Travel, Dining, Culture: Vacationing with the Euro

It's difficult to predict with precision how the dollar will stack up against the euro at any moment. The euro started the summer at $1.54, rose to $1.59, and then dropped to $1.46 at Labor Day. And while this decline is good news for travelers looking forward to vacationing in the 15 eurozone countries, it's extremely unlikely the dollar will ever return to the good old days in 2000 when the euro was worth just $0.82 and a European vacation was a bargain.

If you are intent on a eurozone vacation, you can hedge your bets and lock in your costs now. Your goal is not to speculate on currency, but simply to avoid surprises. One way to do this is to sign up with an all-inclusive vacation or cruise operator, who often sets prices in dollars as much as a year ahead of time. An added advantage to a cruise is that onboard amenities, like spa treatments and shore excursions, are usually priced in dollars. You can also spare yourself euro shock by booking hotels that guarantee rates in dollars.

It pays, however, to read the fine print. If the dollar falls, some companies impose currency surcharges or raise their prices. In other words, it's up to you to do your homework.

Another way to hedge your bets is to buy euros. Travelex, a foreign exchange company based in London, has rolled out a prepaid foreign exchange currency card that can be loaded with euros (or pounds) and used for purchases and ATM withdrawals. If you travel frequently to the European Union, you can open a bank account there and use it to house your travel money. You can also buy euros on the New York Stock Exchange (symbol FXE). Each share represents 100 euros.

Another tactic for an affordable vacation is to choose European destinations outside the eurozone. Croatia features a number of wonderful cities like Dubrovnik and Split and an archipelago of islands that rival those in Greece. You can also vacation in parts of the European Union that have yet to adopt the euro. Romania's capital, Bucharest, once known as "Little Paris," has much to offer, as does the Romanian region of Transylvania, now known for its vintages as well as its vampires.

A third approach is to vacation where the dollar is still king. In recent years, the dollar has performed favorably against the Mexican and Argentine pesos, and countries like Panama and Ecuador use American dollars as their official currency. Taking a dollar-denominated vacation is not only less expensive than a stay in a eurozone country, but it will take you off the beaten track and expose you to the culture and sights of a country that you might have ignored.