Strong dollar makes it a good time to be an American in Europe

Congestion at airports around the globe is making international travel a big headache this summer. 

But if you can make it from the U.S. to Europe, everything from croissants to taxi rides to luxury goods will be cheaper than they have been in decades, thanks to a strong U.S. dollar. 

Given overcrowding at airports and the current unreliability of flight times, not to mention elevated airline and hotel costs, travel experts don't suggest booking a trip to Europe if you don't already have one planned. 

"If you aren't already on a vacation, I wouldn't say go right this second just because the exchange rate is so good," said Willis Orlando, a travel specialist at Scott's Cheap Flights. "A lot of other factors like large crowds still mean higher prices at hotels."

But if you do have a trip planned, or are already in Italy, for example, expect good deals at restaurants and elsewhere. 

Dollar reaches near parity with the euro

The U.S. dollar reached parity with the euro for the first time in 20 years on Wednesday, with the euro briefly falling a few hundredths of a cent below the U.S. dollar Wednesday afternoon. 

The euro fell as low as $0.9998 against the dollar on Wednesday, according to Reuters and Bloomberg. The European currency is down 19% from this time last year.

The strong dollar is owed in part to the Federal Reserve raising interest rates more aggressively than the European Central Bank has, giving the greenback more heft. Recession concerns are also driving investors to safe-haven assets like the U.S. Dollar.

"Now the euro is as low as it's been in a long time. Any American traveling to Europe now will get really good boost to their real income when they come here at the current exchange rate," said Angel Talavera, head of European economics at Oxford Economics. 

Hotel and flight costs are up anywhere from 20% to 60% in some markets, according to data from luxury travel service Indagare. 

But once Americans get to the French Riviera, they'll see savings.

"The dollar is much stronger and goes further on certain things. The kind of opposite of that impact is that flights and hotels are much more expensive than they were a year ago, so in a way you're not going to have a bargain on a whole trip," said Melissa Biggs Bradley, founder of Indagare.

"Where you'll find the biggest bang for your buck is in restaurants, buying a cup of coffee, and taxi cabs," Bradley added. Luxury goods are also effectively discounted right now. "If people love international brand cosmetics or clothing, it will be noticeably cheaper, so stock up on foreign brands you love."

For example, a plate of tortellini in Italy that cost $21.24 last year would only cost $17.20 today.

High hotel costs erode some savings

Boutique-hotel booking platform Tablet Hotels has kept close tabs on rising accommodation rates at over 6,000 properties worldwide. 

Normally, about half of Tablet's bookings are for hotels with the average daily rate (ADR) over $300. This year, that figure is closer to 65%, according to Tablet Hotels CEO Lucy Lieberman. 

In Italy in 2019, the ADR was $426, according to Tablet's data. This year, it's $491, up 15%.

Americans visiting Europe and paying for things in euros are getting about a 10% discount, given that the euro-to-dollar exchange rate at the beginning of the year was around $1.13. 

"So if the average price is up 15% and you're paying 10% less because of the currency exchange rate, it's not too bad," Lieberman told CBS MoneyWatch. 

Consumers who want to lock in a favorable exchange rate can prepay for their bookings. But the dollar is expected to remain strong for months to come. 

"There is no reason to expect that trend to reverse even after the European Central Bank starts tightening.  We expect a strong dollar for the next couple of quarters," said Cailin Birch, global economist at the Economist Intelligence Unit. 

Making the most of the exchange rate

When in Europe, travelers should always use an ATM to withdraw local currency to maximize savings — versus a conversion teller, which charge a commission on top of the exchange rate. 

When using a credit card and given the option to pay in dollars or the local currency, always pay in the local currency. 

"If you pay in the local currency it's converted at the time of the transaction and there is no commission on top of it. If you pay in dollars, the vendor can charge a conversion fee, or set the rate later," Bradley said. 

Another benefit of the dollar reaching near parity with the euro: less uncertainty for American tourists around how much the goods and services they purchase actually cost in dollars. 

"It makes life less stressful when you're charged in euro but you are paying the same price in dollars. There is no need to do a conversion; it creates clarity," Orlando said. "It's great for travelers from the U.S. right now, which is good because there are a ton of us over there." 

— With reporting from Irina Ivanova