The escalating strength of the euro has led travel agencies in China to give serious consideration to raising the price of travel packages to Europe.
"Prices for European trips are very likely to rise at the beginning of next year, to at least 13,000 yuan (US$1,572)," said Dun Jidong of China Travel Service Group.
The cheapest tour to Europe now costs 8,000 yuan (US$967), as it is the off-season following the October 1-7 "golden week" holiday.
Chinese citizens can only travel to Europe legally through a travel agency.
The euro has been gaining strength against the Chinese yuan since early September. The current exchange rate is 10.83 yuan to the euro, compared with 9.93 yuan on August 31.
The strong euro increases the cost to travel agencies of providing services to Europe.
The Shanghai branch of Germany's CAISSA International Travel Service canceled its 15-day Shanghai-Europe tour this month, for which it had planned to charge the regular 13,300 yuan (US$1,608) per person.
The agency would lose 400 yuan per client if it continued the service this month, although it earned the company a marginal profit of 100 yuan per person in September.
"The expensive euro will affect many travel agents that mainly serve individual tourists," said Ge Mu, marketing manager for CAISSA's Beijing branch. He said the Beijing branch did not stop the service because it has more clients who take business trips.
"But if euro keeps rising, we will have to raise prices," Ge said.
Many travel agencies hesitate to hike prices in the slack travel season for fear of losing too much business. Some even cut prices for European travel packages.
"Competition is fierce. Companies are desperate to gain market share, even if they have to operate in the red for some time," Ge said.
However, travel agents might take the coming Christmas season as an ideal chance to raise the price, said Sun Changwei, manager of China Youth Travel.
"We'll keep watch. They raise, we raise," said Chen Hui with Shenzhou International Travel Service in Beijing.
Europe has been open to Chinese tourists for just one year, and a host of travel agencies have jumped into the business. In Beijing alone, more than 40 companies are running tour services to Europe.
(Xinhua News Agency November 26, 2004)
