iangf

Have received emails or calls from more than a dozen friends and colleagues in the last week that, with the exchange rate effectively being $2 for 1 GBP, several of them are planning to avoid London and the UK entirely. One friend told me his parents are cutting out London and beginning and ending their month in Europe in Paris. Does anyone feel this will adversely effect tourism in the UK?

janisj

those people obviously don't understand currency rates. The € is at just as bad an exchange to the $ as the £

So avoiding the UK to "save money" on the continent makes little sense. They will "feel" better at the euro exchange rate, but their buying power is about the same . . . .

tomassocroccante

Janisj has that absolutely right. The thing about England, though, is that it is expensive in any case. The Euro doesn't go as far there as in some of its home countries, either.

As for the Euro/dollar, there are countries where a Euro (and your dollar) buys more, and those where it buys less - though the exchange rate stays the same throughout the Euro nations. Cheaper countries, more expensive countries. But you know that!

janisj

London is expensive to be sure - but rural/small town UK is a different animal altogether.

But definitely - some European countries will be better bargains. But just not France, Italy, Germany, Scandanavia, Benelux, etc.

Michael

We have just come back from London, Scotland and France. We were not surprised at the prices in London because it is said to be one of the most expensive cities in the world. But the same costs applied to Scotland. The U.K. is outrageously expensive, even compared to the euro, and where we paid $100 (the cheapest we ever found) for accomodations in fairly remote parts of Scotland, we paid 43€ ($60) for similar accomodations in a small French town. A liter of petrol costs 98 pence, which is 1.43€.

xyz123

Well to some extent our British cousins pay for this with extremely high interest rates....while many factors go into the determination of international exchange rates, I always love it when some home owner here in the USA brags about how low the interest rate has become on his mortgage while at the same time complaining about the weak dollar! Part of the reason for the weak dollar, not the only one, is the administration's view that holding interest rates down, making investment in US securities not such a good idea, is good for the economy Whether it is or not is something any individual's own person situation will determine. Certainly it's not good for travellers.

walkinaround

>>>>>
but their buying power is about the same
>>>>>

really? the continent has long been considerably cheaper for a traveller as compared to the UK. yes the dollar is also weak against the euro but the UK is more expensive than the continent for a US traveller (or a UK traveller).

>>>>>
London is expensive to be sure - but rural/small town UK is a different animal altogether.
>>>>>

i disagree. prices are very uniform throughout the UK. in fact, it is much easier to get cheap, good value food in london than in a village with three pubs, two curry houses, and a chinese takeaway.

xyz...we do not have 'extremely high interest rates' in the UK. in fact, historically they are very low. both the UK and US wish to hold rates down but are forced to increase rates when inflation kicks up (it has recently spiked). the british government does not raise interest rates to attract investment in our currency. in fact, with most british homeowners over-mortgaged in variable rate mortgages, every 0.25% increase really puts a squeeze on people. since americans tend to favour fixed rate mortgages, the effect of interest rate increases to the consumer is much less than in the UK where we favour much riskier variable rate mortgages.

hausfrau

I have to agree with Michael and others that tourism in the UK is more expensive than in mainland Europe. Yes, the US$ is weak in both places, but I believe the cost of goods and services is higher in the UK than on the continent. Living in Germany, I'm used to making the US$-Euro conversion and know what I can get for my money in terms of hotels, restaurants, gas, etc. In planning our 2-week trip to the UK, we decided to avoid London altogether because it was going to cost upwards of $1000 to spend 2 days there (in a 3- or 4-star hotel in a central location, plus meals, sights, etc.)! We found that prices throughout the UK, even in rural areas (e.g. Cornwall, northern Wales, Glen Coe), were significantly higher than on the continent. It was difficult to find a basic B&B or hotel for less than $120 and entry costs to castles and other sights seemed quite high, but the real killer was food - we routinely spent $100 (for 2) on simple meals that we could have gotten in Germany for perhaps half that price. Don't get me wrong, we had a great time, but I figure that the "equivalent" experience on the continent would have cost perhaps 25% less in US$.

NeoPatrick

Please, all this talk about travel costs in the UK without separating London, which is by itself way more expensive, makes about as much sense as thinking that visiting New York City is the same cost as visiting Peoria. London is EXPENSIVE -- pure and simple. It has little to do with the fact that it takes two dollars to buy a pound. It mainly has to do with the fact that things cost a lot in London.

And people who say "I can buy euros with fewer dollars than I can buy pounds therefore my dollars go further in "euro" countries than "pound" countries" aren't really making any sense.

I'll go back to the lira days in Italy -- using the same logic as the people who say that since it takes 2 dollars to buy a pound, everything costs twice as much in the UK than in the US-- would have said that Italians traveling in the US before the Euro paid 2000 times as much for everything as they did at home. After all it cost them 2000 lira to buy a single dollar, therefore everything they bought was costing them 2000 times as much, right? Nonsense.

Heimdall

During the time I have been living in England I have seen the £ fluctuate from a high of $2.60 to a low of about $1.10. When did my $ buy the most? When the £ was worth about $2.40. Shetland pullovers sold for about £5, cashmere around £12. I bought a new Porsche 911 in 1971 for £2,600 (yes, £2,600, duty-free). Those were the good old days.

xyz123

Hi hausfrau..

Didn't I just read the British central bank has just raised interest rates.

Interest rates are one of the factors that influence currency exchange rates...I did not mean to suggest interest rates were deliberately raised to attract foreign investment in the UK which gave me the idea.

Look, I'm certainly not an economist. All I read in the papers is how wonderful the US economy is doing(some commentators wonder why a certain GWB is not given credit for maintaining the strength of the American economy. The US stock market is at an all time high; umemployment is way down. By all indications, the US economy is doing very well.

Yet the dollar continues to slide, perhaps not in a free fall, but downward nonetheless. People have suggested interest rates are indeed a factor which is why I wrote the post.

Now whether when all is said and done a very strong pound is good the UK and a weak dollar bad for the US overall is something I can't answer. I do know it makes traves to the UK and to Europe very much more expensive but brings lots of tourists here interested in our cheap goods.

As far as the UK, especially London, being expensive, here is what I have found. Theatre tickets in London are cheaper than Broadway although they have risen lately even in pounds which means they have risen even more so against US dollars. But when I go to a grocery, I am shocked at the prices. As a general rule, and it is very general, I have found London prices almost exactly the same as New York prices. In that I mean a meal that cost 20 in London also costs about 20 in the USA but there is one tiny difference. In London, it's £20, in the USA it's $20. Trust me on this one, I've been to restaurants in both places and that is what I have found. Of course, there are exceptions.

The same is true, for the most part, in retail goods. I have a couple of really close friends who live in London who have no compulsions about calling me and telling me they're coming to New York and to prepare to put them up...no problem. Why do they come here? The first thing they insist on doing is visiting Wal-Mart or Target and stocking up on clothes telling me they pay half of what they pay at home...they pick up electronic equipment and tell me they pay half of what they pay at home, they go to the cinema and pay half of what they pay at home...we get in the car and fill up the tank and they can't believe how "cheap" petrol is in the USA as compared to home. They get on the subway here and can't believe all the trains are air conditioned in the summer and they pay $2 to ride the train (less than £1 alas at current exchange rates)...I ride the tube in London and pay £1.50 even under the circumstances of using an Oyster card PAYG. They can transfer, if need be, from subway to bus...in London they have to pay a separate fare.

I could go on and on. But please don't get me wrong...I enjoy London and don't allow the higher price of things to bother me...there's nothing like running into a pub and downing a pint (still wish the beer was cold) but this is the reality of what the strong pound means to some degree and its effect on travel which of course is the primary focus of this message board; not economics.

Of course I wish for the days, not too long ago, when the exchange rate was about $1.40 to £1...and when on the continent I long for the days when the excbhange rate was €1 = $0.87...but whether such exchange rates are good for the economy is something I just can't answer to.

Sorry for the long winded answer but I think as I've been to both places and do so pretty consistantly, I do have a basis of comparison.

walkinaround

>>>>>>
Please, all this talk about travel costs in the UK without separating London, which is by itself way more expensive, makes about as much sense as thinking that visiting New York City is the same cost as visiting Peoria.
>>>>>


i'm not sure why so many people assume london is so much more expensive than outlying areas. i agree that nyc is much more expensive than other parts of the US, but you are wrongly extending this concept to the UK.

a curry is no more expensive in london than in the suburbs or rural areas. hotels might be cheaper in outlying areas but this is also hard to judge. any area where a tourist (or business traveller) would want to go will have london-priced hotels. prices in stores are no higher in london than in guildford or chippingshire.

if you see a west end show in the suburbs, it will be more expensive than you can see a similar show in london. london shows are often deeply discounted and much less so in the shire.

the reason for all of this is competition. london has massive supply of just about everything. in the UK, rural or suburban areas suffer from lack of choice. this is much less the case in most parts of the US where consumer choice is often just a short (and cheap) car journey away. in london you can buy a hammer and a box of nails from a zillion different discount stores that import the goods from distant shores. in rural areas or suburbs, you might have one choice...usually an extortionary shop like roberty dyas. driving far for your goods often involves high petrol costs and parking fees. likewise, competition among restaurants in london is fierce and value for money is usually much greater in london as compared to other areas.

certainly go and see for yourself but anyone expecting a big relief on costs by stepping outside of the london area will be disappointed.

ComfyShoes

So.... xyz123, why is what hausfrau wrote incorrect?

Current exchange rates depend on interest rates AND a myriad variety of factors, including in some instances, a country's needs to promote exports or discourage imports. In some smaller countries, there are often talks of pegging its currency to dollar, euros or pounds for exactly that reason (e.g., after the Argentinian bond market crash... or current pressure on Mugabe's government in Zimbabwe to peg its currency to South African Rand). It is hard to know it all as a tourist but the bottomline is U.K. appears more expensive to an average tourist who earns in euros or dollars. Would I pay lower interest on my home mortgage in U.S., and visit U.K. only half as often? Sure! Last I visited U.K. was back in 2000, and pay my mortgage every month

xyz123

I don't think I said the poster was wrong...everything is relative of course. And I also said in my original post in this thread that interest rates are just one of the things that go into currency exchange rates. The poster simply said I was wrong that interest rates in the UK were high and I said to the best of my knowledge didn't the central bank in London just raise rates...I think I also said rarely do decisins regarding interest rates have much to do with its ultimate effect on currency exchange rates but ultimately they are affected by them.

janisj

walkinaround: &quot;<i>any area where a tourist . . . . would want to go will have london-priced hotels</i>&quot;

Absolutely not true in my experience. Edinburgh during the festival, and a few other places approach London hotel prices. But you can still get <u>very nice</u> ensuite, full cooked breakfast accomodations in Scotland, Yorkshire, Wales, Kent, the Cotswolds, Devon and every other tourist region for &pound;25-&pound;35 pp. That price in London will get you a single light bulb in the ceiling, bath down the hall, and toast/cold cereal/tea if you are lucky. (unless one uses Priceline, of course)

Kate

xyz123 - you're right that the Bank of England has been raising interest rates steadily over the last couple of months (BTW we don't have a 'British Central Bank'), but they still aren't exactly what you'd call 'high'. Currently the base rate is 5.75%, which isn't much higher than the US rate (which, I believe, is somewhere round the 5-5.5% mark? I stand to be corrected). And in the last couple of yeras they have been MUCH lower. The BoE has been raising the rate primarily because houseprices are going through the roof and they're trying to stem the chance of a boom and bust situation.

Incidentally it sounds like the US and the UK have similar economic situations at the moment - low unemployment, storming stock exchange (London now reputedly overtaking New York as The World Financial centre).

What any of this has to do with the Pound v Dollar, Lord knows.

walkinaround

&gt;&gt;&gt;&gt;&gt;
(unless one uses Priceline, of course)
&gt;&gt;&gt;&gt;&gt;&gt;

I accept that rack rates in london can be considerably higher than rack rates elsewhere in the UK (although not necessarily the case). but because of the massive supply, discounts are much easier to find in london than elsewhere.

one can easily overpay on food and hotel in london, however, with just a very little work, one can find deals in london that simply are not available around the country. priceline is not the only source of deals in london but since many leisure travellers book discount hotels or packages in london, it makes no sense to argue that london is more expensive unless you use a discounter. the same can be said for theatre prices....london is just as expensive as the suburbs (unless you use a discounter)...that's precisely the point...london has more theatre deals than suburban theatre.

london is expensive but in many ways it offers much better value for money than other parts of the country. if i had only &pound;12 to spend on dinner, i would far prefer to spend my &pound;12 in london as opposed to north chippingshire. same can be said for theatre. i can easily find many decent shows in london for &pound;10-&pound;15...much more difficult in the suburbs. if i had &pound;10 to buy a souvenir, I would far prefer to buy that souvenir in london as opposed to somewhere else in the country....more choice...better value for money.

don't you agree?

NeoPatrick

A couple of points. Walkinaround, I was mainly referring to tourists -- not locals -- about London being expensive. What is the cost of a typical Thistle Hotel in London as opposed to one in smaller towns in the UK? A lot more!! How much does it cost to ride the tube or a bus within a single zone in London (if you don't have any passes because you're there for a short time)? Now compare that to the price for a bus in any other city or town in the UK. Big difference, my friend. Of course, within London prices vary also, but the typical tourist pretty much in central London, will usually find even drinks or food in pubs higher than they'd be in smaller towns.

As to restaurant costs being double in London compared to the US, I'd strongly disagree. The best example I can give is the restaurant Joe Allen, which is virtually the identical restaurant in London as it is in New York. Prices for the same choices are just over half in London what they are in New York. I've checked and while I don't remember exactly, say Liver and Onions in NYC is $20, it is about 11 or 12 pounds in London. Since it already includes the VAT in London, but you have to add on 9% or so in NYC, plus tip more in NYC, the prices really come out almost identical after the 2 for 1 conversion. There are no items on the menus that are the same number of pounds in London as they are dollars in New York. Of course, both cities offer bargains -- that's not the point. The point is comparing two very similar restaurants in very similar areas in the two and you will find they are almost the same, or perhaps a little more -- AFTER the conversion. --but certainly not double in cost.

Regarding theatre tickets. London has finally almost equalled Broadway. Several shows playing both places are something like 50 to 55 pounds top price in London while they are $105 to $110 now on Broadway. Of course deals are available for up to half pice both places, but let's talk about face cost, not special deals.

flanneruk

Kate:

Your analysis of a storming stock exchange etc has a very great deal to do with the &pound; rate.

The financial services industry is a great deal more important to the UK economy than it is to America's. Add to that (and the enormous levels of bonuses the financial service industry is tossing around) the fact that London's been the favourite refuge for kleptocrats for some years, but has recently become the favourite residence for a huge proportion of the world's relatively honest billionaires as well.

Net result: huge amount of cash chasing property in Greater Greater London and you have tearing house price inflation. Zapping interest rates up is pretty well the only weapon anyone's got to cure this.

Since that creates much higher returns on investments in UK bonds, investors all want pounds.

My bet: in November 1967, the pound was devalued to &pound;1=$2.40. On the fortieth anniversary, it'll be back there.

NeoPatrick

Sorry to have hit post.
Yes, walkinaround, I agree that London is &quot;worth&quot; the higher costs -- that's why I continue to go back. Regardless of anything else, I know there are small towns in the UK where I could spend my 10 days instead of London and I'd have a whole lot more money left over, but the fact is I love London and I'm willing to bite the bullet and pay for it, just like I do when I go to New York.

But you seem to contradict yourself. In your last post you seem to indicate the YES, London is more expensive but it's worth it. Then why did you say in your earlier post that it is wrong to say that London is more expensive than other parts of the UK (like NYC is in the US)?