Foreign exchange rates allow for fluid transactions to occur between people and businesses throughout the world. In principle, fluctuations in exchange rates are meant to equalise geopolitical imbalances, but they often affect local and national business environments. One of the most commonly affected industries is tourism, especially in a heavily visited state such as Florida.
Fluctuating Number of Tourists
Depending on the current and predicted exchange rates, the number of foreign tourists can fluctuate greatly. When the rates are favourable for foreign nationals, states such as Florida experience an increase in the number of tourists, and, conversely, when the rates are unfavourable a decrease occurs. An exchange rate is favourable whenever a foreign person can purchase more dollars with their national currency; essentially, they get a bigger bank for their buck. Because the income of foreign tourists is based on another currency, their ability to afford a visit to the United States is often based on the exchange rate of their currency. When the exchange rates vary greatly from year to year, it is possible to see drastic changes in hotel and resort occupancy in Florida.
Fluctuating Spending Per Tourist
Changes in exchange rates not only affect the number of tourists visiting, but also their spending habits. When the U.S. dollar is expensive in relation to other currencies, those visitors that are able to afford a vacation in Florida tend to spend less. The opposite is true when the U.S. currency is inexpensive. To illustrate this point in a simple way, a person can think of an example without exchange rates and substitute them with variations in pricing of goods and services. The more expensive things are, the less likely we are to buy and consume them.
Changes in Travel Periods
Because vacation time is usually seasonal, and taken in conjunction with holidays and school closings, exchange-rate changes can hinder vacation timing. People who normally take their vacations during the summer, for example, may postpone their vacation plans until the fall or winter if the present currency rates are not favourable. This can create unpredictable travel seasons for many businesses that depend largely on foreign tourism.