Where Your Travel Dollar Will Go Furthest in 2013

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photo: Jim Ferri

EDITOR’S NOTE: An updated version of this survey can be found at Where Your Travel Dollar Will Go Furthest in 2014

By Jim Ferri

Welcome to our second annual “Where Your Dollar Will Go Furthest…” survey, which contains some good information to help you get the best bang for your international travel buck in the months ahead.

As in last year’s survey, we’ve again brought together several resources to paint a good overall picture of where you’ll find the best places to stretch your budget. While we found that some of last year’s stars still remain, we also discovered a few surprises.

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Prague, Czech Republic / photo: Jake Liefer

To compile the survey we’ve looked at the Backpacker Index and its sister 3-Star Europe Index, both of which rate cities around the world for their affordability. We’ve also looked at foreign-exchange rates to get a sense as to where the dollar is maintaining or gaining strength. This impacts the exchange rate you receive.

Included in our mix, as it was last year, is “The Big Mac index”, published by the Economist. This doesn’t mean we expect you to head to McDonalds while you’re on vacation. The popular Economist index is based on purchasing-power parity, with the Big Mac being the item that represents a basket of services and goods in different countries worldwide, with the exchange rate being the equalizer.

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Ljubljana, Slovenia / photo: Jim Ferri

This year we’ve also added a fourth element, the “Worldwide Holiday Costs Barometer,” which is published annually by the British Post Office (yes, you read that correctly, the Post Office). The Barometer is a shopping basket of in-resort costs you’d pay for eight items including drinks, sun cream and a meal for two.

If you’re heading off to Europe, you’ll find that Eastern Europe, as it was last year, is still considerably less expensive than its western neighbors, with cities such as Bratislava, Slovakia about half as expensive as Vienna, which is only about an hour’s drive away. In 3-Star-Europe’s ranking of the 15 least-expensive places in Europe, Eastern European cities took 13 of the top spots. These cities, by the way, are also the places where a Big Mac is a good value.

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Segovia, Spain / photo: Jim Ferri

Although the dollar-euro exchange rate may be a bit off this year – as of this writing, the euro has gotten about 10% more expensive since last July – there’s another side to the coin. Changing economic times in the Eurozone during the past year has unearthed some great new bargains in Western Europe.

Due to the ongoing financial crisis in Spain, for example, costs have dropped so much that it’s now the cheapest holiday destination in the world for the British. “What was once Europe’s best bet for a cheap break,” says guidebook Lonely Planet, is “a contender once again.” And there are bargains to be found in Portugal, which is not far behind Spain in the rankings, as well as Greece, which has also had its share of economic turmoil recently.

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Istanbul, Turkey / photo: Nick Grosoli

Turkey, a hotspot for travelers for the past two years, has fallen from second place in the Barometer’s 2012 rankings to 10th in 2013, as prices have continued to creep upward, especially in Istanbul. But it remains a fairly good value when compared to more expensive Western European countries.

On this side of the Atlantic, Mexico also continues to be a good value for many North Americans not only because of cost but also due to its proximity. The Post Office puts it in 8th place, right between Portugal (#7) and Hungary (#9).

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Quito, Ecuador / photo: Jim Ferri

You’ll find some plenty of bargains throughout Central and South America, as well, from Guatemala right down to Argentina. The situation in Buenos Aires remains pretty much as we described it last year, though, with creeping upward prices eradicating much of the gain you’d otherwise realize from the diminishing value of the Argentine Peso.

If you’re contemplating a trip to South America 2013 might be the year for you to visit Rio de Janeiro. Yes, prices have edged up but since the Football World Cup will come to Brazil in 2014 and the Olympics two years later, costs for travelers are likely to go considerably higher in the years ahead.

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Agra, India / photo: Amit-Gupta

In Asia/Pacific, despite the cost of traveling there, once you arrive in Nepal, Vietnam, Thailand, Cambodia and India you’ll continue to find a plethora of bargains. And following right behind Spain, Sri Lanka is rated as the number-two cheapest resort for British travelers and Bali as number four.

South Korea, Australia, New Zealand and China, on the other hand, are rated as the most expensive. That basket of items the Barometer calculated will cost you £36.14 ($56.07) in Sri Lanka, will cost you about four times as much in South Korea.

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Kandy, Sri Lanka / photo: Denish C

All of this is only a third of the vacation equation, of course, albeit a most-important third. To keep your total costs down you still need to find a good hotel deal and minimize the cost of your airline ticket. Since the cost of hotels and airline tickets both tend to rise in direct proportion to the rise in temperature, early planning is wise. This is something many Americans seem to be aware of since a recent American Express survey says that 50% of us have already booked, or plan to book, our 2013 vacation.

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Xochimilco, Mexico / photo: Jim Ferri

In regard to airfares, last week’s announced merger between American Airlines and US Air is keeping everyone guessing as to whether less competition will now pave the way to higher airfares. Although some industry notables have opined that airfares are likely to go higher, I don’t necessarily agree. Airfares are exceptionally hard to forecast since they’re dependent on the cost of oil, and I believe they’ll remain pretty much the same as in past years, about the same when adjusted for inflation.

Nevertheless, it will pay to plan to buy your tickets as early as possible – if the price goes down you can always ask your airline to credit you for the difference, something most carriers will do.

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{ 2 comments… read them below or add one }

Donna Manz February 23, 2013 at 2:40 am

Vacationers should consider whether it is worth their money and their vacation time to travel to a place based primarily on cost. Something is a “value” only if it is worthy of your money. Bratislava is wonderfully old-world but if it IS Vienna you want to visit, save up for Vienna. Once you have spent your vacation budget and used your vacation time for a third or fourth choice trip, you will have to wait a while before taking your dream trip. Just be sure the destination you choose is one you would have chosen regardless of cost.

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Jim Ferri February 23, 2013 at 6:52 am

Well put. Thank you Donna.

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