Dollar Power

The greenback may be taking a licking around the globe, but there are still plenty of places—from the caribbean to asia—where it is holding its own. Debra A. Klein reports on where the dollar will be safe in the long run

Katey Hartwell, Condé Nast Traveler's England travel specialist, says she's seen prices for popular London hotels rise to "staggeringly expensive" levels over the past few years. It's not that London hoteliers have been jacking up their rates; the sticker shock comes from the diminishing buying power of the U.S. dollar, which is now worth barely half a British pound.

In fact, the value of the greenback has fallen to record lows against 16 major currencies, sending the cost of a number of top destinations skyrocketing. In the United Kingdom, the pound is at its highest level against the dollar since 1981. The picture's not much brighter on the Continent, where the euro—the currency used in 7 of Americans' 20 favorite international destinations (as reported by the U.S. Department of Commerce's Office of Travel and Tourism Industries)—is flirting with a record price of $1.50. Even long-established value destinations are losing their edge as the buck continues its tailspin around the world. The dollar is down and out Down Unde—it has eroded by more than 35 percent against the Australian dollar since 2002; in Thailand, the baht has gained nearly 30 percent on the dollar this year alone; and in China, the yuan has risen 10 percent. Even Canada's once lowly loonie topped its 1957 record high of $1.06 in November.

"At first the declining dollar was a mere annoyance," says Kathy Lien, chief strategist at the currency news and trading Web site dailyfx.com. "But now it's a big deal and will continue to be a big deal for anybody with interests overseas, including travelers making decisions based on exchange rate values."

Elena Hall, an artist in Manhattan who has spent nearly all of her vacations in Europe for the past 25 years, says the euro's steady climb hasn't bothered her until recently. "The prices are so glaringly high now that it's impossible to ignore. My husband and I were thinking about going to Crete next year, but after seeing how expensive the hotels are, we're now seriously considering going elsewhere. We may go to Mexico's colonial towns; they have as much charm as Spain's small towns but much better prices."

Are travelers destined to spend their vacations abroad worrying that the value of their hard-earned money is slipping away? Of course not. The trick is in knowing where the greenback isn't giving up much ground to the local currency.

We've scoured the globe—from exotic isles to South American eco-lodges to Asian cities and European ski resorts—and scrutinized exchange rates to find destinations where the dollar is holding its own, or at least holding up relatively well. If you're open to seeing something new, we have a trip for you.

ASIA
The U.S. dollar is dropping in nearly every country throughout the continent: In Singapore, for example, the greenback is the weakest it's been in a decade, and in Thailand, the dollar buys a third less than it did just two years ago. But tremendous values can still be found in less explored, increasingly popular gems like Laos, where the dollar is up nearly 25 percent. The dollar has also risen slightly against the Cambodian riel and the Vietnamese dong, making a visit to these already inexpensive hot spots even more of a bargain.