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Will a Strong U.S. Dollar Scare Away International Tourists?

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Dream trips to Europe, Japan and Australia are more affordable for Americans now that the dollar has reached a 7-year high against the euro and many other foreign currencies.

“My U.S. clients heading to Europe are pretty jazzed about the exchange rate,” said Sherri Doyle of Seattle-based Pacific Northwest Journeys.

But international tourists heading to the U.S., who collectively spend about $200 billion here each year, are starting to worry that the gung-ho greenback will gobble up their vacation dollars.

When comparing December 2014 to April 2015, “Europeans still searched for travel to the U.S. at about the same rates, but 4 percent fewer actually booked their trips in December vis-a-vis April,” said Kurt Weinsheimer, VP of Development and Partnerships at Sojern.

“My U.S. clients heading to Europe are pretty jazzed about the exchange rate.”

Some travelers may be reevaluating the scope of their trips, but “it’s way too early to panic,” said David Huether, senior vice president of research for the U.S. Travel Association.

Prices still lower

Prices of consumer goods and services are still lower in the United States when compared to competitors such as Germany, Italy, France and the United Kingdom, said Huether, “So it’s still relatively cheap for residents of those countries to come here.”

And even if the dollar continues its rise, a major impact on tourism might not be felt until 2016, “because the effects of the strengthening dollar on travel tends to be delayed,” he said.

That doesn’t mean hotels, popular tourist destinations and travel counselors and travel experts aren’t closely monitoring the dollar’s doings and, in some cases, responding now.

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“A stronger dollar will definitely have an impact on tourism in the U.S., reducing foreigners’ buying power,” said Nils Stolzlechner, general manager of the Shelborne Wyndham Grand South Beach in Miami, “That trend will lead them to look for less expensive options for their travel.”

To stay competitive, the Shelborne has created value-promotions, such as ‘stay 3 nights; save 30 percent’ and a package that includes $250 resort credit for hotel’s spa, restaurants and bars.

For Aussies, still great value

For travelers from Australia, “the USA – even at 80 cents to our dollar – provides great value. We are not seeing any softening in demands,” said Michael Londregan, managing director for luxury travel network Virtuoso in Australia, New Zealand and Asia.

Still, he suspects many Australian travelers are seeking out more modest accommodations and shopping more conservatively than when the U.S. dollar was weaker. Beyond exchange rates, airfares are powerful when it comes to driving demand in long-haul leisure markets, said Londregan, but “the great asset America has for tourism is a segmented product with many price points.”

Because many international visitors plan their trips to New York City months ahead of times, the impact of the surging dollar “is unlikely to be immediately felt,” there said Chris Heywood of NYC & Company, the city official tourism and marketing organization.

But, just in case, Heywood notes that the city’s five boroughs are always being promoted in 28 international markets, which helps soften the impact of currency fluctuations and any changing economic circumstances abroad.

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