A weak U.S. dollar threatens to further squeeze Colorado consumers, even as it boosts some businesses in the state.
Following interest-rate cuts by the Federal Reserve last month, the U.S. dollar struck an all-time low against the euro and is trading near historic lows versus the Australian, New Zealand and Canadian dollars and the British pound.
In early 2002, 86 cents could buy a euro. Today, it costs more than $1.40, making that cup of espresso on St. Mark’s Square in Venice a lot more expensive.
Experts are uncertain how deep the dollar’s slump, which started in 2002 and has accelerated in recent weeks, will get.
“When you are in uncharted territory like this, you will see more volatility,” said Bryan Petersen, a currency trader with Wells Fargo in Seattle.
Businesses that sell goods abroad or cater to tourists here stand to benefit. Consumers, who face higher travel costs and higher prices for imported goods, may not be as happy.
A visit to London, one of the most popular international destinations for Colorado tourists, is now one of the most expensive.
London hotel rates, already high, are now in the stratosphere. A four-star or better hotel in London’s Soho district next June – the start of the peak tourist season – is averaging $450 or more per night. Staying in the area known as the City will set a traveler back $550 a night, according to .
So far, Colorado travelers are forging ahead with plans to cross the pond, said Brenda Rivers, president and chief executive of Andavo Travel in Greenwood Village.
European cruises, where meals and lodging are paid for ahead of time in U.S. currency, have become more popular. More families are renting condos or using time shares, and travelers appear more willing to go down the star scale for hotels.
Even corporate travelers are tightening their belts, Rivers has noticed.
Croatia has become a hot spot for business conferences, in part because its currency, the kuna, remains a better deal than the euro, she said.
If the weak dollar is a harbinger of a weaker U.S. economy, then people will curtail travel plans and switch destinations, Rivers said. So far, it isn’t happening.
“We haven’t started to see a big shift yet,” she said.
Conversely, the number of foreign accents and languages heard on chairlifts and at shopping malls around the state should rise.
International guests accounted for a record 8 percent of the record 12.56 million skier visits to the state last ski season, according Colorado Ski Country USA, a nonprofit trade organization.
If the snow is good, even more are expected this season, given the even weaker dollar, tourism officials said.
Because most foreign tourists enter the country through other points, tracking international visits to Colorado isn’t easy, said Jayne Buck, vice president of tourism for the Denver Metro Convention & Visitors Bureau.
The two measures that tourism officials can track – traffic on direct international flights into Denver and bookings from foreign tour companies and travel agents – are rising.
When Lufthansa added a direct Denver-to-Munich flight March 31, airline officials weren’t sure what kind of response they would get.
“Flights from Munich have been soaring. They have been surprised at the load factor they have been able to sustain,” Buck said.
A weaker U.S. dollar benefits Colorado tourism in two ways. Foreign visitors can spring for more expensive trips deeper into the country, Buck said. And as it costs more to travel abroad, more Americans may chose to stay closer to home, possibly coming here.
Besides travel, another way the weaker dollar could pinch consumers is by making imported goods more expensive. A key reason filling up a tank of gas costs more is that more U.S. dollars are needed to buy a barrel of oil.
An important currency for the Colorado economy is the Canadian dollar, which has reached parity with the U.S. dollar for the first time in 31 years.
Canada imports a wide variety of Colorado goods, including meat, computer products and medical devices. In return, the country sends back crude petroleum and other commodities.
Colorado, so far, hasn’t seen exports pop from the weaker U.S. dollar, said Jim Reis, president of the World Trade Center in Denver.
Colorado exports through July are off 4.6 percent, while U.S. exports are up 10.5 percent.
“Colorado, for whatever reason, is not seeing as much of a benefit,” Reis said.
One reason is that the state doesn’t produce as many semiconductors and computer-storage devices as it did in past years. Another is that after Canada and Mexico, the bulk of Colorado’s exports head to Asia, where currency gains against the U.S. dollar are more restrained.
But foreign buyers are snapping up Colorado commodities. Molybdenum exports are up 88 percent this year versus last, and raw hides and skins are up 66 percent, Reis said.
Molson Coors is seeing a boost as it converts its Canadian cash flows, about 58 percent of its total, into a weaker U.S. dollar.
“Molson Coors, which reports earnings in U.S. dollars and has substantial operations in Canada, benefits overall from a rising Canadian dollar versus the U.S. dollar,” said spokeswoman Kabira Hatland.
That said, the company also holds about $2 billion in Canadian-dollar-denominated debt, which is now more expensive to repay.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
