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Even With a Weak Euro, European Vacations Still Expensive

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PIG IN A POKE
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Back in April, we asked if it was time to start looking at Greek real estate. Vacation property prices were down as much as 50% in some areas and almost looked like a bargain.

Of course, with things as volatile as they are, smart money is still on waiting for the dust to clear before buying that place on the Mediterranean.

But what about taking a vacation in Europe, no property purchases necessary. With the Euro to Dollar exchange rate down to $1.25 to 1 Euro, now has to be a good time to finally see Paris.

Except, well, no.

USA Today reports that many in the travel industry don’t expect to see a substantial increase in the number of US travelers in Europe this summer. While a weak Euro does generally encourage tourism, it’s going to have to get a lot weaker before there’s a significant change.

One major reason for this is the increase in airfare costs over the past few years. According to a spokesman for Priceline (PCLN), European airfares are currently at “a ten-year high.”

Beyond that, as Slate’s Matthew Yglesias pointed out earlier this month, weak economies in country’s like Spain haven’t correlated to lower costs. Hotel rooms, for example, are still pretty expensive.

A lot of this has to do with the Euro, which has remained much stronger than the economies of its weaker members. Normally, prices would drop thanks to favorable shifts in the exchange rate but, so far, a strong Germany has prevented this.

Businesses can’t just lower the Euro price of their goods and services because of a weak economy. For one thing, they have to pay to change the menus. As far as that goes, a weaker economy doesn’t necessarily mean that businesses’ costs go down.

Interestingly enough, the EU country in the worst shape has seen its tourism numbers drop this past year. In the first quarter of this year, Greece saw a 15.1 percent drop in visitor receipts. Continued turmoil in the tiny, debt-ridden nation certainly won’t help, and the numbers for the rest of this year don’t look good.
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