With pre-departure COVID testing no longer required for American travelers heading to Europe, and now dropped for returning home as well, some may find that taking a European vacation is more appealing than ever, especially since hotel rooms in Europe are a relative bargain when paid for in U.S. dollars compared to U.S. hotel rooms paid for in euros.
Average daily room rates in Europe and the U.S. have been increasing since early 2021, but recent exchange rate fluctuations have affected the growth rates in the dollar and in the euro differently. Compared to 2019, average U.S. room rates paid in euros are now 7% higher than they cost in 2019, while European room rates paid in U.S. dollars are now 3% lower than they were in the same time frame. So American travelers looking for a relative bargain may choose to go to Europe. As an added benefit, they no longer need to worry about getting stuck if they test positive for COVID.
The U.S. had been one of the few remaining Western countries that had maintained a strict pre-entry testing requirement after other countries had abandoned the practice weeks ago. Following intense lobbying by the U.S. Travel Association and the American Hotel and Lodging Association that claimed the testing put additional burdens on in-bound travelers, placing the U.S. travel industry at a disadvantage, the testing requirement to enter the U.S. was lifted on June 12. American hotel owners and operators hope the number of overseas travelers headed to the U.S. will increase notably this summer as a result.
However, if history is a guide, the number of travelers leaving the U.S. to venture overseas will likely be higher than the number of Europeans coming to the U.S. In 2019, the Department of Commerce counted 19 million Americans heading to Europe and 18.5 million Europeans coming to the U.S.
In addition, recent exchange rate fluctuations affecting the average cost of a hotel room is also working in favor of European hotel operators. In April of this year, a hotel room cost on average $135 in the U.S. and $125 in Europe. Not only are European room rates lower than they were in 2019, but they are also lower this spring relative to American room rates.
It will be interesting to see who benefits the most from the dropped testing requirements. Will the number of travelers coming to the U.S. increase as expected? Or will an unintended consequence be that more Americans decide to visit Paris, Potsdam or Prague this summer?