Strong euro likely to slow locals' travel to Europe
(China Daily)
Updated: 2004-11-27 08:47

A strong euro since September has pushed travel agencies in China to the edge of rais-ing prices for travel packages to Europe.

"Prices for European trips are very likely to rise at the beginning of next year, to at least 13,000 yuan (US$1,570)," said Dun Jidong with China Travel Service Group.

The cheapest tour to Europe now costs 8,000 yuan (US$967), as it is now an off season after the October 1-7 Golden Week in China.

The euro has been growing strongly against the Chinese yuan since early September. The current exchange rate stands at one euro for 10.83 yuan (US$1.31), compared with 9.93 yuan (US$1.2) on August 31.

The strengthening euro has increased the costs to travel agencies of providing travel services to Europe.

Germany's CAISSA International Travel Service this month has cancelled a 15-day Shanghai-Europe travel package, which charged 13,300 yuan (US$1,608) per person.

The travel agency will lose 400 yuan (US$48) for each client if the service continues this month, though it earned the company a marginal profit of 100 yuan (US$12) per person in September.

"The expensive euro will affect many travel agents that mainly serve individual tourists," said Ge Mu, manager of the marketing arm of CAISSA Travel Service's Beijing branch.

He said the Beijing branch did not stop the service like the Shanghai branch did because it has more clients who take business trips.

"But if the euro keeps rising, we will have to raise prices," Ge said.

Many travel agencies hesitate to increase prices in the slack travel season for fear of losing business. Some even cut prices for European travel packages.

"Competition is fierce. Companies are desperate to seize a market share, even if they have to run in the red for some time," Ge said.

However, travel agents might view the coming Christmas season as an ideal chance to raise prices as they have waited so long for a hot season, said Sun Changwei, manager of China Youth Travel.

"We'll keep watch. They raise, we raise," said Chen Hui with Shenzhou International Travel Service in Beijing.

Europe has been open to Chinese tourists for only a year, and a host of travel agencies, big and small, are fighting for the business, heating up market competition. In Beijing alone, more than 40 companies are running tour services to Europe.

Chinese tourists can travel to Europe legally only through a travel agency.

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