Searching the web> recently for an affordable international trip to take with friends, Suzanne Powell found a $550 three-night getaway to Iceland, including airfare. Extending the trip to five nights bumped the price up to about $900, but it was still the best deal around. "All the other places we'd discussed, the airfare alone was that expensive," says Powell, who says she's looking forward to lounging in Iceland's geothermal spas, touring on the land on ponies and visiting the infamous Eyjafjallaj kull volcano.
Iceland is one of a handful of destinations hit especially hard by the financial crisis of 2008, along with Greece, Portugal and Ireland, where hotel rates are still down, vacation hotspots are less crowded and getaway packages are on deep discount. Consider: During 2010, hotel rates in popular and more economically stable destinations such as London and Paris jumped 13% and 7%, respectively, to $210 per night, according to the Hotels.com Hotel Price Index. But the average nightly rate in Athens dropped 10% to $132, and continues to fall. A seven-day packaged trip to Ireland now costs $800 per person, including airfare, hotel and car rental, down 11% from 2008 -- and $500 less than some of the cheapest July flights to Rome.
Economists say these countries are in desperate need of tourist dollars as they pay back bailout loans and attempt to right their economies. Last year, international tourism rose 6.6% worldwide, surpassing the pre-crisis peak, according to the World Tourism Barometer from the United Nations' World Tourism Organization. And although Europe saw overall increases in tourists and hotel room rates, it was the only region worldwide that didn't rebound to pre-2009 levels (it remained 2% below the pre-2008 peak). "The U.S. has seen green shoots of recovery, but other countries were hit pretty hard, and it's still bad for them," says Daniel Hamilton, the director for the Center for Transatlantic Relations at Johns Hopkins University. "They're quite desperate to get tourists, more so than usual."
Of course, travelling to these countries now is still more expensive than in the winter or fall. Late May through August is peak season for travel to Europe, and both airfares and hotel rates rise in tandem with that increased demand. High oil prices have also tacked on an average fuel surcharge of $400 for international flights, says Rick Seaney, the chief executive of price-tracking site FareCompare.com. And the rising value of the euro -- up more than 10% since the beginning of the year and currently equivalent to $1.42 will further eat into your travel budget.
But for travelers that have always wanted to see Europe in the summer, these four economically challenged spots still offer values.
Silhouette of Temple of Poseidon and tourists at sunset.
Greece must recover dually from damage to its economy -- "successive governments basically cooked the books," says Hamilton, resulting in a record $144.5 billion in emergency loans last year -- and its reputation for safety after economic recovery austerity measures led to strikes and violent riots. Tourism revenue fell 9% last year, to roughly $75.4 billion, but still accounts for a fifth of Greece's economy. Chryssanthos Petsilas, a spokesman for the Greek National Tourism Organization, said the 500,000 Americans who visited the country last year represented a 5% drop, citing the Icelandic volcanic ash that grounded flights and stranded tourists across Europe as the primary loss factor. To counteract the loss and attract more visitors this year, Greek airports, with the exception of Athens, have waived the landing, takeoff and stop-over fees tacked onto airfares, and the government has reduced hotel value-added tax from 11% to 6.5%. That can add up to $100 or more saved over the course of a weeklong visit.
While such deals are enticing, Hamilton cautions that widespread general strikes by civil servants, union workers and merchants are still likely, which can result in cancelled international flights, blocked roads and delayed ferries and trains. The State Department suggests travelers steer clear of areas in Athens where demonstrations are ongoing. That said, vacationing Europeans are already finding Greece a much better alternative than Egypt and other politically unstable Middle Eastern areas, says Andrew Young, the web editor for Travelzoo.com. The GNTO is reporting that bookings are up 20% compared with last year. And travel experts say it's still not too late. "We're seeing Greece deals almost every week," says Angela Lyda, the senior editor for Travel-Ticker.com. The average daily room rates in Athens during 2010 was $132, according to Smith Travel Research, a 10% drop from 2009. Gate 1 Travel has an eight-night mainland package from $1,099 per person with airfare, hotel stays in Athens and other cities, and transportation between cities. Go-Today.com's "Athens at Its Best" six-night package starts at $1,149 for airfare and hotel; in the summer of 2008, prices for the same package were at least 23%, or $350, more.
Photo: Hiroyuki Matsumoto / Getty Images.
Tourists at a spa lagoon, Blue Lagoon, Reykjavik, Iceland.
"We used to tell people to stop in Reykjavik on the way to Europe," says Jason Clampet, the senior online editor for Frommers.com. Then in 2006, inflation began to push prices out of many tourists' range. "Just going out and getting a beer was $25," he says. High inflation led to unsustainable lending practices, and when the financial crisis hit in 2008, Iceland's three main banks collapsed within a week's time. Citizens recently voted down a government-backed deal to repay the U.K. and the Netherlands for the estimated $5 billion accountholders in those countries lost in the collapse, a decision analysts say could make it tougher for Iceland to draw foreign investors to repay its $4.6 billion bailout loan from the IMF. All that makes drawing in tourists all the more important, Hamilton says. Last year, more than 51,000 Americans visited Iceland, 17% more in 2009, according to the Icelandic Tourist Board and Austfar. A side effect of the crisis: $1 U.S. exchanges for 113 Icelandic krona, more than double its pre-crisis rate, while prices have subsided somewhat, too. (That beer will cost you closer to $12 today, Clampet says.) "North American travelers have more or less doubled their money," says Sif G stavsson, a spokeswoman for Visit Iceland.
Despite those more favorable currency exchange rates, Reykjavik is still an expensive city. Local attractions and restaurants are priced on par with other major cities, including London and New York. "Prices have been good, and they continue to be good," says Kristin Lamoureux, the director of the International Institute of Tourism Studies at George Washington University. Icelandair offers a stopover in the country en route to Europe for no additional airfare, as well as two-night packages with airfare, hotel and a one-day tour starting from $599 per person. (In 2009, similar packages were 13% more, or $679 per person.) The 2010 average hotel room rate in the capital of Reykjavik was $99 at the end of 2010, down 26% from 2008, according to Smith Travel Research. Even the eruption of the Eyjafjallaj kull volcano last year, which stranded travelers on both sides of the Atlantic for weeks and contributed to a drop in visitors and room rates for many European countries, has turned into a tourist destination for the curious. Several groups offer day tours for roughly $100 per person.
Photo: Getty Images.
Evening in Dublin.
Tourism is one of the revenue sources keeping the troubled Emerald Isle, which was slammed by the same subprime mortgage crisis that hit the U.S., above water if barely, Hamilton says. Like the U.S., the Irish government bailed out its troubled banks to prevent them from failing, but then needed to negotiate a $90 billion rescue agreement with the EU and IMF in November. Despite that aid, Ireland's economy is still struggling: Moody's recently downgraded the country's credit rating to one level above junk status. The government has identified tourism as one area that can bring in more cash, and the U.S. in particular is a key market, says Bernard McMullen, a spokesman with Tourism Ireland, the country's national tourism board. The 14% increase in American tourists last year, to 800,000, helped offset an overall 2.2% visitor decline. U.S. travelers also spent $1 billion, McMullen says, up from $850 million in 2009.
Some of the best deals right are packages that focus on bringing tourists to the cheaper countryside, so tourist looking to visit Dublin and other highly frequented areas may still have to pay up, Lamoureux says. Overall, though, Ireland is one of the most affordable European destinations right now for Americans, Seaney says, with a host of cheap direct Aer Lingus flights. And while July fares are risen slightly since last year, they still go for as little as $736, 30% to 50% less than those for other European destinations like London and Rome. Last year's average hotel price of $117 per night represents a drop of 5% from 2009, pushing the country back to 2004 levels and making it the most affordable destination in Western Europe, reports Hotels.com. Dublin hotel prices dropped 6%, also to $117. But the best deals are fly-drive packages that get you outside the big cities for high-end bed-and-breakfasts, upscale golf resorts and castles, says Young of Travelzoo.com. A six-night package from Dooley Vacations with stays at five different castles, airfare and a rental car start at $799 per person. (In 2008, starting prices for a similar package were at least 11% more.) Sceptre Tours has offers from $739 for a similar B&B deal starting in Dublin or Shannon.
Photo: Martin Child / Getty Images.
The Algarve, Portugal.
Portugal's government is currently negotiating terms for an EU bailout package worth an estimated $115.8 billion, expected to be finalized before $7.1 billion in bonds and other debts owed come due in mid June. And encouraging tourism with competitive rates and nudging visitors to less-visited regions outside of Lisbon -- from the cork forests of the Algarve, also known for its beaches, to wineries in the terraced Douro River Valley, famous for its Port and unfortified reds -- are two ways the country is trying to come back from its outstanding deficit. "Tourism is very important, absolutely," says Jayme Sim es, a spokesman for Turismo De Portugal, the country's national tourism board. Revenue is expected to grow 7.9% this year, to $23 billion -- the equivalent of 9.2% of Portugal's gross domestic product, reports Turismo De Portugal. The U.S. ranks ninth in visitors, with 400,000 tourists in 2010, but sixth in spending, at more than $435 million (up 24.5% from 2009). "That tells us they see Portugal as an amazing value," he says.
One drawback: Tourists will generally need to book their own arrangements piecemeal -- most tours include Portugal as an afterthought to exploring Spain, like a recent nine-day, $949 wine-region guided tour offer from Travel-Ticker. "Portugal doesn't have the name recognition that Spain does as a destination," says Lamoureux. "It's something they're struggling with." But travel experts say it's worth the extra legwork. "People don't necessarily think of Portugal as their next dream trip, but at today's prices, it could be," says Lyda. Capital city Lisbon boasts some of the best five-star room rates worldwide with average prices of $169 per night, 4% cheaper than in 2009, according to Hotels.com. Six-night packages with car rental and lodging in Lisbon and beachfront region. Packages to the Algarve are even less expensive -- as low as $550 per person at Central Holidays. (Last year, the same package started at $688, 25% higher.)
Photo: Getty Images.