|
|
During the past 20 years, the author has watch China move from being a developing country into an industrial superpower
Money Moves, 5/24: Chocomize Co-Founder Fabian Kaempfer talks with Bloomberg’s Deirdre Bolton about the business of customizing chocolate
The president's campaign has a new rule—no cell phones allowed
In honor of remote control inventor Eugene Polley, we recognize other influential but neglected inventors who have felt the sting of stolen glory
Forget Adderall. Traders now pop chia seeds to stay focused and energized
The Italian automaker and others are adding hybrid technology to elite cars
The storied bridge that links San Francisco and Marin County changed the face of California
Schools cultivate ties with startups before they're big successes
Dave McClure's traveling venture capital show scours the world for promising startups
Get Four
|  | JANUARY 26, 2005
By Eric Wahlgren A Thrifty American in Paris U.S. tourists still flock to Europe, despite the dollar's sharp decline against the euro. But once there, they're pinching pennies The weak dollar didn't stop Amy Alkon going to Paris on a recent weeklong trip. But currency woes did force the Los Angeles resident to keep herself on a budget. She slummed it at a two-star hotel and limited herself to cheap restaurants. Her biggest privation? She nixed buying a pair of Yves Saint Laurent boots that, with the exchange rate, would have popped up as a $300 charge on her credit card, even though they were on sale. MORE WITH LESS. "Every time I saw a sale in Paris that said things were 30% off, I realized that they were on sale for everybody but me," says Alkon, 40, a syndicated columnist whose column "The Advice Goddess" appears in more than 100 papers in the U.S. and Canada. Despite dire warnings from some European tourism officials, the dollar's sharp decline against the euro -- it has witnessed a discouraging 18% decline in the last 18 months -- doesn't appear to be keeping Americans away from Europe. On the contrary, some 9.5 million intrepid U.S. citizens like Alkon visited the Continent in the first nine months of 2004, up 15% on the same period in 2003, according to U.S. government statistics. Last year's Yankee tourist crop was only 6% off the 2000 peak -- which came before September 11's attacks, the SARS outbreak, war in Iraq, and other tourism buzz-killers. While Europe's beleaguered tourism industry naturally is relieved, the news isn't all good. "The number of tourists coming to Europe is increasing, despite the rise in the euro," says Bernard Marois, a finance and economy professor at HEC School of Management in Paris, who studies international business issues. "However, they seem to be spending less." DOUBLE WHAMMY. Until recently, Americans have been famously big spenders in Europe, dropping nearly $30 billion a year on food, lodging, and other travel-related expenses. But the greenback's slide means a buck these days is worth only 77 cents against the euro -- the currency used in 12 European countries -- vs. 94 cents just 18 months ago. As a result, the Americans who typically filled up the Continent's Michelin-rated restaurants and swanky hotel suites are now watching their pocketbooks. Across the euro zone and in Britain, where the pound has been no slacker either, those who cater to tourists are feeling the pinch. "Of course the strong euro hurts," says Manuel Saravilla, of the four-star Alhambra Palace Hotel in Granada, Spain, where junior suites start at $370 a night. Americans have seemed less keen on staying at his hotel since Jan. 1, 2002, he says, when Spain changed to the euro from the peseta. FAIR EXCHANGE. Prices rose during the switchover to the common European currency, and then the euro increased against the dollar. Thanks to this double whammy, Saravilla estimates the dollar's buying power in Spain has shrunk by 60%. "We sell this hotel as the palace of dreams," he says. But for some budget-conscious Americans, those dreams perhaps, for now, come at too high a price. In France, one luxury hotel chain has resorted to offering fixed rates in dollars to lure euro-leery American guests. At $350 a night, the rooms at the Hotel Montalembert in Paris and at the Royal Riviera in St. Jean Cap Ferrat on the Côte d'Azur don't exactly come cheap. But with bills being settled in dollars, Americans are less likely to end up with currency-related surprises on their credit-card statements. "The fixed-dollar rate seems to be very well received," a spokeswoman says. Across the Channel, the fact that the dollar buys little more than half a British pound now is also curbing tourist spending. In 2005, Britain could welcome 27 million additional visitors, or 2% more than in 2004, but their spending will likely remain flat at $23.6 billion, forecasts UKinbound, a tourism industry group. BUCHAREST BARGAINS. Without a doubt, Americans do seem to be looking for bargains, or at the least, better values. Among the destinations that appear to be benefiting is Berlin, where the number of Americans visiting in 2004 is expected to top 2000's record of 152,063. The average per-night room rate at a four- or five-star hotel in the German capital runs to about $169, vs. $276 for a similar room in Paris and $390 in London, according to the city's tourism office. "In spite of the exchange rate, Berlin remains rather inexpensive compared to other European cities," says spokeswoman Kirsten Schmidt. Eastern Europe, where the dollar goes a lot further, is also getting a boost, says Nora Brossard, a spokeswoman for the European Travel Commission, which represents the tourism interests of 33 European countries. Romania reports the number of U.S. visitors rose 24% in 2004, Brossard says. For just $8, a tourist can land the best seat in the house at the opera in Bucharest, Romania's tourism bureau says. In contrast, such a ticket would run to the triple digits in most Western European cities. SHORTER ARMS, DEEPER POCKETS. One tourism niche that still seems delightfully immune to growing euro/dollar inequalities: The super high end. Just ask Flavia Fichera, who rents properties in Tuscany and Chianti, including a villa that sleeps 14 and goes for $8,580 a week in high season. Even though 80% of her clients are Americans, Fichera says she has had no trouble with bookings. "I think the Americans we deal with don't have big euro/dollar problems," says Fichera, who owns Florence-based Podere Barberino in Chianti, a property-management company. But for the average American tourist traveling to Europe, tightening the purse strings is part of the program, Brossard says. Some U.S. travelers, she says, are shortening their stays, others are downgrading hotels, while a few are enforcing no-shopping policies. "An American who wants to go to Europe is not going to put off their plans because what used to be a $20 entrée at a restaurant is now going to cost them $25," Brossard says. Perhaps, but Europeans may find it harder to get Americans to part with their money once they get there.  Wahlgren is a correspondent for BusinessWeek Online in Paris Edited by Thane Peterson Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2005, Bloomberg L.P.Terms of Use | Privacy Notice |
Printer-Friendly Version
