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Ancient architecture, bustling cafes and thriving nightlife — all the hallmarks of a European vacation are available at a deep discount in Hungary.
updated 11/10/2010 11:16:50 AM ET 2010-11-10T16:16:50

In an era of a declining dollar, many Americans think they can't afford a European vacation — and that they'll never get a chance to see the continent's ancient architecture, bustling cafés and thriving nightlife. But those perks and more can still be had at a deep discount in Hungary, No. 1 on our list of countries where the dollar goes furthest.

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"You'll get a really unique look at European history without the high price tag associated with euro-based countries," says Patrick Evans of agency STA Travel. "The country still operates on the forint, meaning big value for travelers."

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The Hungarian currency's 9.2 percent drop against the dollar over the past year isn't the only reason the country is tops on our list. Low prices across the board and a generally low cost of living combine to make Hungary a very affordable place to visit. Travelers in search of a discounted vacation in the Western Hemisphere should consider Argentina and Mexico.

"Compared to a top European city such as Paris, everyday costs are significantly less with a wide variety of affordable accommodations available," says Evans, referring to Buenos Aires and Mexico City. "There are plenty of opportunities to experience the local culture in a city that isn't filled with tourists — yet."

Behind the numbers
To form our list, we looked at 35 of the countries tracked by The Economist's Big Mac Index, which the publication describes as "a lighthearted attempt to gauge how far currencies are from their fair value." We then ranked the countries across three affordability categories: Big Mac Index performance, year-over-year local currency movement against the dollar, and cost-of-living metrics provided by management consultancy Mercer (we used data from each country's most expensive city and double-weighted the category because of its broad scope).

These categories are, of course, inextricably linked to one another. "When a currency is weak somewhere, inevitably it makes the relative costs lower," explains Rebecca Powers, a principal global consultant at Mercer. "Over the past few years, for example, the Mexican peso has not been keeping up with most currencies. The dollar has been weak against other major currencies over the past few years, but the peso is one that hasn't strengthened against it."

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Given our methodology, we weren't able to include many of the world's smaller and poorer nations because there were no data available. However, budget-conscious vacationers would do well to avoid many such places, given the high costs associated with traveling to remote corners of the globe; our survey should be seen as a set of suggestions for those looking to stay on the beaten path. Nor does the survey factor in transportation costs to and from the venues rated. Airfare from the U.S. to Mexico is likely cheaper than to Argentina — our survey simply addresses how far your dollar goes once you arrive.

Airfare notwithstanding, don't expect all the countries on our list to stay cheap for long. Hungary, for example, is likely to switch over to the euro within the next five years, meaning the cost of a visit to Budapest could soon approach the cost of a trip to Paris or London.

"The nature of the economy is changing globally," says Powers. "I think more likely you'll start to see Hungary's [cost of living] move up than see Western Europe's move down."

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