Vacation inflation: Where the weakening crown will cost you more this spring

Due to the depreciating Czech crown, people in Czechia planning spring and summer vacations abroad may have to dig deeper into their pockets this year for many destinations. The Czech currency has significantly weakened against major world currencies such as the euro, U.S. dollar, and British pound sterling in the last 12 months, meaning that Czech workers will need to pay more for the same services as last year.

According to an analysis by finance firm Purple Trading, the Czech crown’s exchange rate has fallen 7 percent against the euro and 10 percent against the dollar since last year. 

"This makes vacations more expensive for everyone going to eurozone countries such as Croatia,” said Purple Trading analyst Petr Lajsek. For example, a hotel room that cost CZK 2,375 last year will now cost about CZK 2,530. For longer vacations, the price difference could be in the thousands, Lajsek writes in financial news site Kurzy.cz.

Lajsek also points towards other factors that may cost travelers more. “Fuel prices are also raising concerns – especially diesel, which will be significantly more expensive this year than last year.” However, he notes that the relatively low average inflation rate across the eurozone will help limit price growth this spring and summer.

In March 2023, the euro-crown exchange rate stood at around EUR 1: CZK 24. The crown has since depreciated, now at EUR 1: CZK 25.2.

The Czech crown has been in a precarious position recently, due to falling interest rates, high inflation, and weak foreign investor confidence. The situation is set to worsen, however, with analysts predicting the Czech crown to depreciate in the coming months and through to the end of 2024.

“The Czech National Bank's interest rate cuts could take on a more aggressive trend in the first half of the year, which will put pressure on the currency,” an analyst at financial services firm XTB Štěpán Hájek said at the end of 2023.

It's not just the eurozone that will be affected. Vacations in the U.S. will also become more expensive for Czech travelers. The exchange rate for the crown against the dollar has increased by over CZK 2 since last July, for example.

With the ongoing rise in prices for food and housing in the US, Czechs can expect to pay 5 to 10 percent more than they did last year, Lajsek notes. Including flights, vacations in the U.S. should cost 10 to 20 percent more than last year for people on a Czech salary.

Similar is true for destinations in the UK – out of all major currencies, the crown has depreciated the most against the pound sterling. In mid-April 2023, CZK 26.33 was worth GBP 1. Today, you would need almost CZK 30 to buy one pound sterling.

It’s not all bad news, though. Destinations to countries with poor economies, volatile exchange rates, and governmental instability have become markedly cheaper than last year. For example, the crown has strengthened against the Egyptian pound by 50 percent and the Turkish lira by 15 percent since March 2023. 

"A holiday to Egypt this year could be very advantageous for Czechs. Despite the expected summer inflation of around 20 percent, thanks to the favorable exchange rate, the holiday could be almost one-third cheaper than a year ago,” notes Lajsek.

Due to poor currency stability, destinations such as Algeria and Argentina should also be cheaper for Czechia-based people to travel to than last year.