Udy Law, a real-estate agent from California, didn't intend to travel extravagantly when she toured northern Italy last month with her husband. "We planned to low-budget it," she said, "but with the cheap exchange rate we got to go first class all the way." The couple stayed at four-star hotels in nearly every town they visited; in Verona, they splurged on an 18th-century table and matching bench that cost $2,500. "It's an amazing deal," said Law. "Everything was so cheap in Italy."
The combination of a strong U.S. economy, low airfares and the falling euro has turned Western Europe into an American bargain-hunter's paradise. "What's happening now is Euromania," says Linda Cabasin, a senior editor at the American guidebook publisher Fodor's. Not since 1985 has a European vacation been so affordable. Some currencies, including the Italian lira, the Irish punt and the Portuguese escudo, have fallen to postwar lows against the dollar. As a result, American travel to Europe is expected to reach a new high after seven consecutive record-breaking years.
The British and Japanese have benefited, too. Since January of last year, the pound's value has grown 15 percent against the euro; the yen has appreciated 42 percent. The number of Japanese buying package tours to Europe this month has risen 12 percent over the same period last year. Japanese tourists have been crowding the Louis Vuitton shop on Paris's Champs-Elysees and the Prada outlet near Florence, where shoppers are so plentiful they have to take a number. The low euro is one more good reason why the British are flocking across the Channel to buy already cheap alcohol in northern France--a trip nicknamed the "booze cruise." "It would be crazy to buy this at home," says Alan Campbell, an engineer from Nottingham, England, standing over a trolley laden with 10 liters of whisky and three cases of beer at a Calais shopping mall.
Eurolanders have learned to profit from the invasion. Some real-estate brokers and luxury-goods manufacturers have hiked prices dramatically. The price of a Fendi Zucca Bagette handbag has jumped from 500,000 lira last year to 960,000 lira. Property prices in the south of France, where Americans have been buying up quaint farmhouses and villas, have also risen. "This year I've seen houses double, if not triple, in value," says Brian Hart, co-chairman of Var Property in Provence. "With American tourists, the market is really flying." In most cases, though, Americans can still find a good deal, at least compared to what they would pay at home.
Not so for Eurolanders. The U.S. Department of Commerce is predicting a gradual decline in the growth rate of European tourism to the States over the next few years. "Everything's very expensive. It's difficult to shop," complained Thorsten Pilgrim of Germany, who wandered along New York's Fifth Avenue last week with his wife, Silke. "I haven't been here in 18 months, and the difference is huge." Normally, the couple stocks up on clothes from Banana Republic and Ann Taylor. This year, all they had to show for two days of shopping was a shirt from Brooks Brothers. Says Mick Stempel, a financial consultant in Vienna, "Only a few years ago we Europeans went on our shopping sprees to the States with empty suitcases and behaved like American millionaires. Now it's the other way around." That's just fine with the Yanks.