The rise of the U.S. dollar has more American travelers are looking abroad for their summer destinations. At the same time, the euro is experiencing a nine-year low, which has many airfares to European destinations seeing a drop in prices.
As a result, more Americans are looking across the Atlantic for their summer getaways.
"I think we've seen some softening in airfares going to Europe in July from the U.S. — routes like Frankfurt, Milan, Dublin and Scandinavia have fares that are even lower than winter," said George Hobica, president of Airfarewatchdog.
The European Travel Commission (ETC) expects a 6.7 percent increase in the number of U.S. visitors this year. Last year, the ETC said about 23.4 million Americans traveled to Europe. The U.S. Department of Commerce reported approximately 68.3 million Americans traveled abroad last year, which was a 10 percent increase from 2013.
"We haven't seen double-digit growth since 2004," said Ron Erdmann, spokesman of the National Travel and Tourism Office of the Commerce Department.
Despite coming off a record-breaking year in tourism, many U.S. tourism agencies are worried that the strong dollar could hurt their business rather than improve it.
For example, California experienced a record-breaking year in tourism in 2014. The state hosted 251 million visitors, who spent $117.5 billion in the state and supported more than 1 million jobs, according to tourism agency Visit California.
Economists attributed last year's growth to factors such as a stronger economy, higher consumer confidence spending and an increase number of middle-class Chinese tourists. This year, California must deal with both the stronger dollar and a massive drought.
"Visitors to Los Angeles are not going to care if it gets a little brown around the edges," said Dean Runyan, a consultant who studied the tourism economy for Visit California.
Despite the drought, the strong dollar remains the biggest threat to tourism in the state. To combat this, Visit California has proposed a $116 million budget for 2016 — an 87 percent increase from the 2015 budget.
In 2014, New York City had 56.4 million visitors, breaking the previous record of 54.3 million visitors from 2013. Tourism contributes about $60 billion to the local economy. Now, officials in the state worry that the strong dollar may sway international visitors and even domestic visitors to look abroad for better deals than in NYC.
"There's a direct relationship between exchange rates and tourism revenue," said economist Merih Uctum, director of CUNY's economics doctorate program. "I'm sure the hotels and restaurants will be affected."
The good news is that the stronger dollar doesn't seem to be affecting the hotel industry yet. Guests are paying 5 percent more than last year, and statistic firm Statista reported occupancy rates at the more expensive hotels are expected to hit 65.1 percent in 2015.
"Groups are booking more in advance now because they feel they have a better line of light at the future economic outlook," said Lauro Ferroni, head of hotels and hospitality research at property consulting firm Jones Lang LaSalle.
Despite the strong dollar, the U.S. travel industry remains strong. According to AAA, 37.2 million Americans are expected to travel this Memorial Day Weekend.
