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With the dismal reports on the rising Euro and British pound, many Americans are re-thinking their European vacation plans this year. While "Europe on $5 a Day" is indeed an ancient memory, these past few years have proved challenging for Americans looking to explore not only Europe's rich treasure trove of art and history, but its contemporary and vibrant city life.

Friends returning from Europe will be quick to share tales of frightening expenses, from $40 ice creams for two in Venice to the $10 bottles of water in Greece. Every day Europeans are flocking to the U.S., almost gleefully taking advantage of the buying power of the Euro, snapping up designer bags and New York City condos alike. Does this mean that your dream European vacation is not an option this year?

Absolutely not. With careful research and planning, you can start packing for that trip to London, Estonia, Budapest, Sicily or Algarve. One way to make a European trip affordable is to consider a group tour or vacation packages. A group tour is usually an escorted tour with a host or leader with many inclusive features, from air and hotel, to meals and local tours. You can find some good deals and a key benefit is that all travel logistics are handled for you.

If you are averse to traveling en-masse -stuffy motor coach rides through European cities, anonymous florescent-lit rest stops and 6:00AM wake up calls -you can find other options that provide the savings that group travel offers, combined with flexibility to create your own itinerary. A number of hotel and airlines have joined forces to create vacation packages that may even include some meals and entertainment. Both tour and vacation package options take advantage of the supplier or operator's buying power by pre-purchasing large blocks of hotel rooms, airline seats and other travel related amenities in advance.

Member-based travel clubs can be an especially good value as they also purchase large blocks of hotels and airline seats, but their overhead and marketing costs are relatively smaller than mass-market tour operations, thereby passing a larger savings to their members. A good club offers a variety of destinations ranging from fully escorted tours to independent travel options. These clubs usually require an annual membership fee, but if you can find a vacation package that meets your interests and offers great savings, it may be well worth the fee of about $50 or so per year. If you belong to a discount warehouse store, check out their member travel discounts.

How do you know if you found a good deal? While a price comparison is helpful, it is important to research thoroughly so that you make a fair comparison on what's included and what's not included. Make sure to also factor in value. Only you know what is most important on your vacation. You can go online and find out more information about many hotel location, ratings and amenities. Bear in mind that opinions on hotels, like restaurants, are very subjective, so it is worth reading examples of best and worst opinions so see where your tastes fit in.

Features to compare:

1. Airfare: Is airfare included? Is it from a convenient gateway or do you need to spend additional travel dollars to get there from your home? If air isn't included, can you cash in your mileage points and avoid any blackout restrictions? This may be the year to cash in your airline miles to help offset at least a portion of your travel expenses. Many airlines offer good travel bargains through mid-spring, and sometimes even beyond. Competition for those seats will be fierce this year, so plan early.

2. Hotel: What level of accommodations would you be most comfortable in? If three stars are fine, you'll find a good number of affordable packages. Bear in mind that hotel room sizes in most European hotels are considerably smaller. Location is also important. Is the hotel close to any of the things you want to visit or do in your destination? Weigh the time and cost of traveling from your hotel into the city center each day. Try to find out exactly how far or how easy it is to reach the city center if your hotel is located outside of the city limits.

3. Meals: While it is usually more cost-effective to have meals included, you may not like to be limited your hotel dining room.

4. Tours: If you are planning your own itinerary, you likely won't be interested in any included tours, though some folks like to have an Introduction tour on the first day to acclimate to the city.

5. Hidden Fees - Pay attention to hidden fees like airport taxes, fuel surcharges and service fees. These can add up too.

The good news is that between special offers and well-priced vacation packages, you should be able to find a European vacation package deal that meets your needs and budget. But you'll still have to spend once you get to Europe. Just be smart and go local. Stay away from international food chains like McDonalds and Starbucks. You can get the same at home for a lot less. Before you go, research the web for well-priced local eateries near your hotel. Save money by eating your main meal at lunch and a light supper in the evening. Go as local as language and location permits. Stop in a busy supermarket and pick up some interesting foods for a picnic lunch. Avoid costly soft drinks and stick with water or local wine and beer. Just don't make yourself crazy. It's no fun pinching pennies, or pence, on your vacation. Cut back on your souvenir shopping. Do you really need another colorful handicraft that will likely be relegated to the attic?

Nearly every European city has an official website with a slew of resources that can aid in your planning. You can get information and even pre-purchase public transportation passes, tickets to museums, attractions and performances. Take advantage of inexpensive or free activities posted on these tourist board websites. A number of governments have made away with museum entrance fees; mainly to encourage local visitors, but tourists can certainly take advantage. Most public museums in England are free and France is experimenting with free admission to 20 museums, including the Louvre and the Musee du Cluny, through June 30, 2008

Whether your hotel is in the city center or in the outskirts, you can find affordable public transportation in most cities, usually a type of transit card purchased in daily or weekly increments. For example, in London; you can purchase an Oyster card that enables you to ride the Tube, buses, trams and participating National Rail services. The pre-paid card automatically adds up the cost of 'each pay as you go' journey made that day. When the total cost reaches a pre-determined limit, a cap is applied and further journeys made in the same zones are free for the rest of the day. The ParisViste can be purchased in 1, 2, 3 or 5 day increments and can be used on Metros, buses, trams and suburban trains based on zone fares. You can even pre-purchase the card online and take advantage of the trains from the Charles de Gaulle International Airport in Zone 5 as soon as you arrive in Paris.

Be realistic, once you get to Europe, the local prices will be high. But if you've done your homework and selected a comprehensive vacation package with the inclusive features you desire for a successful vacation, limit your souvenir shopping and go "local" as much as possible, you'll be just fine. Bon voyage!

Marie Patrick loves to travel and share her journeys. She purchases vacation packages and escorted tours for the best travel deals.