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Strong Dollars Go Far Overseas

Don't you just love it when things cost less than they did a year ago?Well then, love this:
• A double room at the Bangkok Oriental (800/526-6566) — rated Asia's best hotel by Travel & Leisure readers — cost $264 in late 1996, but $185 in November 1997.
• A single room at the elegant Bayerischer Hof in Munich, a member of the Leading Hotels of the World (800/223-6800), would have set you back $345 in the fall of 1996, but just $260 in the fall of 1997.
• A nine-day Baltic cruise on the Kristina Regina, available from EuroCruises (800/688-3876), started at $2,395 in 1997 and has dropped to $2,195 for 1998.

What gives?Simply, Americans are enjoying the benefits of a dollar that's strong relative to many foreign currencies.

"Americans in Europe are getting more champagne, sauerbraten, and tapas for the buck than at any time over the past six years," says Jeff Hamblin of the European Travel Commission. From July 1995 to late September, the dollar gained 23 percent in value against a group of 12 European currencies. (The European Union is still working to establish a single currency by 1999, but that shouldn't make much difference in the relative strength of the dollar.)

This season, it might even be cheaper for some Americans to ski in the Alps than in the Rockies. Example: Central Holidays (800/935-5000) of Jersey City, New Jersey, is offering five-night packages to the Rockies for a starting price of $579, and seven-nighters to Italy from $699. Not only are the Italy trips two nights longer, but they also include round-trip airfare, which isn't part of the Rockies trips. Interhome USA (201/882-6864) reports that by late 1997, rental rates for its villas and apartments in Europe were as much as 40 percent lower than in 1993.

Before you start spreading around your macho dollars overseas, however, here are some caveats:

• Watch out for high inflation at your destination. Though the dollar gained 90 percent against the Turkish lira in the past year, much of that advantage was eaten up by Turkey's inflation rate, estimated at 85 percent in 1997. The dollar's strength is much more valid against the currencies of nations like Germany, France, and Italy, where inflation has been running at less than 2 percent. Even Thailand, with an estimated 1997 inflation rate of 7 1/2 percent, is a great deal because the dollar jumped 46 percent against the baht. But remember, the dollar isn't stronger everywhere: in Britain, for example, it has dropped 3 percent against the pound since late 1996.

• Booking and buying in advance, in dollars, still yields the best deals. If you rent an economy car for your trip to Paris this winter at Hertz's Affordable Europe dollar rate, which requires advance booking and prepayment, it'll cost $168 for a week. If you rent it at a Hertz counter in Paris— same car, same terms— you'll pay $363. To travel from Zurich to Florence by first-class rail, you could buy a round-trip ticket in Switzerland for $302; but you could get an advance-purchase Europass for $316, good for five days of first-class travel in Italy and four other countries.

• Don't expect any reduction of international airfares originating in the United States, since they're set in dollars.

• Want the best exchange rate?Use a credit or charge card for payment whenever possible. "Typically, that exchange rate is the interbank rate plus one percent, considerably better than you'd get on your own," says Rob Rosenblatt of American Express. When you do buy currency at your destination, Rosenblatt suggests, "convert a little bit of money at the start of your trip, but then shop around, because exchange rates vary dramatically."

• If the stronger dollar convinces you to go on a shopping spree in Europe, you can save as much as 20 percent by claiming refunds of value-added tax on your purchases. This can be done in most European countries: Keep your receipts, and look for VAT refund forms in stores, airports, and train terminals.

• Finally, good news even for those on a beer budget: a six-pack in Paris that cost $5.05 in 1996 was $4.57 in 1997.

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