Tour Operators Take a Wait-and-See Approach to Greenback´s Rise

Central Holidays, a US-based tour operators, reduced its prices by 5 percent after the French rejection of the proposed European Union constitution helped push the dollar to its highest point in nearly eight months, $1.23 per euro.

Overall, the value of the dollar has risen 11 percent since March 13, when an euro cost $1.35. After the Netherlands rejected the EU constitution following the vote in France, the price of the euro dropped further to $1.22.

Most operators said the currency fluctuation did not warrant a price change because their prices are set far in advance through hedging, the advance purchase of currency at favorable rates.

But although tour operators said they considered the dollar´s rise to be good news, most were hesitant to predict the long-term effects of currency trends.

For tour operators, the strengthening of the dollar is a mixed blessing because a weak dollar creates an economic incentive for buying escorted tours, which lock in prices months in advance and enable customers to pay for components up front in U.S. dollars.

"We´re having a very strong season, and I believe it´s because people turn to packaged travel so they get most of their up-front costs in dollars -transfers, meals, sightseeing," said Gary Murphy, president of Brendan Worldwide Vacations. "Expenses out of pocket are limited."