The ongoing European debt crisis and the accompanying steep drop in the value of the euro over the past month is most decidedly a grim business: an economic malady to blame for everything from riots in Athens and frayed nerves in Berlin, to instability in the U.S. equity markets and dour growth forecasts for the export-dependent (and earthquake-ravaged) Japanese economy.
But for one small group, American travelers planning holiday-season trips to the Old Continent, the slumping euro could end up being a veritable boon.
The euro traded Monday at an intraday low of USD1.3363, the lowest since Jan. 18, and 8.15 percent off the high of USD1.4548 on Aug. 29. It had settled at USD1.3485 in late-afternoon trading. The steep drop in the currency's value against the dollar, if maintained, would make European goods and services a relative bargain to American travelers, likely leading to increased demand.
Already there are signs the trend could materialize. Crediting the weakening euro for helping encourage inbound tourism, Geneva-based International Air Transport Association revised their previous estimate of yearly profits for European carriers, upping the $500 million June estimate to $1.4 billion in a Sept. 20 press release.
A day later, the chief executive of Intercontinental Hotels Group, a global hotels company with a portfolio of brands strongly associated to American consumers, gave a cheery interview to Dow Jones Newswires, in which he said a recovery in the firm's European business was expected.
We have to recognize the Eurozone has got some issues economically and the resolution of that, whichever way it goes, is potentially going to have some short-term impact. But long term, I am sure they'll get it right. It's a huge, wealthy population, said Richard Solomons, the hotel group's chief executive.
Previous forecasts for weakness in the European cruise line business, such as one earlier this month from asset manager Raymond James, which had been predicated on a strong euro, could also be upended.
An influx of bargain-hunting American tourists filling Bavarian beer halls on Oktoberfest or spending a white Christmas in Paris would be a reversal of travel trends from earlier in the decade, when a strong euro allowed Europeans to take discount shopping trips to New York and Los Angeles.