Q & A | How to travel on the cheap

Question: How low will the dollar go?

Answer: Tour operators spend a lot of time trying to figure this out when they price their tours for the coming year. Most estimated the dollar would be at around $1.30 to the euro when they priced their 2008 tours. Obviously they were wrong, and a few have added currency surcharges to cover the increased costs.

The U.S. dollar seems to have settled in at par with the Canadian dollar. Some market watchers predict the euro-dollar rate may improve slightly in the coming weeks after hitting a record low of $1.59 but could spike as high as $1.60-$1.70 if the Federal Reserve keeps cutting interest rates.

Q: What international destinations are cheapest for Americans right now?

A: Almost anywhere in Asia — China, Indonesia, Malaysia, Thailand; South Africa; the Middle East; Mexico and other Latin American countries; and the Central and Eastern European countries that haven't adopted the euro: Hungary, Slovakia, Croatia, Bulgaria, Romania and others.

The dollar has fallen against many of these currencies, too, but things are still much cheaper for Americans than they are in Western Europe or Canada.

Q: If I've already bought airline tickets to go to Europe, should I consider canceling?

A: Not unless you're prepared to pay a stiff penalty — usually $200 on a nonrefundable international ticket — and that's to rebook to another destination within a year.

But let's keep things in perspective. If you did your budget estimates at the beginning of this year, when the rate was $1.47, a week in a 100-euro-a-night hotel would have cost $1,029. If the euro goes to $1.60, you'll pay $90 more — an amount you could make up by substituting an expensive dinner with a meal in a local cafe, or by taking public transportation instead of taxis. Consider that a one-way train ticket from Fiumicino Airport in Rome to downtown is about $15 compared with $60-$80 for a cab.

Q: What are some other ways I can cut costs and still enjoy myself?

A: Spend smartly: One way is to minimize foreign-currency transaction fees when using credit cards or withdrawing cash from automated teller machines in other countries, including Canada and Mexico.

Use cards that carry a maximum 1 percent fee on each charge or withdrawal (available from small community banks, credit unions, etc., as opposed to bigger national banks that charge 3 percent or more). Capitol One (www.capitalone.com) issues a no-annual-fee Visa or MasterCard with no foreign-currency-transaction fee.

Scale back: It's easy to save just by tweaking your style of travel. Choose a two-star hotel instead of a three, or take the stairs to the second floor of the Eiffel Tower for $6.30 instead of the elevator to the top for $19.

Do free stuff: "Go straight to the tourist-information office when you arrive and get a list of free things to do," advises Tom Meyers of EuroCheapo. "Every city in Europe knows about this issue and is doing something to help restore American confidence in the feasibility of traveling there."

Eat cheap: Skip the restaurants in high-rent tourist areas, and eat ethnic. A growing immigrant population means you'll find Ethiopian restaurants in Paris, Turkish pizza in Amsterdam, and Chinese and Indian food just about anywhere.

Q: Should I stock up on Canadian dollars, euros or other supplies of foreign currency before I go?

A: Some people feel better having a small amount of foreign currency with them in case they can't get to a bank machine right away. But, in general, the high fees involved in obtaining currency here outweigh any savings, even when the dollar is falling.

Q: Why does Canada suddenly seem so expensive?

A: Without factoring in exchange rates, estimates are that products are priced about 25 percent more in Canada than in the United States, due to Canada's tax structure and overall economic policies. This has always been the case, but it's more apparent to Americans now that the buying power of the U.S. dollar has declined.

Q: Even so, with the way things are going, hotel and restaurant owners must be making out like bandits.

A: On the contrary, they know Americans are paying more due to poor exchange rates, so many are holding off on raising prices even though their own costs are going up.

Letzia Mattiacci, the owner of Alla Madonna del Piatto, a small farmhouse inn near Assisi in Italy, has kept her room prices at 80 euros — $123 at current exchange rates — for three years.

"I wish I could lower them," she says. "I cross my fingers every day that the dollar stops falling."

— Carol Pucci