Are currency surcharges in store for travellers?

As the annual sun season approaches and the Canadian dollar continues to weaken, talk of currency surcharges on travel packages has returned.

While the Canadian dollar has hovered around 76 cents U.S. for much of the year, the loonie dipped below that value on Aug. 24, marking an 11-year low amid international financial market turmoil and declining oil prices. And with hotel and resort prices often negotiated in U.S. dollars, the travel industry is not immune to those effects, with currency surcharges introduced by some tour operators in recent years.

On Aug.11, Sunwing implemented a currency surcharge of $30 on all new Sunwing and Signature Vacations bookings, citing an “increasingly unfavourable U.S. exchange rate.” The surcharge was announced July 30, encouraging agents to book their clients early to avoid paying the additional fee.

Amr Younes, vice-president of sales at Air Canada Vacations, told PAX that a currency surcharge for the coming travel season is “currently under review.”

“As hotels charge in USD, naturally we will see costs increase given the weak Canadian currency,” Younes said.

Meanwhile, WestJet Vacations spokesperson Robert Palmer told PAX that the company will stand by its position of not instituting a surcharge, opting instead to factor foreign exchange into the price of packages.

“We always monitor our pricing and make adjustments as necessary,” Palmer said. “In particular, the continued slide of the Canadian dollar is causing our costs to rise, as we pay for our hotel rooms in U.S. dollars.”

Transat Holidays spokesperson Debbie Cabana said that for the time being, the company does not intend to add a currency surcharge for the upcoming season.

Dr. Gabor Forgacs, associate professor at Ryerson University’s Ted Rogers School of Hospitality and Tourism Management, told PAX that surcharges are most likely to occur in a climate of uncertain currency values.

“If at the beginning of the season you know what you can work with, there’s usually no reason to apply extra fees,” he said. “If we suddenly see big changes in value, that’s where we get the biggest impact and you get surcharges.”

Going forward, however, Forgacs said that the value of the loonie will not likely shift much in the foreseeable future, making increased price tags on travel packages more likely.

“The dollar is not believed to bounce back in a significant manner,” he said. “There’s a big difference between trading at 90 cents versus 70 cents.... If we believe the value of the dollar is not going to move significantly, then we have a new reality with new prices and everyone gets comfortable with the new rates.”