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Strong U.S. Dollar Set to Boost Travel

January 6, 2015 By: David Eisen

US Dollar strengthAmericans are traveling abroad again—and they have a stronger U.S. dollar to thank. That's right: The U.S. dollar is the strongest it's been against the Euro in four years, and is gaining on other foreign currencies.

The Euro fell by 1.2 percent against the dollar to $1.1864, marking its weakest level since March 2006. And if you ever wanted to take that trip to Tokyo, now is the time.

Russia's Ruble was the biggest loser against the dollar, falling 46 percent in 2014, as it was weakened by U.S. and European sanctions and sliding oil prices.

All of this, combined with an improving American economy, and lower gas prices, is giving U.S. travelers the impetus to take that overseas trip, which they may have put off in the past.

"I don't think there's any doubt that a strong U.S. dollar coupled with lower fuel costs encourages more travel, both domestically and abroad," John Caruso, senior market strategist at RJO Futures, told CNBC. "In recent past years this has been a major deterrent to U.S. travel abroad."

"It has been a good year for the dollar," Eric Viloria, a strategist at Wells Fargo & Co., told Bloomberg. "It’s experienced broad-based gains, the Fed concluded its quantitative-easing program and signaled that rate hikes are coming. All of these things, along with a positive fundamental outlook and strong economic data, are positive for the dollar."

The upside is that it makes traveling overseas cheaper for Americans. It is a kicker for U.S.-based hotel brands that have a large spread of international hotels—think Marriott, Hilton, etc. Many U.S. travelers, even though they are traveling abroad, appreciate the familiarity and perceived safety of U.S. brands.

The stronger U.S. dollar is also helping publicly traded hotel companies on Wall Street. Check out this chart.

Conversely, a stronger U.S. dollar tends to curb overseas travel to the U.S. However, lower oil and gas prices allow U.S. travelers to hit the road more easily, which should mitigate some of the loss in overseas dollars.

What do you think of this $type?


About the Author

David Eisen
David Eisen is the managing editor of Hotel Management and Hotel Design. He has been covering the lodging industry for the past 7 years and, to paraphrase George Bernard Shaw,...

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By David Eisen | January 6, 2015
With the dollar reaching a four-year record high against the Euro, the stage is set for a positive year for U.S. travel abroad.