The United States are still thriving despite the rise of the dollar

Despite a slight increase that began mid-april 2015, the rate of the euro compared to the American dollar remains currently very low.

According to boursorama.com, it is of 1.1140 US dollar for one euro, on Monday May 11th, 2015. To illustrate this shift, just one year ago, on May 12th, 2014, one euro was exchanged for 1.3759 US dollar.

A situation that has many consequences for the players of French tourism.

Just like we explained in February 2014, many travel agencies that reserve services through incoming agencies that deal in US dollars are forced to sacrifice a share of their profit margin or to ask clients to pay more.

Other “victims” of the drop of the euro: tour-operators who produce trips to destinations outside of the euro zone and sell in France.

Unless they’ve thought of buying dollars in the long term to protect their rates, they see the prices of their “à la carte” stays explode, and their margins on brochure product be reduced.

Which could also lead to a drop of demand. Mainly on the United States where, by definition, all of the services are paid in US dollars. In front of the general rise of rates, the clients of TOs could thus choose to look towards other less affected destinations.

But that is not yet the case, according to Michel-Yves Labbé, President of the Visit USA Committee. “During our last meeting, the TOs who were present were all happy,” he assures.

In the United States, tourism professionals of DMC tourism are excepting, despite everything, a decrease of arrivals due to the increase of the US dollar. A trend that has in fact begun on some markets.

“But not on the French market, affirms Michel-Yves Labbé. France remains a refuge value for tourism in United States.”

Philippe Marquenet, Commercial Director of Visiteurs, confirms this sentiment. The sales of trips in the USA have been in constant progression for 3 years now.

And this year, the TO shows a growth of +18% on summer reservations.

“But would we be at +21% if the US dollar were weaker or at -5% if the US dollar were at the same level as the euro? We can’t really tell,” comments the Commercial Director of Visiteurs.

The monetary variations could have an impact on the prices of packaged offers presented through a brochure by the travel company. “But our rates are protected,” specifies Philippe Marquenet.

However, there's a small chance that they’ll influence the sales of “à la carte” products.

An analysis agreed on by Stéphane Cygler, manager of Get Americas: “On the ‘à la carte’ quotes the influence of the drop of the euro compared to the dollar is barely felt. The average spending amount is higher, there is no impact.”

However, on the Groups/Work Councils, this DMC specialized in the United States that charges in dollar clearly senses a shyness: “we’re still registering as many quote requests from agencies, however, once they convert the amount in euros, they either reduce the number of nights, or they change destination completely. The group segment is clearly affected,” he observes.

At Euram, that makes 70% of its business in the USA, the April sales have also made that step.

“We feel the ‘dollar’ effect, but this may also be due to the atmosphere, whereas in January, February, and March, we beat records,” highlights Serge d’Albrand Commercial Director France.

“It is still a bit early to know the consequences of the drop of the euro compared to the dollar, it’s difficult to evaluate.

We sense a reluctance but it’s not necessarily due to that. It is more global. This will not be our best season, but there was timidity also before,” adds Aurélie Gauthier, Production Manager of Amerigo, who specifies that there will be an impact on next Winter's rates.

For Jet Set, the volume of reservations for the 2015 summer remains stable compared to the same period in 2014.

The increase of the US dollar “makes a few clients think because the rates are not those they were expecting anymore, from the level of the price of a trip to the budget to dedicate once on location,” observes Charles Julien, Product Manager for North America and Latin America.

At Kuoni, the influence of the variation of the dollar and euro rates is also hard to measure: “It is impossible, right now, to verify the consequences on our sales,” responds Emmanuel Foiry, President of Kuoni France.

Yet, it remains that even after an increase of close to 30% of the sales of trips in the USA between 2013 and 2014, - after the retrieval of the destination by Thomas Cook and the sale of Austral Lagons especially - they remain at a progression of around 5% in 2015.

“But we don’t know if this increase would be higher if the dollar were weaker, adds Emmanuel Foiry. However, it is certain that if it were the case, the consequences certainly would not be negative.”

According to him, the “USA remain a refuge value on the French market. Especially in New York where French travelers stand in the Top 3 of emitting markets before the British.”

However, it is certain that this increase of the US dollar compared to the euro will lead to a rise in rates of on-the-ground services paid for in the United States. But it will surely be compensated by a reduction of the air transport prices due to the decrease of the price of petrol.

And maybe even more that just compensated. “We can say that it is today cheaper to travel to the United States than 5 or 6 years ago,” concludes Emmanuel Foiry.

Tourism rates to the USA for the years 2013 and 2014:

Total number of foreign visitors in 2014: 74.728.706
Total number of French visitors in 2014: 1.624.604

Total number of foreign visitors in 2014: 69.768.455
Total number of French visitors in 2014: 1.504.654

Source Visit USA Committee/France