Escape From Caracas.(Special Report)(foreign exchange rate drives more Venezuelan to shop abroad)

Byline: Joseph Contreras

High inflation is encouraging Venezuelans to spend their cash on foreign travel--while they still can.

Elvira Sarmiento and her husband checked one suitcase each at Caracas's Maiquetia International Airport when they boarded a flight to Madrid at the end of February. When they returned to Caracas a month later, the couple had seven suitcases between them--one tangible measure of the $15,000 shopping spree they indulged in during their holiday in Spain and Italy. The 38-year-old mother of three has President Hugo Chavez to thank in part for her spendthrift vacation: when his government introduced foreign-exchange controls in 2003 in a bid to curb capital flight, Venezuelans holding credit cards were allocated an annual quota of $5,000, plus $500 in cash for international travel at the overvalued official rate of 2,150 bolivars to the dollar. Instead of paying upwards of $800 for her round-trip plane ticket, Sarmiento coughed up a mere $360 under an exchange-control regime that favors many of the middle- and upper-class Venezuelans who make up the backbone of Chavez's internal opposition. "Everybody's traveling," says Sarmiento. "If you do the math, it's very cheap to travel at the official exchange rate."

The numbers bear her out. An estimated 1.5 million foreign air-travel tickets were sold in Venezuela last year--a 45 percent jump over 2006--and the trend shows no signs of slowing. During Easter week last month, 139,421 people ventured abroad, a 10 percent increase over the same holiday period in 2007. It's become nearly impossible to find a seat at short notice on a flight from Caracas to Panama City or Santo Domingo.

Why the mad dash? Venezuela's oil revenue windfall in the past three years has boosted disposable income, and that in turn is helping to drive the highest inflation rate in the Americas--which gives consumers even more incentive to spend their bolivars instead of saving them. "There's been a significant increase in the amount of liquidity in people's pockets," notes Humberto Figuera, executive president of the Venezuelan Airlines Association. "Venezuelans feel it's better to spend their money now than put it in a bank account where it's going to lose value."

The entire Caribbean Basin is feeling the ripple effects of the Venezuelan foreign-travel boom. Top-drawer Venezuelan chefs like Edgar Leal of the Coral Gables bistro Cacao are making names for themselves in South Florida, a popular travel destination for Venezuelans. Carolina Sivoli of the Venezuelan-American Chamber of ...