Will Europe be less expensive this summer?

The days of Arthur Frommer's Europe on $5 a day guidebook are gone. Europe has become increasingly accessible, popular, and expensive—so much that the most recent edition of Frommer's book is Europe on $85 a day.

Prices this summer will be as high as ever, and Europe will be as crowded, if not more crowded, than last summer. Germany in particular will experience a huge influx of visitors in June and July for the World Cup soccer championships.

Although Europe will be more expensive and crowded this summer, you can use our tips to save on everything from airfare to hotels and rental cars.

How's the dollar faring against the euro?

Unfortunately for American travelers, the dollar has fallen against the euro. According to data provided by the U.S. Department of Commerce, the dollar has been getting below 80 cents per euro since October. Last summer, the dollar got about 81 cents for every euro. Due to the poor exchange rate, in-country costs will be somewhat higher this summer, so you'll have to budget accordingly.

Is airfare more expensive?

According to Barbara Messing, Vice President of Retailing and Special Projects at Hotwire, prices for airfare are up about 10 percent over summer Europe fares from last year. Our research shows that a summer flight from London to New York started at $499 round-trip from discounter 1-800-Fly-Europe; this year, the fare is up to $519 (not including taxes and fees).

Additionally, Expedia's recent Travel Trendwatch report notes that "Airfare tracking firm Harrell Associates said that [the] average round-trip economy fare between the U.S. and Europe, booked in February 2006 for summer travel, was $910 compared to $856 in February 2005."

Fares in 2006 have jumped as well. Kirsten Ott, a spokeswoman for Kayak, notes that in March, a summer flight from Chicago to London went for $632 round-trip on Kayak.com, yet in late April the same route starts at $817. The same is true in almost a dozen other instances.

The reasons for the price increases are two-fold. Prices for jet fuel have continued to soar, with U.S. airlines instituting no fewer than four fare hikes in 2006 alone. Nora Brossard, spokeswoman for the European Travel Commission notes that a recently increased fuel surcharge from American has raised transatlantic fares by $130 round-trip. She also notes that "the demand for Europe is back big time," driving competition for a limited number of seats. This summer, you can expect to find higher fares and fuller planes.