Patch of blue in stormy economy

Air fares are dropping. The dollar is climbing. Hotel rooms are going begging. For travelers at least, the financial crisis has an upside.

A bigger than expected decline in business and vacation travel is putting pressure on airlines to fill seats even though they are offering fewer flights.

Another bonus: If you're planning a trip to Canada, Europe or Mexico, your dollars will buy more than they have in a long while. The U.S. dollar has strengthened against most world currencies amid falling oil prices and the worldwide credit crisis.

Finally, with business travel down, hotels are offering discounts. Expedia, the largest online hotel booking agency, is cutting its fees.

Consider:

With the euro at $1.37 midweek compared to $1.60 earlier this year, a 100-euro hotel room in Italy costs $137 compared to $160 a few months ago — still not a bargain, considering the euro was at $1.26 two years ago, but better than it's been in a while.

Lunch at a pub in London priced at 10 British pounds is $17.60 with the exchange rate on the British pound at $1.76 vs. $2 last year.

Mexico, always a bargain destination for Americans, has become even more affordable. The peso plunged to a low of 13.2 per dollar, the weakest it's been since 1993.

Crossing the border to Vancouver or Victoria, B.C., soon? Don't settle for an even trade on your dollars. The greenback is now worth $1.10 Canadian, the most since May of last year.

A few suggestions:

Hedge your bets and pay in advance if you think the dollar will eventually weaken again. If you think it will strengthen even more, as some economists do, avoid paying too far ahead for anything priced in a foreign currency. One survey shows economists predicting that Canada's currency will slip to $1.13 against the U.S. dollar by the end of 2009.

Avoid buying foreign currency here too far in advance of your trip.

Don't assume the prices you see on overseas tours scheduled for next year are bargains. Prices were set earlier this year when the dollar dipped to record lows against the euro and other currencies. Tour companies will likely stick to their pricing in the short term to try to make up for last year's losses, but they could put packages on sale later if the economy continues to dampen travel.

Airlines have so far kept fall and winter fares to Europe high, but that too could change.

Eurofly, which flies from New York to Rome, last week offered reduced-price companion fares with the purchase of a round-trip coach fare of $679 including fuel surcharges.

"The effects of high fuel costs and the stalled economy is far outstripping the cutback in seats and flights," Joe Brancatelli, the editor of Joesentme.com, an online newsletter for business travelers, told his subscribers last week. "The 'experts' who predicted that airlines could control prices by depressing capacity were, as always, wrong. History has shown that demand dictates pricing."

Hotels are also feeling the slowdown. In September, domestic hotel occupancy was down 5 percent from the previous September, according to Smith Travel Research.

Expedia, which normally adds a booking fee to the price of rooms reserved on its site, cut its fees for U.S. reservations made by Dec. 1 for travel anytime.

Carol Pucci: 206-464-3701 or cpucci@seattletimes.com