Only time will tell how President-elect Donald Trump’s policies will affect the daily lives of Americans. What we can see immediately, however, is how his policies are affecting certain aspects of travel.
With Trump’s election, the Mexican peso has been a notable loser. In the past year (after the presidential campaign began in earnest), the dollar gained 20% vs. the Mexican peso. Traders have been worried over Trump’s aggressive policies toward our neighbor to the south. The incoming president has called for an overhaul of the North American Free Trade Agreement, and has famously called for building a wall along the US-Mexico border.
The peso dropped 2% on Wednesday, after the Federal Reserve released minutes from its December meeting. The Fed outlined the possible need to increase interest rates if the economy grows rapidly under Trump.
According to Reuters, the peso also took a hit after Ford announced plans to cancel the automaker’s $1.6 billion investment in Central Mexico. “With this Ford announcement, markets are clearly seeing the risk of protectionist measures toward Mexico,” said Juan Carlos Alderete, a strategist at Banorte-IXE.
Tensions are high on the economic front, but the silver lining for American consumers is that a weaker peso means travel to Mexico will be more affordable now.
Your dollars go further
The value of the Mexican peso has been tumbling against the dollar. In the beginning of 2016, $1 would get you around 17.25 pesos. Today, it gets you over 21 pesos.
So how does that conversion rate translate into actual goods and services? Here’s a comparison of how much you’ll pay for common travel expenses in Cancun compared to Chicago.
Three-course meal for two at a midrange restaurant
Chicago — $60
Cancun — $27.97
Meal for one at an inexpensive restaurant
Chicago— $15
Cancun — $4.66
Domestic beer (1 pint draught)
Chicago — $5
Cancun — 93 cents
Base taxi fare
Chicago — $3.25
Chicago — $1.40
Cheaper flights, new routes
Travelers can typically find a reasonably priced flight from the US to Mexico, but that might get easier in 2017. According to Hopper, fliers could see the average round-trip ticket to Cancun drop to $260, a potential savings of 36% compared to last year.
In August, Mexico and the US signed a new air transportation agreement that is expected to boost travel and economic growth between the two countries. One immediate effect of the deal is that it removed limits on the number of airlines allowed to travel between the US and Mexico. This will make room for new routes and even more affordable flight options.
On Feb.1, Mexico’s low-cost carrier, Volaris, will begin flights between Mexico City and Houston. A one-way ticket will cost $99.
In the Midwest, Norwegian Air’s 2016-2017 schedule now includes nonstop flights from Milwaukee to Cancun, Cozumel, Ixtapa/Zihuatanejo, and Puerto Vallarta. American Airlines, Delta, Southwest and Hawaiian Airlines are all expected to announce to new routes to Mexico in 2017.
Affordable hotels
According to Hotels.com, Mexico was the fourth-most popular international destination for US travelers in 2015. During this period, the average price paid per night for a hotel room was $147.
Cut to 2016, when Mexico became the second-most popular international destination for US travelers, costing an average of $136 per night for a hotel room. It’s too soon to predict how much hotel rooms will cost in 2017, but if the trend continues, travelers could enjoy an even cheaper stay in Mexico thanks to the strength of the dollar.
As for destinations, Hotels.com ranks Mexico City as the most popular desination for tourists. Current deals for Mexico’s capital include Camino Real Polanco Mexico for $111 a night and the Hotel Royal Reforma for $71 a night.
Other popular destinations with great hotel values include Playa Del Carmen, Puerto Vallarta and Cabo San Lucas.
Brittany is a writer at Yahoo Finance.
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