Americans enjoy global travel discounts as dollar soars

The British pound's collapse to its lowest level ever against the US dollar has further roiled global financial markets, but the flip side of Britain's despair is positive news for Americans, whose Mighty Greenback is now at — or near — historic highs against several currencies.

For people paid in US dollars, or in a currency pegged to it such as the UAE's dirham, this means Britain, Europe, Japan and beyond are now deeply discounted for anyone with the means to visit.

The dollar's rise has seen it smash parity with the euro for the first time in 20 years, surge by about 30 per cent against the yen this year alone and brought into play the once-unthinkable prospect of eclipsing the British pound in value, following Chancellor of the Exchequer Kwasi Kwarteng's tax-slashing mini budget, which markets reacted to with a collective facepalm.

Economists see the world's top currency growing stronger still, with investors seeking higher returns on dollar deposits as the Federal Reserve raises interest rates. The buck is also seeing its power expand as energy shortages and uncertainty from Russia's war in Ukraine hammer European currencies.

Caleb Reed, a personal finance expert and founder of TheDollarBudget, noted that Americans hobbled by high inflation at home can get some relief if they are able to travel abroad.

“Americans travelling overseas ... will get more for their money on everything from lodging to food," Mr Reed told The National.

"This could result in several hundred dollars in relative savings for Americans travelling to European destinations."

Japan will reopen fully to tourism next month and European destinations are thrilled with the recent influx of American tourists.

"Presently, Americans can get bigger discounts on luxury hotels and on lunches and dinners after they commute to Europe or other countries," financial expert and founder of FinanceJar Elena Jones told The National.

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It's a stunning reversal for the dollar, which has often lagged behind other currencies. For instance in Britain 15 years ago, £1 bought more than $2. That left price-shocked American tourists forking over nearly $10 for a one-way ticket on the London Underground.

Jason Porter, a senior investment manager at Singapore-based Scottish Heritage, said that in the first half of 2022, the US dollar's rise sparked a real estate buying frenzy in Europe and Canada, driving total cross-border real estate investment flows to their greatest first half in years.

"A strong dollar will make it more expensive for foreign investors to purchase real estate in the United States, while giving American investors more purchasing power abroad," Mr Porter told The National.

"London drew the greatest investment of any city in the past six months, with just under $10 billion invested, primarily by Asian investors eager to purchase prized office buildings."

David Decker, a lawyer and real estate investor based in Atlanta, Georgia, had travelled frequently to Paris, France, for many years and when the US dollar started gaining in value, he decided to invest in a property there.

Tourism in Cyprus for 2022 - in pictures

Nissi Beach in the resort town of Ayia Napa on the south-east coast of Cyprus. All photos: AFP
There is a rebound in tourist numbers following two tough years of the Covid-19 pandemic.
The number of Russian visitors has reduced drastically, as the once lucrative market has been hit by EU sanctions imposed after Moscow invaded Ukraine.
The key tourism sector, which contributed 15 per cent of the country's GDP in 2019, is still counting the cost of the disastrous years of Covid-19 travel chaos.
In 2019, before the start of the pandemic, a fifth of tourists were Russian — 782,000 out of 3.9 million — making it the holiday island's second largest market after Britain.
A cat sits next to a mural by Greek artist Fikos, in the Cypriot capital of Nicosia. Last year, despite tough Covid-19 travel restrictions, the share of Russian tourists rose to more than 25 per cent, totalling nearly 520,000 out of 1.93 million visitors.
A Cypriot fisherman sails off the coast of the northern village of Pomos. Only 17,000 Russian tourists came to Cyprus between January and June this year.
A partial view of the Musan underwater sculpture park in Ayia Napa. From January to June, Cyprus recorded 1.2 million visitors, nearly five times the level last year. Overall, tourist arrivals in Cyprus are bouncing back.

“My family and I had been going to Barbizon, which is about 30 minutes outside of Paris, since about 2010,” Mr Decker told The National. “When the dollar and the euro were almost 1-to-1, we decided it was time to buy and stop renting.”

“Had I waited another month when the US dollar was at its current peak, I could’ve saved about $25,000.”

“I’ve never seen the French so happy to see Americans, but of course they are always happy to see our money,” he laughed.

A wave of Americans looking to escape political uncertainty and rampant gun crime at home is also moving to countries that offer so-called golden visas, such as Portugal. Residency with a fast-track to EU citizenship currently comes with a €500,000 investment in Portuguese bourses.

A year ago, that would have cost an American almost $600,000. Today it would be about $479,000.

While a strong dollar may be good news for US tourists, it can hamper American exports, as overseas companies struggle to pay inflated prices.

In addition, "the soaring dollar adds risks for the Fed as it seeks to tame inflation without slowing the economy into a recession", noted Morgan Stanley's Lisa Shalett in a note to investors.

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