Newcomer Conversion rate in BA hotels

[Pablo P]

Which hotels in Buenos Aires use the official exchange rate for converting USD to ARS?

I inquired with Hotel Madero, and they indicated they use the MEP rate.

For instance, if my hotel costs 200 USD per night, it would be approximately 200,000 ARS with the MEP rate, but less than half of that with the official rate.

I am searching for a hotel in Palermo, Recoleta, or Madero that converts using the official rate.

 

[Tessa]

The recent government decision raised the official exchange rate from 370/400 Pesos to 800 Pesos for 1 USD. Therefore, it's uncertain whether seeking hotels that adhere to the official conversion rate will result in significant savings moving forward.

 

[Russell]

So, what does this imply? Will it become more affordable for travelers or more expensive?

I presume it doesn't indicate an increase in the money supply; rather, it suggests that fewer hotels will seek to profit from currency exchanges. For instance, if a hotel costs 200,000 ARS at an official exchange rate of 400, it would be $500 on booking.com. Now, with the exchange rate at 800, it would cost $250. This appears to be favorable.

This is based on my assumption. Hopefully, it doesn't mean that hotels will start charging 400,000 ARS when previously they were charging 200,000. I don't think they would, as it could significantly reduce demand, unless, of course, there is an increase in the money supply. I'm curious to hear others' perspectives.

 

[Sal P]

I'm quite intrigued by the potential impacts of this situation. We're set to arrive in Argentina in two weeks, and I'm contemplating whether it's advisable to bring cash for a blue dollar rate exchange. On the flip side, if the official rate comes close to the blue dollar rate, then using my credit card might be the more convenient option.

 

[roger]

It seems that any hotel I've previously booked, anticipating the official rate, will now cost double the expected price.

 

[Jazmin]

@Russell , we can't provide you with definite answers. Those of us residing here are interpreting the situation much like you are.

One thing to note is that hotels were simply trying to endure, not engaging in any underhanded tactics to maximize profits. Like everyone in Argentina, they've been grappling with a near-daily escalation in their own expenses.

 

[BASally]

The majority of hotels establish their prices in US Dollars and then convert them to Argentine Pesos. Therefore, irrespective of the fluctuating exchange rate, the prices in Dollars should stay constant.

The ones who benefited from the official versus blue exchange rate were the tourists when making payments in Argentine pesos. Perhaps this discrepancy won't be as notable now.

 

[blair]

Certainly, as a tourist (myself), I may incur losses, but it's likely better for the country overall. The prices for tourists here are exceptionally low; for instance, I settled my hotel bill just before the change, and instead of €145, it only amounted to €70.

Tomorrow, the same bill would be €145, which is still considered good value.

 

[Russell]

I believe the main point being raised is whether the potential increase in prices, especially in USD, would benefit the people of Argentina who stay in these hotels.

@BASally y, can you confirm that most hotels set their rates in USD for all guests, not just for foreigners? This seems counterintuitive for Argentinian customers.

From an economic perspective, if the money supply remains stable while the exchange rate devalues, prices in Argentine pesos should theoretically stay constant. The issue lies with hotels that previously converted their prices from Argentine pesos using the official rate and charged in USD for foreigners, as well as booking sites following similar practices. These entities might face challenges, and some may see this as a positive development.

 

[Tessa]

@Russell : I am a citizen and resident of Argentina, and I am absolutely certain that hotels set their rates in US dollars for both locals and foreigners.
Contrary to deceiving foreigners, in reality, you pay less than we do. The 21% VAT is waived for tourists, while we have to bear that cost, and it gets added to the final bill.
Regarding the notion that "prices in Argentine pesos should remain the same," it doesn't happen in practice.

 

[Russell]

@Tessa I appreciate your clarification. I acknowledge that practices may vary among hotels in Argentina. Some establishments might indeed set prices in Argentine pesos and accept payments in pesos, while others may opt for pricing in USD and accept payments based on the blue dollar rate. There could also be instances where hotels charge USD for foreigners and pesos for locals, prompting travelers to seek hotels with a consistent pricing approach.

It seems like the threads discussing hotels and the suggestion to message them directly are aimed at finding accommodations that align with individual preferences on payment currencies. Your preference for paying in pesos with a 21% VAT, rather than 100% in USD, is certainly understandable.

I'm not currently in Argentina, so my information is based on general knowledge, and I appreciate your insights into the specific nuances of the situation.

 

[Jazmin]

@Russell ,
First, Tessa and BASally are correct in stating that hotels establish their prices in US dollars. BASally, being a longtime travel agent, possesses substantial knowledge of how hotels operate. This practice is a necessity due to the weekly devaluation of the peso. By guaranteeing room rates in dollars, hotels ensure they will receive the equivalent value, regardless of the day's exchange rate.

However, it's crucial to note that this doesn't necessarily mean they charge guests in US dollars. According to the law, hotels are obligated to accept payment in pesos, using the official exchange rate for conversion from the dollar amount. Guests benefit from this arrangement, as it prevents the use of the blue rate for conversion, which could make rooms more expensive. The advantage for foreign guests lies in paying with pesos obtained from the blue market.

While the recent change to the official rate at 800 has narrowed the loophole, there still exists an advantage. The blue rate, as of this afternoon, stands at 1070. It's worth mentioning that the average Argentine may not have access to dollars for exchange with a "cueva" and often needs to make installment payments on a credit card, incurring additional costs, including the VAT tax.

There have been reports, particularly in Patagonia, of some hotels insisting on payment in US dollars, which is not legal but may occur.

Regarding the assumption made in a thread on the Argentina forum, where you discussed prices going up weekly despite stagnant salaries and reduced affordability, the expectation that businesses would lower prices due to decreased demand does not typically apply here. Contrary to California, prices in Argentina tend to move in only one direction—upwards.

 

[Tessa]

For several years now, every hotel I've booked (though not many, as I live here) has provided a quote in USD. We, as Argentinians, understand that in the face of rampant inflation, hotels can't predict their rates in Pesos in advance.

However, we do end up paying in Pesos, and the same should apply to any tourist (either in cash Pesos plus 21%, or with a price stated in Pesos by the hotel but charged in a foreign currency at the prevailing credit card exchange rate, which is beyond the hotel's control).

No hotel or merchant has the authority to insist on payment in USD cash. The Argentinian Peso is the legal currency here.

What might occur is a "gentlemen's agreement" between the hotel and the customer. This is often framed as an offer like, "If you prefer to pay in US cash, we can offer a discount and/or waive the VAT tax," etc.

 

[Tessa]

Sorry @Jazmin ,
I didnt see your post haha
No worries at all! If I had seen your response earlier, I wouldn't have posted mine. I always appreciate your fluent English, while I grapple with it. 😄

Regardless, it's reassuring that three residents of Argentina are in agreement on this matter. If there's anything else you'd like to discuss or clarify, feel free to let me know!

 

[Russell]

@Jazmin @Tessa
Certainly, let's break down the economic scenario you've presented:
If a hotel sets the price at 100 USD per night, and previously people were paying 350,000 Argentine pesos per night at the official rate, a sudden increase to 800,000 Argentine pesos without a corresponding increase in wages would indeed impact demand for hotel rooms. This price surge, especially without a concurrent rise in income, could deter potential guests.

Your point about hotels increasing prices in Argentine pesos while other goods and services maintain their prices is insightful. In a scenario where hotels double their pricing but other costs and economic conditions remain constant, it would make sense for hotels to reconsider their pricing strategy. If the cost structure hasn't changed and demand decreases due to higher prices, a prudent move for hotel owners would be to lower prices to stimulate demand, potentially maintaining overall profitability.
However, you rightly note that not all hotels follow the same pricing strategy. Some may set prices in USD and allow payment in Argentine pesos at the blue dollar rate, while others may set prices in Argentine pesos directly. This variation in pricing strategies can impact how hotels adjust to changes in exchange rates.

Regarding Sylvie's comment about prices going up weekly despite stagnant salaries, your perspective on salaries rising due to increased money supply is valid. The distinction between raising the exchange rate and printing more money is crucial. Raising the exchange rate aims to establish a more realistic and reflective value of the peso against the dollar, addressing distortions.

Your insight into the impact on intermediaries like booking.com, who might have been benefiting from arbitraging the currency, is also noteworthy. Adjusting the exchange rate would affect how these platforms convert and display prices to international travelers.

In summary, the complex interplay of pricing strategies, exchange rates, and economic conditions in Argentina creates a nuanced landscape that requires a tailored approach by businesses, including hotels, to navigate successfully.

 

[Tessa]

Understanding Argentina's economic landscape proves to be a complex task, defying the application of conventional economic principles. Nobel Prize-winning economist Simon Kuznets humorously categorized countries into four types: developed, underdeveloped, Japan, and Argentina—implying that the last two are particularly perplexing and resist straightforward comprehension.

In essence, Kuznets' quote highlights the unique and sometimes enigmatic nature of Argentina's economic situation. It suggests that the country's economic dynamics may not conform to standard models or explanations, and attempting to apply conventional logic might prove challenging.

 

[matr28]

Merchants in countries with volatile currencies tend to establish their prices in stable currencies, such as USD or EUR. Failing to do so can be viewed as impractical or financially risky—a move that goes against basic economic principles. This practice is not unique to Argentina; similar approaches can be found in certain countries across different continents.
It's a fundamental economic strategy based on the stability of major currencies. However, it's essential to clarify that, at the point of sale, transactions typically occur in the local currency. As mentioned earlier, this ensures compliance with local regulations and the legal use of the official exchange rate.
In such scenarios, savvy buyers who have both access to stable currencies desired by locals and understand how to leverage parallel rates might find opportunities to benefit from the fluctuations in exchange rates.

 

[Russell]

@Tessa haha its funny and I agree

@matr28 Your point about applying the strategy of basing prices on stable currencies, like USD or EUR, is valid not only for goods and services but also for wages. Merchants, including businesses employing labor, often opt for stability by pricing in a more reliable currency, albeit subject to fluctuations.

In the context of your discussion, the consideration of the real price of hotels after factoring in inflation is crucial. The confusion arises when it's unclear whether a hotel charges based on the official exchange rate, the blue dollar rate, or neither, leading to uncertainties about the genuine cost.

Your aversion to businesses, including hotels, profiting through arbitrage without providing commensurate value or employing dual pricing to exploit certain customers is a sentiment shared by many. Practices that lack transparency and fairness can understandably be disheartening, and you express the sentiment of good riddance to those who exploit such avenues.

 

[spar60]

I'm planning to stay in Buenos Aires for a week in two months, and I've already booked a room at $55 per night in USD. I've noticed that the current advertised rate for the same room is $140 per night USD. My reservation was made through Hotels.com. I'm curious if they will honor the initially agreed-upon rate or if they will charge the higher rate.

 

[Jazmin]

@Russell
I appreciate your clarifications and the additional information you provided.
Regarding the assumption that only hotels have increased their pricing, it's evident that this is not the case, and various sectors, including supermarkets and shops, have recorded significant increases, as highlighted in the recent developments under the new government: https://www.batimes.com.ar/news/eco...ps-record-increases-of-up-to-50-percent.phtml. It's crucial to acknowledge that these price hikes are affecting various businesses, not just hotels.
Regarding the notion of "charging clients with the blue dollar rate," I appreciate your correction. The point was that customers could benefit from the blue rate when paying in Argentine pesos. The calculation example you provided illustrates the potential savings for visitors when using the blue rate compared to the official rate.
Regarding the statement about salary increases, I understand the disparity in economic conditions, and the reference to rising poverty rates is valid.
I want to assure you that my goal is not to uncover any plot but rather to provide accurate and unbiased information. I appreciate your insights into the economic challenges in Argentina and the contrasting perspectives on affordability for citizens versus visitors. If you have further points or questions, feel free to share, and I'll do my best to assist.