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Jul 8, 2007
BY ELLEN CREAGER
FREE PRESS COLUMNIST
Poor measly dollar.
It's shriveling against the euro. It's a weakling against the British pound. It's even starting to waver against the Indian rupee and the Thai baht.
Is there anyplace in the world that the dollar is still almighty?
Sure. You just have to know where to go.
'Rural Spain and Portugal are not so bad, but the rest of Western Europe is so expensive now; everyone I talk to is just flabbergasted at how much they are spending. They are not prepared for the actual shock of spending $100 on lunch,' says Tim Leffel, the Nashville-based author of The World's Cheapest Destinations (Booklocker, $13.95).
Instead of Europe, look in our own hemisphere, he urges.
'I advise so many people to go to Latin America,' he says. 'It is easy to get there, there is a steady exchange rate, there is almost no time change and it is a bargain.'
Places like Nicaragua, El Salvador, Ecuador and Argentina all are cheap for Americans. El Salvador and Ecuador actually use the dollar as their official currency, plus the cost of living is low.
A taxi ride that might cost $30 in London may cost just $3 in Nicaragua. A hotel with breakfast might be $60 a night.
Leffel also says Mexico can be a bargain if you get away from the big tourist areas.
He also likes the Middle East; value spots are Morocco, Jordan and Egypt.
Bruce Beattie, owner of Foreign Currency Exchange Services in Birmingham, Mich., is seeing a lot of movement among his customers to Asia, where they are finding value in Vietnam, Laos, Bali (Indonesia), Cambodia, Malaysia and Nepal. That does not mean all spots in Asia are cheap.
'Hong Kong is really pricey now,' he says. 'I had a customer who came back and said they couldn't afford to buy anything.' Japan is also expensive, but the yen is at a four-year low against the dollar, which helps American tourists.
Beattie's wife hails from Thailand, where he says a five-star hotel with breakfast can still be had for $83 a night. However, a recent rise in the Thai baht against the dollar (now 31 baht per $1, down from 42 in 2005) means prices are rising. So far, high-end travelers will still find the country a bargain. But travelers on a shoestring budget will likely feel the pinch, Leffel says.
DOLLAR-WISE SPOTS
** Romania, Bulgaria, Turkey and Croatia: These nations are a good deal -- for now. All may someday adopt the euro as members of the European Union.
'Romania just joined the EU in January. It is only a matter of time before their prices rise,' says Leffel. Bulgaria also just joined; Turkey and Croatia have applied.
** China: Economists estimate the Chinese yuan is about 40 percent undervalued against world currencies, including the dollar, which makes its products ultra cheap abroad. The good news? It also makes visiting China still incredibly cheap for tourists.
'For now, the hotel building boom and the huge spike in demand are offsetting each other,' says Leffel. 'Their currency is still the same it's been for years (now about 7.5 yuan per dollar). But the 2008 Olympics are coming, so that will drive up prices.'
So might international pressure on China to raise the value of the yuan.
AFFORDABLE STILL
Some destinations, while not cheap, have prices similar to the United States:
** South Africa: 'It's actually gotten better in the last six months because their exchange rate has gone down (7 rand per $1),' says Leffel. You are not going to get sticker shock anywhere in Africa.'
** Israel: Lack of tourists makes it affordable.
** New Zealand: Not as expensive as Australia for Americans.
GETTING PRICIER
** Canada: The Canadian dollar has risen dramatically against American currency.
Five years ago, you could get a whopping $1.50 Canadian for $1 U.S. and buy a lot as a tourist in Canada. Now, the two nations' currencies are nearly identical in value, says Beattie.
'The combination of that, plus the fact they got rid of the GST visitor tax rebate, makes Canada more expensive,' he says.
** India: The rupee has risen more than 8 percent against the dollar this year (you now get only 40 rupees per $1 instead of 44), but the main thing driving higher tourist prices is demand.
'It's getting more expensive at the top end,' says Leffel. 'In the budget and mid range you are fine. But it's not unheard of to pay $350 a night at a good hotel in Bombay or Delhi.'
** Poland, Czech Republic and Hungary: Though they don't yet use the euro, these countries are so popular with European tourists that prices in Krakow, Prague and Budapest have risen -- not to Western European levels, but a lot. Leffel's advice is to get out of the big cities, because the countryside in these nations is still very affordable.
** Costa Rica: Ultra popular eco tourism spot in Central America is not expensive by European standards, but 'they are a victim of their own success,' says Leffel. 'But you still get a lot for your money there.'
** Australia: The Australian dollar hit an 18-year high against the U.S. dollar last month, making a trip Down Under an increasingly upper-crust pursuit.
So which countries are the most expensive for American tourists? The popular ones, naturally:
** Austria, Germany, Belgium, Finland, France, Greece, Ireland, Italy, the Netherlands, Luxembourg, Portugal, Slovenia and Spain: These 13 countries use the euro, which means ouch! for Americans. The euro started in 2002 at equal value to the dollar but has risen dramatically in value (now .73 euro per $1.) Get out of the big cities, and you still can find affordable attractions.
** England and Scotland: The British pound sterling is hovering sickeningly at the $2 mark. In addition, London was just ranked the second most expensive city in the world to live in (after Moscow) by Mercer Human Resources Consulting.
The last prolonged time the pound cost $2 was in the early 1970s, Beattie says.
'The exchange rate has really clobbered us,' Leffel adds.
** Switzerland, Denmark, Sweden and Norway: None uses the euro, and prices may not seem high when you are Swiss, Dane, Swede or Norwegian, but Americans will blanch at the costs.
'It is super expensive,' says Leffel.
So Cambodia and Ecuador, here we come.
CURRENCY AND TOURISM TIPS
Just because another country pegs its currency one-to-one to the U.S. dollar does not mean it is cheap for tourists. The Bahamas and Bermuda have dollars equal to American currency, but both island destinations are very expensive.
Watch out for new ATM withdrawal charges abroad. ATMs (called 'cashpoints' other places in the world) have in recent years had the best rates and low fees, but that is changing.
Some banks are starting to charge outrageous fees of up to $10 per transaction or 2-3 percent for withdrawing cash at foreign ATMs. Before you travel, find out fees (credit unions may have better rates).
Alert your credit card company you are traveling, and ask about fees and charges. Most charge 2-3 percent for purchases abroad. Never use a credit card for a cash withdrawal abroad unless you want to pay high fees plus highway-robbery finance charges that start immediately.
Check exchange rates at www.xe.com. You won't get that bank-to-bank rate, but you can get an idea of what your rate should be.
Carry some local cash when you travel.
Don't use traveler's checks unless you know for sure you will be able to cash them at your destination. They are hard to use in many countries.
If you are bad with math, bring a calculator with a currency converter function.
(Source: Free Press research and Bruce Beattie/ Foreign Currency Exchange Services, Birmingham, Mich.)
WORLD'S MOST EXPENSIVE CITIES
Because of the falling value of the dollar, New York is the only U.S. city on the list.
Moscow
London
Seoul
Tokyo
Hong Kong
Copenhagen
Geneva
Osaka
Zurich
Oslo
Milan
St. Petersburg
Paris
Singapore
New York
(Source: Mercer Human Resource Consulting Cost of Living Survey 2007, a ranking of 143 cities. This list measures how much it costs to live in a city. It does not measure hotel rates, but tourists can get a good idea of the cost of visiting.)
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