Cheap countries to see in the recession

By Zack O'Malley Greenburg

updated 3:35 p.m. ET May 18, 2009

The latest resident of the recession-era bargain bin: a private island in Fiji. Paul De Domenico, a former food industry executive who'd been asking $35 million for his 800-acre slice of paradise, is lowering his price by nearly 20 percent.

"The good old days are over," says De Domenico, 74. "I'm at the age now where I'm trying to liquidate some assets."

Fortunately for the rest of us, a trip to Fiji can be had without making such a pricey commitment, thanks to a sagging local currency. Though round-trip airfare will set you back about $1,600, the greenback gained 40 percent on the Fiji dollar over the past year—which means that once you get there, everything is on sale at a deep discount.

Fiji is just one of many places that's suddenly more affordable to American travelers.

Top on our list is Hungary, buoyed both by airfares in the $590 range and a currency that the dollar has gained 30 percent on over the past year. Sweden, our second-ranked country, offers nearly identical currency perks. The dollar has gained a full 50 percent on Poland's zloty, meaning that $100 can now get you a $150 hotel room in Warsaw.

On top of the dollar's increased value, Americans will find tremendous deals on rooms as hotels around the world try to entice reluctant visitors.

"Middle-range hotels have definitely been lowering rates," says Michelle Finkelstein, vice president of sales at Our Personal Guest, a San Francisco-based travel agency. "A lot of high-end hotels haven't lowered their rates because it's hard to get them back up. So they've been throwing in free nights and other perks."

Behind the numbers
To figure out which countries are cheapest to visit in this recession, we looked at all the non-North American currencies against which the U.S. dollar has gained 15 percent or more over the past year. We then ranked these 28 countries by the dollar's value in local currency, and by airfare. We based the latter on prices from Kayak.com for a round-trip coach flight from a New York-area airport to each country's capital, departing on Friday, June 12 and returning Sunday, June 21. Ties in the overall rankings were broken by lowest airfare.

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Last year, Forbes predicted that the dollar, which had been pummeled by steady rate cuts by the Fed, was poised for recovery — and that high-flying foreign currencies were in for a rude awakening. We suggested that countries like Brazil and Poland would see their currencies drop as the dollar recovered. Indeed, the greenback is up 26 percent on Brazil's real and 50 percent on Poland's zloty.

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"Our currency has weathered the storm better than many," says Dan O'Neil, executive vice president of futures at OptionsXpress in Chicago. "We've been a lot more proactive in combating the downturn, we're seen as a more dynamic and resilient economy, and the dollar has traditionally been a safe haven currency."

And now, instead of paying exorbitant exchange rates abroad, American travelers are reaping the benefits of a strong dollar.

Iceland on sale
Of all industrialized nations, Iceland has been perhaps the hardest-hit by the global recession. Starting in 2003, Iceland's financial industry metastasized, growing from a few billion dollars in assets to nearly 50 times that amount by 2008.

Helen & Vlad Filatov / Shutterstock Moscow, Russia: Dollar growth: 35 percent; round-trip airfare: $780; must see: Red Square, now a popular tourist attraction.

Unfortunately for Icelanders, that included a plethora of highly leveraged deals made at the top of the market, much of it in foreign real estate. Unlike the U.S., the island nation of 300,000 had no strong federal safety net to save it when everything came crashing down. The country's stock market is off 95 percent over the past 12 months.

That's bad news for Iceland, but great news for American travelers, whose dollars are worth 60 percent more in Iceland than they were a year ago.

James Scully / iStockphoto Lusaka, Zambia: Dollar growth: 56 percent; round-trip airfare: $1,950; must see: Victoria Falls, one of the Seven Natural Wonders of the World.

"The economic collapse has brought hardship on many people," says Urdur Gunnarsdóttir, spokeswoman for Iceland's Ministry for Foreign Affairs. "But it has made life much easier for tourists, that's for sure."

Though peak nonstop fares from New York to Reykjavik exceed $1,000, midweek fares are often available for less than $600. Once in Iceland's capital, a beer in a swanky downtown bar is about $5; a posh hotel room can be had for $80 or so. It's not exactly cheap, but the dollar goes twice as far in Reykjavik as it does in Europe's cosmopolitan capitals like London and Moscow.

Getty Images Warsaw, Poland: Dollar growth: 50 percent; round-trip airfare: $740; must see: Warsaw's Old Town center, which is a UNESCO World Heritage Site.

Keep taking discount vacations, and you might just be able to save up enough for an extreme vacation in Sierra Leone, which doesn't make our list but will certainly be affordable — though far from luxurious — upon arrival.

Better yet, you could pack your bags for Fiji — for good.

"It's a really good buy," says De Domenico of his 800-acre, $35 million island. "People pay that much for a condo in Manhattan."

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