If you’re an American visiting Italy, Greece or Spain this summer after a travel hiatus during the pandemic, you’re in luck: Meals, hotels and tours are more affordable in dollars than they’ve been in two decades.What’s happening: The euro has slumped to about $1.03, plunging more than 8% against the US dollar year-to-date. It’s now trading at its lowest level since late 2002.Most analysts don’t think it’s bottomed out yet. Predictions are flying around that it could even reach parity, in which one dollar can be swapped for one euro.”I’m bearish on the euro until I see a headline that tells me global growth is going to pick up in a big way,” Nomura strategist Jordan Rochester told me. He thinks the euro will hit parity by the end of August.Breaking it down: What’s good for American tourists is tough on European businesses that need to buy energy, raw materials and components priced in dollars. The rising cost of imports could continue to boost prices across the 19 countries that use the euro, where annual inflation jumped to a record high of 8.6% in June.
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What’s triggering the sell-off of the euro, the second most-used currency in the world? Analysts point to a few factors.The first is the economic outlook. Recession fears are rising globally. But Europe’s proximity to the war in Ukraine, and its historic reliance on Russia to meet its energy needs, has made it more vulnerable than the United States.Natural gas prices in Europe are at their highest level since March. Russia has cut flows of gas to Europe, and the major Nord Stream pipeline is about to undergo maintenance. Energy workers in Norway have just gone on strike, threatening further supply constraints.”We have an upcoming winter crisis for the euro zone and I expect energy prices will remain very strong,” Rochester said.The euro tends to perform poorly when risk appetite among investors pulls back.Another issue is trade. Germany just reported a rare monthly trade deficit, a sign that high energy prices are weighing on manufacturers in Europe’s export powerhouse. A weaker euro then becomes necessary to make the bloc’s exports more competitive.Europe has also been behind the United States in raising interest rates, though the European Central Bank expects to begin hiking this month. That means investors are more likely to park their money in the United States, where they can net better returns.As interest rates climb, there are concerns that bond markets in countries with high debt loads like Italy and Greece could come under strain. The ECB has said it will work to prevent what it refers to as “fragmentation,” but it remains a risk traders are monitoring closely.Clients “are very concerned about all things European,” Societe Generale strategist Kit Juckes said Tuesday. “Germany’s trade data yesterday went down badly, and the sense that the current account surplus is being battered by energy prices is widely spread. Add in worries about fragmentation and fear that the global economy is turning south, and it’s hard to get even slightly upbeat about the euro.”___
The worst hidden travel fees and how to avoid them
HOTEL RESORT FEES
Resort fees, which are sometimes called “facility fees” or “destination fees” purportedly cover amenities like internet and pool access. But because the fees are mandatory, they act as hidden costs for booking a room that don’t appear until final checkout.“Resort fees are the only travel fee that has no correlation to any actual service or product,” says Lauren Wolfe, counsel at Travelers Unite d, an advocacy group for travelers. She’s also the founder of the website Kill Resort Fees. “If your hotel charges for parking, if you don’t have a car, you don’t pay to park. Hotel resort fees, though, are almost impossible to get out of even if you decline amenities.”Here are some tips to minimize these pesky fees:— Pay with points at brands that waive resort fees for award stays, like Hilton and Hyatt.— Ask the front desk to waive the fee. “It is probably not likely to work but you can always ask nicely,” Wolfe says.— Look for a search option on a hotel website or app to “show rate with taxes and fees” or similar. This will help compare real prices directly and avoid the hassle of clicking through to the final checkout windows.
Image by Engin Akyurt from Pixabay
AIRLINE SEAT SELECTION FEES
Despite a recent uptick, the cost of airfare has actually been dropping for years. That might sound like good news, but that hides a hidden trend: Airlines have been gathering more of their revenue from add-on fees while lowering the base price of airfare.Charging for seat selection is one of the newest, and most galling, tricks. These fees usually appear during checkout and often seem mandatory.These fees are almost always avoidable, though. Simply skipping the seat selection process and letting the airline assign a seat at a later date is often the wisest choice if you don’t mind the risk of getting stuck with a middle seat.Airlines want customers to pay these fees, of course, and often share scary warnings about the dangers of not picking a seat. But skipping seat selection doesn’t increase your chances of getting bumped from a flight.And note that some airlines, such as Southwest, don’t charge for seat selection.
Image by JUNO KWON from Pixabay
VACATION RENTAL CLEANING FEES
Everyone wants a clean vacation rental, but nobody wants to pay exorbitant cleaning fees that can exceed the base cost of the rental.It’s almost impossible to avoid these fees outright, as most properties carry them. But it is possible to avoid paying too much.Most vacation rental platforms, including Airbnb, offer some option to compare “total price,” which includes cleaning and other fees. It isn’t always easy to filter and sort on total price, but seeing this price on the search screen rather than the checkout screen can vastly simplify comparison shopping.And note, unlike resort fees — which are usually added to every night booked — cleaning fees are applied once. A $100 cleaning fee might be intolerable for one night but reasonable for 10. So, the best way to avoid cleaning fees on short stays is usually to book a hotel instead.
Image by Tesa Robbins from Pixabay
DON’T GET DRIPPED
The underlying psychology of add-on fees is simple: We get lured in by the low sticker price, then grudgingly accept the extra costs.Countering this bias is equally simple in theory, if not in practice. Ignore sticker prices and compare final prices only — taking all fees into account. And avoid as many optional fees (such as airline seat selection) as possible.
Rick Bowmer
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