Holiday Euro Summer 2007:
"Holiday Euro" at Record Low Value Abroad
- Popular holiday destinations have gained value against the euro in 2007
- The holiday euro not profiting from the weak dollar at all overseas destinations
- Holiday euro worth the most in Turkey in spite of value gains and inflation
"Inflation and relative value gains have reduced the buying power of the holiday euro in some of the most important vacation destinations for Austrians," says Stefan Bruckbauer from Bank Austria Creditanstalt (BA-CA) Group Economics. While the value of the holiday euro has increased slightly in the most popular vacation destination, Italy, for the first time in years, the value of the holiday euro has fallen in many other popular countries because of inflation and relative value gains. This is especially true in Turkey, but also in Hungary, another important travel destination. Holidaymakers in Turkey will get around 22 per cent less for their money this year than in the summer of 2006, and around 11 per cent less in Hungary. Higher inflation rates than in Austria have also weakened the holiday euro in three further well-loved destinations, Spain, Greece and Great Britain, though to a considerably lesser extent than in Turkey and Hungary.
"In spite of the strength of the euro, the 'holiday euro' will be less than it has ever been this summer," says Bruckbauer. Economists at BA-CA calculated the value of the currency back to 1990. This means that the strength of the euro will only bring advantages at some overseas destinations.
"In spite of the decline, the holiday euro will again be worth the most in Turkey this summer, followed by Croatia and Hungary," the BA-CA economist explained. After Turkey at 146, Croatia at 138 and Hungary at 135 come Slovenia at 123 and the USA at 122. "This year, the holiday euro is worth hardly more than it is in Austria in Portugal, Spain, Canada, France, Germany and Italy," added Bruckbauer. The euro buys less than in Austria in Great Britain (97) and also in Switzerland, despite the franc's devaluation.
The fact that the USA is one of the top five countries in terms of holiday euro value can be attributed to the strength of the euro against the greenback, which is up 7 per cent from 2006. But this gain since 2006 does not mean more buying power at all overseas destinations. BA-CA's economists calculated the change in the value of the holiday euro for various destinations that are popular with Austrians for this first time this year (see the new chart), and discovered that Japan, Hong Kong and various destinations in Africa are also cheaper this year than in 2006 in addition to the USA. But overall, the holiday euro has gained virtually no value compared to 2006 in Asia and in South and Central America, in spite of the euro's strength on the world markets. "The local currencies at some popular overseas destinations such as Thailand and Brazil have even gained value against the euro, and as a result the 'vacation euro' is only worth not quite one per cent more in these countries than in 2006. In spite of the euro's strength against the dollar," notes Bruckbauer. The holiday euro has especially lost value in Australia and New Zealand.
In conclusion, the economists at BA-CA note that these values are national averages, and that individual regions (for example London as a central region) can deviate from these values. The price level is also based on the average prices for goods and services in the countries, and prices for individual products (especially for tourists) can vary significantly. For this reason, only the change and no values were given for the overseas destinations. In addition, it must be noted that the price level in some holiday countries is so much lower than in Austria above all because of the high level of wages here. If price levels were lower in Austria, this would also mean a lower wage level, and we would often not be able to afford to go on holiday at all.
Enquiries: Bank Austria Creditanstalt Economics and Market Analysis
Stefan Bruckbauer, Tel. +43 (0) 50505 ext. 41951