The last month has been tough on the U.S. dollar, especially in its trading value against the Japanese yen and the German mark. But the several months before that weren't particularly cheering, either. If a tourist's stature is measured by exchange rates, Americans are standing several inches shorter than they were during last summer's vacation.
If you're one of the several million Americans who will travel to Europe in coming months, now is the time to arm yourself against sticker shock.
"Your summertime buying power isn't going to be what it was last year, and it wasn't anything great last year," says Bob Dowd, eastern sales and service center manager for Thomas Cook Currency Services in Washington.
First the big picture. Between Aug. 31, 1994, and March 14, 1995 (measuring by the retail trading rates of Thomas Cook exchange offices), the U.S. dollar lost about 3% of its buying power against the English pound, about 8% against the French franc, and more than 12% against the German mark. Meanwhile, it gained about 4% against the Italian lire.
Italy isn't the only bright spot for travelers. Mexico and Canada, beset by currency troubles of their own, are better bargains for Americans than they were last year. The U.S. dollar is 5% stronger against the Canadian dollar than it was Aug. 31, and about 40% stronger against the Mexican peso. (Many Mexican hotels have tried to protect themselves by accepting payment only in U.S. dollars.) But the broader picture isn't so encouraging.
Dowd is one of many guessing that the dollar will slide further over the next three months--a fairly remarkable forecast, considering that U.S. currency in early March hit post-World War II lows against the yen and mark. Dowd, like many others, cites traders' concern over the mounting U.S. foreign trade deficit and uncertainty over U.S. measures to back the peso. But he notes that speculators have been consistently wrong in their guesses about the dollar's direction over the last two years.
How do all these figures translate into buying power on the street? Here's a sampling of prices in four European capitals, all gathered by Times correspondents and assistants March 10-12. The foreign currencies were translated using Thomas Cook's March 14 retail rates, such as the ones printed in the Sunday Travel section's Travel Statistics listings. (Keep in mind that exchange rates vary from day to day and outlet to outlet, and that the figures used in The Times' Business section--and in most other newspapers' tables--are the high-volume rates enjoyed by major financial institutions. Individual travelers at banks and exchange houses get substantially less-generous rates.)
London: Tickets to major musical productions run 10-30 pounds ($16.55-- $49.65).
Tea at the high-end Ritz hotel costs 15.50 pounds per person ($25.65).
A seven-day pass for travel in central London on the London Underground runs 11 pounds ($18.20).
Paris: One adult admission to the Louvre runs 40 francs ($8.35).
One glass of house red wine at the popular Left Bank cafe Deux Magots costs 35 francs ($7.31).
A Seine River dinner cruise on a bateau mouche fetches 500 francs ($104.40).
Rome: A single espresso at a table in the sunshine at the Tre Scalini cafe on Piazza Navona costs 4,500 lire ($2.87).
A standard double room at the Holiday Inn Rome-St.Peters costs 380,000 lire ($242), not including breakfast.
An Armani tie at the Emporio Armani on Via del Balbuino costs 72,000 lire ($45.86).
Berlin: A bockwurst (similar to bratwurst) and a small local beer at KaDeWe costs 7.85 marks ($5.83).
The cheapest (standing room) tickets to concerts at the Berlin Philharmonic cost 12 marks ($8.91). Tickets for the best seats cost 88 marks ($65.33). There is a range of middle prices.
One adult admission to the Pergamon museum is four marks ($2.97).
If you travel with tour groups, however, you have a layer of protection between yourself and currency troubles. U.S.-based tour operators generally take advance payments in dollars, negotiate payment for hotels and transportation with foreign contractors, and then either gain or lose money on the fluctuations between the first booking and last payment. Those companies typically reserve the right to adjust prices after their catalogues are printed, but they seldom exercise that option.
Reynolds travels anonymously at the newspaper's expense, accepting no special discounts or subsidized trips. To reach him, write Travel Insider, Los Angeles Times, Times Mirror Square, Los Angeles 90053.