How to Save Money in Europe

The Europe Trick

Now this is how you do Paris. For their 20th wedding anniversary, retired nurse Carole Andregg and her husband jetted across the pond in comfort, stretched out in United Airlines' roomy "economy plus" section. Once there, the Spokane, Wash., couple spent a week at the four-star Westin Paris, where their upgraded room offered spectacular postcard views of the Eiffel Tower, the Place de la Concorde and the majestic Musée du Louvre. Special VIP treatment at all the big museums followed. Sound like a budget-busting trip? Nope. The Andreggs paid less than $2,000 each.

Desirable destinations

Even with the dollar on the losing side of the exchange rate, the European Travel Commission expects the number of U.S. tourists this year to match, or even break, the record 13 million who visited in 2000. But with prices on the rise, more travelers are getting creative about how to go in style — without going broke. Don't get us wrong: The days of slipping into the Continent's best hotels for a couple hundred dollars or less are long gone. And be prepared for eye-popping prices on everything from steak frites to opera seats. (Try $275 to catch La Traviata in Milan.) But with Europe offering some of the world's most desirable destinations, there's the obvious question: Why miss out?

Today's savvy travelers are working all the angles, from basic frequent-flier miles to the less used but equally valuable hotel loyalty clubs. Thanks to some new carriers, overseas business-class fares have become a near bargain on certain routes. And tour packages, which lump together everything from airfare to hotels and meals, are shedding their low-budget image and offering some decidedly upscale options. That's how the Andreggs scored their deluxe trip.

When it comes to Europe, all but the über-wealthy need to do a little cost-cutting these days. The exchange rate has gone from bad to worse: The euro now trumps the greenback by nearly 50%, while the pound is almost twice the value of the dollar. Transatlantic airfares have risen in most markets, and the average daily hotel rate in Europe in March was 31% higher than the year-earlier month, compared with a 6% increase in North America. But you don't need to start calling hostels. Below, you'll find strategies for planning a first-class trip — without breaking the budget.

Flights

Turns out airfare is the least of your worries. While fares have crept up, prices have been kept in check by an increasing supply of seats; U.S. airlines have boosted capacity on transatlantic routes by 25% since 2002. In addition, several all-business-class carriers, like Eos, L'Avion, MaxJet and SilverJet, have begun offering direct flights to Europe. Round-trip tickets on SilverJet, which flies from Newark to London, start at $1,798, nearly half the price of British Airways' 21-day, advance-purchase business option. The carrier recently offered to comp one leg of a round-trip flight to frequent fliers of other airlines who purchased a round-trip ticket.

Of course, since all-business-class carriers fly out of limited markets (New York; Washington, D.C.; and soon Los Angeles and Las Vegas), many travelers have to use other strategies, like frequent-flier rewards. Your best bet? Rather than upgrade your miles, redeem them for a premium seat, advises Joe Brancatelli, publisher of travel web site JoeSentMe.com, since more airlines are charging additional fees or limiting eligible types of fares. If you don't need all the perks of business class, consider "economy plus," seats with up to 20% more room than those in regular coach. Virgin Atlantic has as many as 58 premium-economy seats per flight and will soon expand to 65.

Hotels

While using airline miles is a no-brainer, many travelers forget that hotel frequent-guest programs offer the same perks — only with fewer blackout dates. On a recent summer jaunt to Spain, technical writer Melissa Harshman and her husband Glenn couldn't resist splurging on Seville's luxurious Hotel Alfonso XIII. The Allentown, Pa., couple was hoping for an upgrade, but traveling smack in the middle of high season, they weren't holding their breath. But once the hotel discovered they were Starwood Preferred Guest members, it promptly upgraded them to a palatial room, complete with balcony — all for 1,500 points, a fraction of the 20,000 needed for a free night. "Frankly, I don't know why more people don't sign up," says Melissa.

As the Harshmans learned, even the most upscale properties have hopped on the loyalty-program bandwagon. When you think Starwood, the W or Sheraton springs to mind, but the company's reward program also covers the tony Le Méridien and the Luxury Collection, which includes properties like the Alfonso XIII and the Grand Hotel in Florence. Marriott Rewards members can cash in points at the Ritz-Carlton or Orient-Express Hotels, while the Priority Club rewards you earn at the Holiday Inn (rates as low as $68) can be used for free nights at InterContinental resorts (ranging above $1,000 a night).

Strategic choices

If you're not using points, be strategic. Business hotels are generally a good bet in the summer, when most European businesspeople are on holiday. They also tend to be cheaper on weekends, while resorts offer deals midweek. And even with demand soaring, many hotels are still willing to make a deal if it means extending your stay. Leading Hotels of the World, a group of more than 430 luxury hotels, offers a One More Night program, where travelers who book a certain number of nights get a freebie thrown in. At the Hotel Majestic in Rome, this recently translated into a free fourth night, a savings of more than $900.

Villas

Then again, you could just ditch the hotel room altogether. Ever fantasize about sipping espresso and nibbling biscotti in the bougainvillea-strewn garden of your rustic, old-world villa? This might be the year. Home rentals can be shockingly affordable, especially if you're traveling with family or planning a longer trip; rates for a two-bedroom home can dip below $1,500 a week. And small adjustments can lower your rate dramatically. Renting directly from the owner can save up to 10%, while taking a place 15 minutes from the beach, rather than right on the water, can make an even bigger dent. On home-rental site HomeAway.com, a six-bedroom villa in the Costa Blanca section of Spain located 25 meters from the beach started at $2,966 a week, while a similar property a half mile from the shore ran $2,158.

The best way to save? Avoid the big two: Tuscany and Provence. Italy is pricey overall, says Dan Legault, president of villa company HomesAway (a different outfit than HomeAway), though bargain-seeking Francophiles do have some options, like the less well-traveled Normandy and Burgundy regions. Still, vacationers striking out into new areas should be cautious, since villas in these regions usually haven't been as thoroughly vetted as those in the traditional tourist hot spots. When HomesAway added new properties in Croatia, for example, Legault started with 120 potential villas, but after visiting them, discovered that only five were really up to snuff.

Cruises and Packages

Cruises are another way to cut out pricey hotel rooms. Smaller barge and river cruises, particularly suited for travelers who want to get beyond the basic port cities, are frequently discounted. Luxury barge outfit GoBarging recently dropped the price of its summer cruises through Burgundy and Provence — picture strolling through medieval towns, exploring ancient castles and sipping your way through vineyards — by a whopping $1,000 per cabin.

And have we mentioned the bargain bin of packaged travel? Whether you're buying basic airline-and-hotel bundles or full-fledged guided tours, expect to save 15% to 20% over what you'd pay á la carte. The deals get even better when costs spike, since package rates are usually published at least a year in advance. The upshot? This year's travelers pay last year's prices — and dodge runaway exchange rates by paying in dollars. Companies frequently offer their best deals on bigger, more inclusive packages. Luxury operator Abercrombie & Kent recently offered a $500 discount for those who booked a business-class airfare along with their two-week tour of Turkey.

But even with Crystal Cruises offering cuisine from sushi mecca Nobu and Tauck World Discovery tours boasting overnights at posh hotels like the InterContinental Paris Le Grand, perhaps the biggest challenge for cruises and tours is not proving they're a good deal, but convincing vacationers that they are, in fact, luxury travel. "I know, I know: If It's Tuesday, This Must Be Belgium," sighs Bob Whitley, president of the U.S. Tour Operators Association. "That movie was made 38 years ago!"
- smartmoney.com