LONDON, IT SEEMS

, is the latest hot destination especially if you need to conduct business. Not only is the city giving New York a run for its money as the world's financial capital, but it's also packed with enough swanky hotels and trendy restaurants to woo even the most jaded road warriors. And with world-class theater and museums to fill the between-meeting lulls, it might be surprising that more briefcase-toting Yanks aren't headed across the pond. That is, until you check out the price tags: a night at the Hilton, $670. Cab from the airport, $180. Dinner before drinks and tip $150 a person. A single one-way trip on the Underground? That'll be $8, please.

Forget lost luggage and flight delays; the nose-diving dollar is today's real international-travel nightmare. The United Kingdom is the worst, with pounds sterling now trading at over $2, the biggest edge it's had on the dollar since 1981. And with the euro worth nearly $1.50, the Continent's not much better. While all American travelers are feeling the pinch, business travelers may be the hardest-hit, especially since, unlike vacationers, they have little choice about where and when they go. Indeed, rates at international business hotels are skyrocketing this year, forecasted to jump by as much as 24% in Europe and up to 22% in the Asia-Pacific region, compared with a U.S. increase of about 6%. Business airfares are up too, with companies reporting an 84% spike last year in international tickets priced between $3,000 and $4,000.

A single one-way trip on London's subway system costs a hefty $8.

The industry hasn't totally ignored travelers' plight, with some European hotels offering dollar rates and airlines running business-class-fare sales. But at most companies the response has been what you'd expect: downsizing perks. Tactics include restricting business-class flights and changing per diem limits "from suggestion to requirement," says Priscilla Campbell, practice leader at American Express Business Travel's consulting group. In fact, according to recent surveys, nearly 75% of corporate travel buyers are shifting from luxury to midprice hotels, with nearly 40% of companies now auditing every expense report, up from a quarter in 2004.

Can you still eke out a pleasant trip overseas? To find out we put together our own excursion, and because we like a challenge (you may prefer to call us masochists), we chose London, one of the world's biggest and priciest business destinations. Our goal? Keep costs below $3,171, the average for an international business trip, and with the help of tour guides, hoteliers and other locals, we succeeded (grand total: $2,338). What follows are our tips for doing business on a budget.

Booking a flight, of course, is never easy. We'd hoped to hold on to those front-of-the-plane perks by flying an all-business-class carrier, but the cheapest would still eat half our budget before we even cleared immigration. Banishing our dreams of leather seats and warm towels, we find two economy fares below $800. Unfortunately, one connects in Chicago (two-plus hours of flying in the wrong direction), and the other is an Air India flight with a recent delay record of nearly 90%. Our final choice is a $757 flight on Zoom Airlines. Never heard of it? Neither had we, but it turns out Zoom is one of an increasing number of low-cost carriers to take on long-haul international flights, a trend that analysts say we'll be seeing more of.

One person not looking forward to the low-cost revolution is our fellow traveler Holly Fitzgibbon. "Never again," says the Oakland, N.J., marketing executive, yanking her suitcase from the carousel. Fitzgibbon's travel coordinator booked her on Zoom "as an experiment" after discovering it charged half the price of British Airways. Fitzgibbon's misgivings started early, as the airline repeatedly changed her seat and flight time on the days before departure. (Zoom says such changes are infrequent.) But the real deal breaker was the flight itself, during which she spent more than seven cramped hours in the last row, too far away to even see the movie screen. Exhausted, Fitzgibbon sprang for a taxi into the city, a ride that cost her $180. "Big mistake," she sighed. "For that I could've gotten another flight!"

Duly warned, we give the Gatwick Airport taxis a wide berth. The going is easier over at Heathrow; cabs are about $100, and the Underground connects directly to the airport. Here the best option is a $55 round-trip on the Gatwick Express, which makes the 30-minute run to Victoria Station every 15 minutes. In fact we have such an easy trip to Victoria that we get a little cocky, opting to skip taxis altogether and take the Underground to our hotel. Nearly 45 minutes, two trains and 10 flights of stairs later, we stagger into our room. Needless to say we cab it to Victoria on our way home, the best $40 we ever spent.

We're staying at the Hoxton Hotel, one of a number of U.K. properties responding to the need for affordable, business-friendly lodging. Some, like Nitenite in Birmingham, have tiny but high-tech "pod-style" rooms, while options like London's Base2stay are closer to apartment rentals. Located in up-and-coming (but slightly seedy) Shoreditch, near East London, the Hoxton has a trendy "urban lodge" feel, complete with fireplaces and taxidermied moose heads.

But despite the funky vibe, the hotel's private meeting rooms and reasonable phone and restaurant prices draw a suit-and-tie clientele. It's also turned price-conscious heads with promotional room rates as low as a pound. But snagging that deal can be as tough as winning the U.K. national lottery: Every two months the hotel releases five rooms at that price, available on a first-come, first-served basis. For the typical last-minute business trip, prices are a crapshoot. Booked a week in advance, our $333 room, while respectable, is not exactly a steal.

Restaurants are another place where even so-called bargains can become a money pit. Hoping to avoid inhaling our food budget in a single sitting, we book a lunch meeting at The Eagle, generally considered the first gastropub. Fusing affordable pub grub with sophisticated cooking, London gastropubs have gotten so popular that even celebrity chefs like Gordon Ramsay are opening them, and we do have a tasty lunch for a little more than $50. Good luck closing a business deal, though, when you have to scurry to the bar to order and pay. And it's a bit awkward when our guest's meal arrives five minutes before ours not to mention when we spill her drink by leaning on our rickety table. So for power lunches skip the scurrying in favor of the set-price menus available at many of the city's top restaurants. Arbutus, an acclaimed Soho eatery, offers its $35 pretheater menu at lunch for just over $30.

Wining and dining isn't the only way to woo clients, and luckily, there are still deals in the West End theater scene. The cheapest tickets are at the half-price booth in Leicester Square, but theater aficionados may quibble with the take-it-or-leave-it seat policy. The best bet, says Simon Thomas, head concierge at the Brown's Hotel, is to visit the box office, where while you don't get half off, you do skip the standard ticket-agent fee (up to 25%) and increase your odds of scoring last-minute returns on hot shows. Though "Hairspray" is listed as sold-out, the box office offers us a $100 seat an hour before curtain. However, our hearts are set on seeing Ian McKellen, whose sold-out "King Lear" is getting major buzz. At the theater we learn that no last-minute seats are available (no surprise, as tickets are $300 on eBay) but that the actor is also performing in The Seagull on alternating nights. So for just over $60, we get our Sir Ian sighting after all.

"Coming here always gives me goose bumps," says John Stringfellow as we step into the iconic Harrods department store. Us, too, but ours are from the $50 baby tees and $110 galoshes. Since even the busiest travelers pick up a souvenir or two, we're getting some tips from Stringfellow, a concierge at The May Fair Hotel. Though items are generally overpriced, he says, you can find affordable gifts here or even buy elsewhere and have them wrapped in the store's signature green. "How about a tin of shortbready biscuits?" he asks, handing us a $30 box. "Nice and British."

Things go from bad to worse along menswear mecca Jermyn Street, where stores are stuffed with $140 ties and $300 shirts. In Church's shoe store we meet John Derringer, a Toronto radio host, who blithely pays for a stack of boxes (shoes and two pairs of slippers) while holding forth on the strength of the Canadian dollar. Catching us gazing longingly at Derringer's shopping bags, his colleague, program director Blair Bartrem, shakes his head and laughs: "Good luck. I guess your dollar is the new peso."