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US tourists getting less bang for their bucks

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Feb 13, 2008

The US dollar used to be the universal tourist currency, accepted almost anywhere, from the streets of Hanoi to the plains of Africa. But the continued slide of the dollar against other currencies has led the greenback to be shunned in unexpected places, creating new problems for American travelers and pushing prices higher.

The Taj Mahal has stopped accepting dollars for the entrance fee, under a new edict from the Indian Ministry of Culture that also affects other national tourist sites like the 13th-century minaret known as the Qutb Minar and Humayun's Tomb in Delhi. As a result, for entrance to the Taj Mahal, Americans must now pay 750 rupees, about $19, at the rate of 29.74 rupees to the dollar, compared with $15 previously.

Some tour operators say they have encountered newfound resistance to dollars in parts of Vietnam and Peru, especially in villages that are off the beaten path.

"It used to be a $100 bill was universal everywhere, from Moscow to Mozambique," said Peter Rudy, the North America director for KE Adventure Travel, a Denver-based outfit that books adventure trips throughout the world. "It's not now."

Even in New York, some shops are encouraging payment in foreign currency. A recent article in The Villager, a Manhattan neighborhood newspaper, noted that East Village Wines, a liquor store at 138 First Ave., accepts payments in euros as well as dollars.

Over the last year through mid-January, the dollar has depreciated about 9 percent against the euro, 10 percent against the rupee, and 12 percent against the Chilean peso, said Jay Bryson, global economist at Wachovia.

In the past, savvy travelers could hedge against the weakened dollar by buying a prepackaged tour. Tour operators set prices as much as 18 months in advance, so they can be printed in brochures and other marketing materials. Those travelers were essentially getting a built-in discount during the last couple of years as the dollar fell against other currencies. But not this year.

Some American tour operators are now tacking on so-called currency surcharges, in much the same way that airlines have bumped up fuel surcharges in the face of rising oil costs. Others are raising package prices to help make up the difference.

Last month, Group Voyagers, the parent company of Globus, Cosmos, Monogram, and Avalon Waterways, added a currency surcharge of about 5 percent to many of its European tours. For example, Globus' $1,699 Taste of Italy package starting on May 3 now includes a surcharge of $110 a person. Overall, travelers can expect to pay $20 to $190 extra per person for the European tours.

Nearly 60 percent of members of the US Tour Operators Association serving Europe and Britain said their prices would increase up to 15 percent because of the weak dollar, a December survey showed.

And it's not just Europe. KE Adventure Travel raised prices for a handful of clients who booked winter tours to Patagonia, Bolivia, and Nepal - partly because ground agents were demanding more money to make up for the decline of the dollar. Some agents are even requesting payment in euros instead of dollars.

more stories like this"It's a monstrous change in the business, and it's affecting every one of us," Rudy said, adding that KE Adventures never before raised prices in midstream for its clients in its 25 years of operation.

Despite the currency surcharges, prepackaged tours can still offer some savings. The roughly 5 percent surcharge imposed by Globus is less than the 10 percent devaluation of the dollar against the euro since it priced its vacations in June. To help ease the blow, Globus is offering a limited-time $200 discount on air-inclusive Europe vacations booked by Feb. 29.

And other tour operators are simply absorbing the loss. After Globus announced its currency surcharge, a flurry of tour operators, including Brendan Worldwide Vacations, Insight Vacations, and Collette Vacations sent out news releases emphasizing that they did not plan to levy currency surcharges. These tour operators use a hedging strategy that mitigates the effects of currency exchange fluctuations.

Recognizing the challenge American tourists are up against, some hotels with a large American clientele have also begun to guarantee some rates in dollars. The high-end Hotel Carl Gustaf in St. Bart's, for example, is guaranteeing winter rates for travel through April 19 in dollars. While the listed rates begin at 1,100 euros, or $1,672 at $1.52 to the euro, the hotel is offering rates beginning at $1,300 a room a night with a three-night minimum to travelers who ask for the United States-dollar rate. One place to find hotels that are offering similar deals, said Stacy Small, owner of Elite Travel International, is the website of Small Luxury Hotels of the World, slh.com. The collection of upscale hotels "has a number of properties that consistently promote US fixed-dollar rates," she said.

For example, the Capital hotel in London is offering a three-night package in an Executive Double room with airport transfers and access to a health club for $1,399, not including tax. A three-night stay in that category of room would normally cost 855 pounds, or about $1,700 at $1.99 to the pound, without the transfers or club pass. The St. James Paris is offering a City Escapes package through April that includes breakfast for $470 a room, not including tax. Rates normally start at 380 euros, about $577.

To get the most bang for your buck, consider destinations where the dollar hasn't declined. The dollar is flat against the Mexican peso compared with where it was a year ago, said Bryson of Wachovia, and is up about 2 percent compared with a year ago against the Argentine peso. And countries like Panama and Ecuador use US dollars as their official currency.

boston.com

US tourists getting less bang for their bucks
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