Global inflation a key reason
Iceland has been ranked the most expensive travel destination for American tourists in 2025, with the average visitor spending more than $400 per day, according to a new report by The Forex Complex.
The ranking reflects a broader trend: while domestic travel in the United States is becoming more affordable, international trips are becoming increasingly costly due to global inflation and shifts in currency exchange rates.
The study analysed 19 popular destinations worldwide and evaluated three factors: average daily tourist spending in US dollars, year-over-year inflation in the destination country, and the performance of the local currency against the dollar.
The result is a metric called the “2025 Tourist Cost Impact Score”, which measures how costly a vacation feels to US travellers, even if local prices haven’t risen sharply.
Iceland
Iceland earned a top score of 100, driven by its exceptionally high daily costs of $401.40 per person. Although the Icelandic krona has weakened by 6.73% against the US dollar, that decline has not been enough to offset the island’s steep prices for accommodation, food and transport. Inflation in Iceland is also among the highest in the study at 5.5%, further compounding the financial pressure.
Australia
Australia came in second with a score of 87. Despite more moderate daily costs of $280.99, the Australian dollar has appreciated by 3.92% against the US dollar over the past year. Combined with a 2.4% inflation rate, the stronger currency means Americans are spending more than they did before, even if prices in local terms have changed only slightly.
Mexico
Mexico ranked third in the index, and while it has one of the lowest base costs at $145.78 per day, the strength of the peso has taken many tourists by surprise. The Mexican currency is up 6.4% against the dollar, the most significant rise among the destinations studied. When paired with an inflation rate of 3.93%, Mexico’s affordability has eroded, making it more expensive in practical terms than it initially appears.
Canada
Canada placed fourth, with daily costs at $241.34 and a relatively mild inflation rate of 1.7%. Its currency has risen by nearly 2%, enough to edge it above the UAE in the rankings.
UAE
The United Arab Emirates, ranked fifth, offers price stability with no currency movement against the dollar and low inflation at 2.1%. Still, Americans are spending $217.78 per day, primarily due to the high cost of lodging and luxury services in cities such as Dubai and Abu Dhabi.
Jamaica
Jamaica followed in sixth, with a daily tourist basket of $151.38 and a 5% inflation rate. The Jamaican dollar has slipped slightly against the US dollar, but higher local prices have pushed it up the rankings.
Dominican Republic
The Dominican Republic, in seventh place, has somewhat lower costs at $148.51, although a stronger peso and near-4% inflation contribute to a similar overall expense level for US travellers.
Europe
In Europe, the UK, Germany and Italy have all become marginally more affordable due to weaker currencies. The British pound is down nearly 5%, and both Germany and Italy benefit from a 4.58% drop in the euro’s value.
However, these savings are offset by consistently high daily costs, keeping all three destinations in the global top 10. Visitors to the UK are spending around $256.50 per day, compared to $258.47 in Germany and $257.67 in Italy. Italy’s slightly lower inflation at 1.9% places it just below its European counterparts in the final ranking.
While the average cost of travel within the US has declined, thanks to lower gas prices and an 8% drop in airfares, international holidays are proving more expensive for Americans. The study highlights how currency appreciation and inflation can subtly impact travel budgets, even in destinations traditionally considered affordable.
A spokesperson for The Forex Complex noted that exchange rate changes are playing a larger role in shaping the real cost of travel. “Daily prices tell part of the story, but when the dollar weakens or local currencies gain strength, travellers may find their spending power significantly reduced,” the spokesperson said.
With summer travel in full swing, US tourists planning to head abroad may need to look beyond price tags and consider the hidden costs driven by currency trends and economic shifts.
Image: Inflation in Iceland is among the highest in the Forex Complex study. Credit: Matt Hardy
