As predicted by many currency traders, the dollar may have turned the corner, most significantly against the Euro, as discussed in the Economist today. After peaking at US$1.60 against the Euro on April 22nd, the dollar has strengthened to below US$1.54 on May 2nd in response to the “perception that the period of Federal Reserve easing may be coming to an end.”

For owners and hoteliers operating in gateway cities around the United States, this news may come with mixed feelings. With slowing domestic corporate and leisure travel impacting operating results for the month of March, as has been reported reported by STR, it is believed that much of the demand bolstering these results is leisure demand created by the exchange rate. One just has to walk through SoHo in New York to see the Europeans that are flocking the city, taking advantage of the favorable exchange.

According to STR, New York RevPAR was up 7.6% year-over-year for the month of March and is up 12.3% year-to-date for the same period. But will a strengthening US dollar put an end to the European invasion? Not likely anytime soon as the Euro continues to trade at historical highs. Dollar/Euro exchange projections made by AIB in April 2008 project slow strengthening of the dollar throughout the year and into 2009 (although current trading levels are already below the 2Q target). American gateway cities, New York in particular, can likely expect continued bullish leisure transient demand from Europeans to bolster results. The British Pound remains just below US$2, hovering around this level since last autumn, which is also favorable versus historical levels.

So New York hoteliers, brush up on your French, German, Spanish and Italian, because you’re likely to be entertaining the Europeans this summer!