Confusion and concern over the stabilization of the Euro vs. other global currencies exists even after a third EU bailout program seems to have prevented Greece from falling into bankruptcy and exiting from the EU. Shortly before the July 13th bailout was announced, news reports gave mixed signals on the situation.† Regardless, the tour and travel industry still faces one near-term certainty: the Euro remains nearly 20 percent below what it was a year ago. As of July 15, it was pegged at $1.10, down a little more than 20 percent from the first week of May 2014. Its average level for 2015 is $1.11. And while some Eurozone tour operators were able for a while to avoid paying more for (and charging their clients more for) U.S. product through advance purchases and hedges late last year, they can no longer do so.
This is hardly good news. Already, the latest (June) semi-annual long-term arrivals forecast issued by the U.S. National Travel and Tourism Office (NTTO) had relatively modest expectations this year for the key Euro-based overseas source markets: Germany, 0 percent change vs. 2014; France, up 4 percent; Italy, up 5 percent; and Spain, up 3 percent. (A report last week from the German trade publication, FVW, indicated that year-to-date demand for USA product at TUI, one of Germany’s largest tour operator, was up 45 percent, year-on-year. We should note that the U.S. is not, however, a top-tier international destination for TUI customers, who generally opt for holidays in neighboring European countries, North Africa, Turkey and the Middle East. Industry experts in Germany believe this demand was due to an expansion of their U.S. product offering for this summer and the favorable pricing they were able to offer by hedging to lock in more favorable exchange rates.)
Here are tables on the changes in the value of the Euro vs. the U.S. dollar.
Decline in Euro vs. Dollar, 2014
Euro vs. Dollar, 2015
|Month||Euro = U.S. Dollars|
|Mean/Median mid-month rate Year-to-date||$1.11/$1.13|
Note: Rate is mid-day, 15th of each month
Source: Prepared by Inbound Report, per xe.com
† Here is a sample of actual news headlines that have appeared since July 1, 2015
For Europe’s Sake, Keep Greece in the Eurozone
(Opinion-New York Times)
Germans tout plans for five-year temporary Grexit …
Eurozone economy in best health for four years – despite Greece