American travelers have long enjoyed the benefit of a powerful U.S. dollar allowing vacation spending to go much further in many countries abroad.
The historic strength of the dollar has extended purchasing power abroad on everything from the cost of hotels to food and transportation.
But good things don’t always last. And just a few weeks ago, the banner run of the U.S. dollar experienced a reality check. Its value began to tumble compared to other currencies and ultimately posted its worst first half year in more than 50 years, according to the ICE U.S. Dollar Index, a barometer that measures the value of U.S. currency against six other currencies.
As an example of that decline, the dollar sank 13 percent against the euro this year and 6 percent against the Japanese yen – both wildly popular places for American travelers. Japan in particular, has been attracting Americans in droves because of the incredibly favorable exchange rate.
A report from The Wall Street Journal ties much of the dollar’s declines to a variety of new realities including Trump’s trade policies, the growing national debt and also the closing gap between interest rates in the U.S. and other major economies. All of this is dragging the value of the dollar down at the moment, say news reports.
According to these same analysts, the value of the dollar is expected to continue dropping, which is going to make traveling and spending abroad on everything from hotels to souvenirs and meals, more expensive then it has been in a very long time.
To help navigate this new reality, TravelPulse reached out to both travel experts and money experts for tips on making your travel spending abroad go further. Here’s what they had to say.
Stick with currencies tied to the dollar
If the value of the U.S. dollar is declining, visit countries that use the U.S. dollar as their local currency, suggests travel writer Tim Leffel, an editor and author for Al Centro Media. Which countries might that include, you ask?
“Some countries such as Ecuador and Panama use the U.S. dollar as their currencies,” explains Leffel.
In addition, the value of currency in some other countries is closely tied to that of the U.S. dollar. Places like Belize and Jordan “have a peg in place that never wavers,” explains Leffel, which means prices don’t fluctuate much in those places, no matter what is going on in world currency markets.
“So a vacation now is the same price as a vacation in 2023 or 2024 apart from normal inflation,” says Leffel.
Lock in pricing early
Yet another way to control your spending costs when exploring internationally is to lock in pricing well ahead of time. How do you do this exactly? One way is to book an international group tour. When you book and pay for a tour in advance, you’re locking in prices.
That means “travelers hedge against currency swings, prices are locked in at the time of booking, so even if the dollar weakens further, their trip cost stays the same,” says Marla Kaplan, CFO of EF World Journeys USA.
Learn how to be a savvy diner abroad
Let’s be honest, one of the best things about traveling abroad is the opportunity to sample local cuisine and truly immerse yourself in the country’s offerings. This can also cost quite a bit if you’re not smart about where you dine or purchase food while traveling.
Stacey Black, lead financial educator and certified financial education instructor for BECU, an American-based credit union, says there are many ways to trim your food budget while still enjoying local food.
“Avoid touristy areas that tend to be more expensive. Explore street food vendors and markets for authentic and more budget friendly experiences,” says Black.
She also suggests getting tips on where to eat from locals or using review apps to get recommendations for authentic dining locations that are affordable.
“Share dishes with your travel companions to try a variety of items without overspending,” adds Black. “Skip the appetizers, desserts and pricey beverages so you can focus on the main course.”
Travel off-season
It used to be a fairly well-kept secret that traveling during shoulder season or off-season times of year can make your vacation costs far less expensive.
In a post-pandemic world however, where far more of us are working remotely and are not tethered to an office, this cost-cutting hack is no longer much of a secret. More than a few travelers have begun to extended their normal windows of vacation time to include fall and winter.
Nevertheless, travel industry experts say it’s entirely possible to still get bargains by opting to travel at less popular times of the year.
“Go off-peak,” says Kaplan “EF recently launched a series of off-season tours, which come at a lower price point and help stretch travel dollars without sacrificing experience.”
EF Tours is just one example of a travel company featuring less expensive pricing in slower seasons. Shop around for bargains that may be available in fall or winter.
Cut daily costs
Whenever I travel, I shop around to find hotels that include breakfast in the nightly rate. This is a good way to reduce your daily meal costs.
Kaplan, of EF World Journeys offers similar insights. Many tours, for instance, include meals in the price you pay in advance. In some cases this may just be breakfast, but it may also include lunch and dinner.
When you’re booking travel, be a savvy shopper and pay close attention to what’s included in the price you are paying. Moreover, some tours include other typically out-of-pocket expenses in the overall sticker price you pay for tour.
“Many tours include flights and airport transfers, helping guests avoid additional fees that can add up fast, sometimes as much as $100-plus each way,” says Kaplan.
Avoid paying in U.S. dollars when possible
Another tried and true tip for savvy travelers to help your money go further: use local currency as much as possible.
“Occasionally when traveling you’ll be asked if you want to pay in dollars or local currency,” says Dan Wilderness, creator of the platform The Financial Wilderness. “The USD might seem a logical choice because it’s familiar, but it’s rarely a good option. These setups (of paying in U.S. currency when abroad) tend to offer really poor exchange rates.”
Go where the U.S. dollar’s decline is relative
Yes, the greenback is down a bit in Japan and Mexico, but it’s trading way above where it was two or three years ago, explains Leffel.
“So while vacationers who were there at the very beginning of this year may notice a difference, those who arrived recently will still find terrific values,” Leffel continues. “It’s important to look at historic norms to put any decline in perspective.”
Select one of the cheapest places to travel
In Leffel’s book, The World’s Cheapest Destinations, he outlines 26 countries where it’s possible to really stretch a travel budget, places where globetrotters can easily get by in comfort for a daily budget that’s half what you would spend on your home turf.
“Sure, the dollar may be down a bit from a year ago in Colombia, Guatemala, Bulgaria, or Thailand, but those places are still a terrific value compared to what you’d spend on similar experiences or lodging options in the USA or Western Europe,” says Leffel.
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