotel prices haven’t changed, says Marcia Roberts, president of the Mexico Connection of El Paso, which has been putting together air fare and hotel packages to Mexico for 16 years.

As Roberts explains it, hotels catering to Americans have quoted prices in U.S. dollars to individual travelers as well as tour operators since the 1980s, when they suffered badly in an earlier peso devaluation. Until then, prices routinely were quoted in pesos. Because Roberts’ air/hotel packages are listed in dollars, the prices have remained unchanged since the devaluation. Still, she estimates her January business is up 50% over last year because almost everything else in Mexico is a bargain.

However, tourists bound for offbeat destinations or business-oriented cities such as Guadalajara, Monterrey and Veracruz should have little difficulty finding lodgings priced in pesos.