Does the declining dollar have on economic impact on European hotel rates?
 

Since I barely passed college economics, please forgive any statistical or logical errors in my post.

To wit, assuming (and this is just an assumption, not a declaration) American tourism to Europe declines by a significant percentage (say, 25-35%) due to a falling dollar, will the European tourism industry feel the pinch and be forced to adjust prices downward (such as hotel room rates) to attract more travellers? Or, do travellers from other countries (both in and out of Europe) easily outnumber American tourists in Europe, making the impact of declining American tourism neglible?

Make sense?

Americans do not represent the majority of tourists in Europe, although in some areas they tend to represent higher spenders in better hotels. I suspect that other nationalities will take up the slack, so do not count on a decline of hotel prices.

There is also the booming Chinese economy. With increasing wealth more Chinese are likely to want to travel to Europe (and elsewhere)in the future. This market is potentially enormous and largely untapped at this point.

Of course not.

The number of tourist from USA in Europe is marginal. 95% of the hotel guest in Europe come from Europe.

Strangely, American tourists (and also the Fodorites) concentrate on very few spots in Europe (Amalfi, Cinque Terre, Rome, Venice, Rothenburg, Munich, Paris, Nice, Barcelona, Sevilla..) while huge areas of Europe are almost totally ignored.

I have been traveling around Europe extensively for about 12 years and now live 6 months a year in France. I keep a record of every hotel stay and details such as price etc for each hotel (not sure why I'm just a nut for records) and I find that hotel prices despite the falling dollar continue to rise. When I find a hotel I like I return there everytime I am in town and so it is easy to track prices. It seems that most tourists I see throughout France these days are Italian, British and German.

Larry J

traveller1959 seriously exaggerates the importance of Americans to Europe's tourist industry.

In France for example, all foreign touists together accounted for only 35% of the tourist industry's income in 2006. And Americans accounted for one twenty-fifth of those foreigners: there were nearly three times as many Netherlanders.

Americans, with their low standard of living, loopily small holiday entitlement and debauched currency, can't even spend much any more. In France last year, the British spent three times as much as the the Americans, who were also outspent by the Germans, Italians, Swiss, Dutch and Spanish.

A 35% fall in the number of visiting Americans would, in an average year these days, merely match the average annual increase in the number of British visitors France receives.

A couple of years ago we were once again staying in our favorite very small boutique-style hotel in Amsterdam. The Euro ws rising against the Dollar and the owner told us that Europeans were telling him how happy they were that they could finally get reservations since there had been a fall-off in American visitors.

It is possible for a hotel, perhaps part of an international chain, to release some rooms specially for the US market at a reduced rate (in euro terms) to stem the loss of US customers. This is easily done by releasing blocks of rooms to consolidators like expedia, orbiz and travelocity US, while keeping the existing rates for other markets. It's called market pricing and happens a lot in travel and tourist industries, such as airlines and car rentals.

"Market pricing" also happens on sites WITHIN the US, and not just for hotel rooms, either.

>...Americans, with their low standard of living, loopily small holiday entitlement and debauched currency, ...

C'mon, give us a break. What can you expect from a developing country that exports its natural resources (coal, timber) and agricultural products (soy beans, rice) in exchange for finished goods (cars, consumer electronics, clothes)?

((I))

flanneruk, you stated that traveller1959 seriously exaggerates the importance of Americans to Europe's tourist industry. How exactly? traveller1959 said "Of course not. The number of tourist from USA in Europe is marginal." Maybe you meant the OP?

Flanner, you misread traveler1959's post if you think this exaggerates the importance of US visitors to Europe: "The number of tourist from USA in Europe is marginal. 95% of the hotel guest in Europe come from Europe."

In spite of the weaker dollar and the high fuel prices that have pushed air fares up, travel numbers continue to rise. Americans haven't abandoned their European plans.

As to the dollar's effect on European hotel room rates ... well, the fact that oil is still priced in dollars does contribute to the price Europeans pay for energy, and energy is a part of the price of everything, including hotel rooms. Still, it seems that the higher hotel prices we see when comparing to, say, five years ago (and I refer to the price in Euros) has as much to do with the Euro's effect on "leveling" prices in major capitals (Rome used to seem cheaper than Paris, for instance ... now not so) and the general economic health of tourism: between hoteliers working to upgrade their properties and the large number of tourists (hence scarcity), rates are noticeably higher.

Which returns to the OP's question: hotel rates are likely to drop only if tourism in aggregate slows, and since that looks unlikely (unless and until world events and other factors intrude, as they always do) we shouldn't look for falling prices anytime soon.

As to the dollar's impact on tourism, you'd think it would mean far more European visitors to the US, but in fact numbers haven't yet returned to the pre-9/11 levels. In NYC, at least, this seems to be true - tourism has recovered well, but Americans are the ones visiting here in greater numbers. I heard one expert comment recently that the relatively unwelcoming entry experience is to blame for foreign tourist numbers not recovering. Surely there are many reasons, but money isn't one of them!

flanneruk -

Maybe the British have more money to spend on tourism, not because of the U.S. "low standard of living" (Say what???), but because the British don't spend it on getting their teeth fixed.

Americans' "low standard of living"?

It has always been my impression that, materially at least, the standard of living in the US is significantly higher than that of Europe, and less expensive to boot.

I base this on a comparison such basics as air conditioning, central heating, plumbing, cars, high end baths, clothes dryers and kitchens with large refrigerators and freezers and dish washers.

My impression has been reinforced by the reactions of visiting European children, who invariably remark -- to their parents' annoyance -- that "everything is better here." Out of the mouths of babes . . .

You might argue that health care is expensive here, and so it is, though not so much as is said, or that our vacations are too short. I would agree, but I note that the Euros are lengthening work weeks and will presumably cut down on vacation time, too. (I understand that Brits actually work in the afternoon now, rather than sitting about in beer-addled stupors during the afternoon, as they did even in elite bastions of the City when I lived there.) I have heard you lay the woes of the French economy at the feet of lethargic French workers. The trend is towards the American standard, not the other way -- longer work and less vacation. (Hint: this becomes more bearable with higher wages and lower taxes.)

Or you might compare unemployment rates -- why not do that?

Or the absence of disaffected youth in European cities, except -- oops -- you've got them in droves.

I understand that there are many standards for measuring a "standard of living" and am genuinely interested in your criteria.

ira: Don't worry too much about flanner's comments. Long-term counseling is needed in that case to overcome the obsession with the US.

From a story in the Christian Science Monitor:
"Americans are crucial to tourism in the UK," says Neil Wootton, managing director of the British travel firm Premium Tours. "They bring in more tourist revenue than any other nation in the world. They are far more likely to go out, go on tours, buy souvenirs, go to the theater."

Thought-provoking responses. On previous travels to Europe, I never sensed any dominant American tourism presence anywhere. So MY buried assumption was that the falling dollar would NOT have any impact on hotel rates unless (as tomassocroccante suggested) "world events intrude." A body is a body, after all. What do hoteliers care, as long as their rooms are full?

Now as for that untapped Chinese market....do Chinese have limited vacation times like we Americans? (Oh when, oh when will some kindly European nation with generous vacation benefits take over the US?) And what about India? Or how about those Russian millionaires? It's clear that American tourists are a teeny, tiny drop in the bucket.

America with its "... debauched currency" --- Perfect description!

>>>Or how about those Russian millionaires?<<<

It is nowadays ordinary middle-class Russians that fill Europe and particulary Mediterrenian beaches, millionaries travel to Bhutan and African luxury safaries. And live in Monaco.

I don´t know about Chinese vacation time, but every year there are more and more big groups of Chinese all over Europe. A bit like it was big groups of Japanese in 1970´s. I suppose Indians will soon follow.

<< such basics as air conditioning, central heating, plumbing, cars, high end baths, clothes dryers and kitchens with large refrigerators and freezers and dish washers >>

I don't consider air conditioning, cars, high end baths, clothes dryers and kitchens with large refrigerators and freezers and dish washers to be "basic". I can easily afford all of those items and yet I do no possess them.

The term "high end bath" as a "basic" is in itself a total contradiction in terms.

"I don't consider air conditioning, cars, high end baths, clothes dryers and kitchens with large refrigerators and freezers and dish washers to be "basic".

Well, they are considered basic here, and that is why I say we have a higher material standard of living. Note that the fact that you choose to live without these devices does not negate this.

Congrats on the high end bath catch.