UAE travellers hope to get more from their holidays thanks to strong US dollar

The fact the dirham is pegged to the dollar and that the US currency is particularly strong at the moment means that people travelling abroad from the UAE could benefit.

DUBAI // Travellers will adopt a wait-and-see policy on where to fly this year, travel agents predict, as a strong US dollar makes it cheaper for UAE residents when going abroad.

In the first 11 months of last year, the dollar increased in value against a basket of currencies, including the Russian rouble, where it rose by nearly a third.

Since 1997, the dirham has been pegged to the US dollar at 3.67.

Premjit Bangara, general manager of Sharaf Travel, said he expected most people to watch currency rates before making their travel choices.

“I suspect it will have more of an effect initially on business travel and then consumers.”

He expected destinations such as Greece and Turkey to remain popular with holidaymakers.

Gaurav Sinha, founder of Insignia Worldwide travel branding agency in Dubai, believed European countries were very attractive to UAE travellers.

“The eurozone has weakened considerably and is almost on parity to the dollar, meaning things are about 20 per cent cheaper than they would normally be,” he said.

“Places like Spain, France and even Switzerland are very attractive because they are only about six hours away and hotels are affordable.”

The US dollar was 32 per cent stronger against the Brazilian real for most of last year, but Mr Sinha does not believe it will result in more people from the UAE going there. “Brazil is still a nascent market. We haven’t had direct flights there for long,” he said.

The stronger dollar could also deter tourists from coming here.

Keren Bobker, a senior consultant at Holborn Assets in Dubai, said currency rates were not the sole deciding factor for many travellers.

She noted the stronger currency was unlikely to make all-inclusive holidays cheaper, although for independent travellers it could be less expensive.

“This will only work if payment is made in full now and you don’t think the exchange rate will move against you,” she said.

“It could also be wise to buy some of the appropriate currency at time of booking as it could easily have altered by the time of the holiday.”

Flight costs will remain the same as they are valued in the country the consumer is in, but booking accommodation directly could result in savings.

“The big fall in oil prices ought to reduce the cost of air travel, too, but there seems to be little sign of that really happening.”

Although the dollar is expected to remain strong, there are no guarantees.

“The strength of the currency is hitting the profits of many US companies that trade overseas so it is quite possible that the US Federal Reserve [central bank] will take steps to redress that situation,” Ms Bobker said.

“The strength of the dollar has, in part, been due to problems in other global markets where the currency has then weakened so the US dollar has seen a passive benefit.”

Published: January 4, 2016 04:00 AM


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