Getting to Europe is cheaper this summer — but everything costs more when you're there

CNBC

06-07-2025

A last-minute summer flight to London or Rome costs less than it did a year ago, but the good news ends at the customs checkpoint. U.S. travelers to the U.K. and Europe are finding their dollars don't go as far as they did just months ago.
Exchange rates haven't been kind to Americans abroad this year.
The dollar index — which tracks the greenback against a handful of other major currencies — has plunged 10.3% so far this year, its worst half-year performance since 1973, largely due to President Donald Trump's ongoing global trade war. While some analysts expect a partial rebound later this month, €1 now buys only about $0.85 today, versus $0.93 a year ago. In Britain, £1 fetches some $0.73, about 6 cents less than in early July 2024.
Some of the currency swings have been quite recent. A ticket to a London play that cost £100, or about $135, at the beginning of June would cost $137 now. A three-night Barcelona hotel bill of €850, about $965 a month ago, will set you back $1,002 today.
Fortunately, cheaper airfares are cushioning the blow. Tickets to Europe and Asia are down 10% and 13%, respectively, since last year at this time and have returned to pre-pandemic pricing, according to the booking platform Hopper. And travel experts at Going.com recently found some of the lowest-ever deals for certain flights to Sydney, Rio de Janeiro and Dublin this fall.
Many consumers appear to be taking advantage of bargain tickets. Even as international travelers pull back on visiting the U.S., Americans are venturing abroad. Travel volumes among U.S. citizens returning home at major airports' passport control were up about 2% over the 28 days through June 21 since the same period a year ago, according to Tourism Economics, a market research firm.
While budget considerations are affecting who's deciding to vacation abroad and how to spend when they do, consumer finance experts and travel industry analysts say broader economic uncertainty is playing a bigger role.
"If you're going to cancel an international trip, it's not going to be because of the dollar," said Greg McBride, chief financial analyst at Bankrate. "It's going to be because you're worried about getting laid off, you're worried about geopolitical issues, or don't have the money saved up and the only way to pay for it is to put it on the credit card and finance it at 20% interest."
For any travelers with heartburn over the weaker dollar, McBride noted that it "still compares pretty favorably to levels we saw in 2021, and it's still better than pretty much anytime between 2003 and 2014."
Indeed, Tourism Economics found travel spending by U.S. residents abroad rose 8.6% in the first four months of the year from the same period a year earlier. "This indicates continued U.S. outbound demand," the firm said.
While the economy and household finances always influence travel demand, "today those factors are looking to have more of a negative impact than positive one," said Nicki Zink, deputy head of industry analysis at the market research firm Morning Consult.
In the group's recent survey, 31% of consumers said both the state of the U.S. economy and personal financial pressures are reducing their interest in leisure travel in the next three months, "higher than any other factor we survey about," said Zink.
For its own part, the tourism market research firm Future Partners found 47% of American travelers are likely to venture abroad in the next 12 months, but 35% said uncertainty around U.S. policy changes had already caused them to reconsider or delay those plans. And in a NerdWallet survey last month, 11% of consumers said they'd scrapped international travel plans this year over global relations or economic uncertainty.
Plenty of Americans are still packing their passports, though. Millennials, for example, "are increasingly considering international destinations, despite the higher cost compared with domestic trips," said Zink, adding that interest in destinations across South and Central America, the Caribbean and northern Europe have risen this year.
Wealthy travelers are also still traveling with gusto, extending a trend that has intensified since the recovery from the pandemic.
"Our affluent clients are still going after those bucket-list adventures and once-in-a-lifetime experiences," said Mandee Migliaccio, CEO of the New Jersey-based agency Stepping Out Travel Services. "While they're definitely keeping an eye on the headlines, they typically won't change plans unless a destination really becomes unstable."
Migliaccio acknowledged she has seen some subtle shifts lately, with some clients asking to trim flight costs or deciding to skip a stop to keep things more efficient.
"It's not so much 'I can't go' as it is, 'How can I make this work for me?'" she said. "People are being strategic, spending where it matters most, and opting for curated experiences over excess."