The U.S. Dollar Remains Weak Relative to the Euro | A Boost for the U.S. Lodging Industry
31,000 Incremental Occupied Rooms per Night in 2004, and an additional 11,000 Incremental Occupied Rooms per Night in 2005, PwC Forecasts
NEW YORK, Since its introduction on January 1, 1999, the Euro was anticipated to be a strong alternative to the U.S. dollar as an international transactional currency as well as a store of value. However, by October 2000 the Euro reached its lowest value relative to the U.S. dollar, with one Euro only being able to buy 0.85 dollars. Since then the Euro has gained remarkable strength while the U.S. dollar has declined.
NEW YORK, Since its introduction on January 1, 1999, the Euro was anticipated to be a strong alternative to the U.S. dollar as an international transactional currency as well as a store of value. However, by October 2000 the Euro reached its lowest value relative to the U.S. dollar, with one Euro only being able to buy 0.85 dollars. Since then the Euro has gained remarkable strength while the U.S. dollar has declined. As of December 2004, one Euro could purchase 1.34 dollars, a 36 percent dollar decline since October 2000.
The relative value of the U.S. dollar has suppressed U.S. travel to the Euro zone, however, it is has benefited travel to the U.S., and, therefore, lodging demand.
PricewaterhouseCoopers' analysis of the effect of the Euro/Dollar exchange rate changes on the U.S. lodging industry is summarized by Bjorn Hanson, Ph.D., Global Industry Leader, PricewaterhouseCoopers Hospitality & Leisure Practice, "The lower value of the U.S. dollar relative to the Euro has benefited U.S. lodging demand, especially in gateway markets including New York and Washington, D.C. During 2004, the weakness of the U.S. dollar resulted in an incremental 30,857 occupied rooms per night for the U.S. lodging industry, or 0.7 occupancy points. Assuming continuing dollar weakness in 2005, based on the latest forecast by Macroeconomic Advisers, we forecast an incremental 11,162 occupied rooms per night for the U.S. lodging industry, or 0.2 occupancy points. "