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JULY 21, 2003
Edited by Ira Sager Talk Show "We know the Germans well -- these stereotyped hypernationalistic blondes....They noisily invade our beaches." -- Italian tourism minister Stefano Stefani, in a letter to an Italian newspaper. German Prime Minister Gerhard Schröder promptly canceled a family vacation to Italy LITIGATION NATION A Golden State for Lawsuits Those hoodwinked by advertising once had just two options: Complain to the Federal Trade Commission or the state attorney general. Then wait to see if they take action. No longer. To the alarm of corporations, crusaders have found that a California law allows almost anyone -- not just a government agency -- to sue over false or misleading ads. And boy, are they ever. The most recent case: People for the Ethical Treatment of Animals (PETA) sued Yum! Brands (YUM ) on July 7, alleging its KFC unit is lying when it says suppliers raise and slaughter chickens humanely. PETA sued Louisville-based Yum in Los Angeles under California's Business & Professions Code, which prohibits "unlawful, unfair or fraudulent" business acts. Nike (NKE ) also is being sued under the statute, about working conditions at its overseas suppliers. And Yahoo! (YHOO ) recently settled a case over the handling of a Web user's personal information. Plaintiffs suing under the statute don't have to live in California or show they were victimized. Attorney William Stern of San Francisco law firm Severson & Werson says cases dismissed elsewhere are being refiled in California. "The state's becoming the Havana of consumer litigation," he says. Perhaps the Golden State should consider adopting a new motto: caveat vendor. By Michael Arndt   CASINO SOCIETY Vegas, the Ace of Clubs Forget faded lounge acts crooning in smoky rooms. Las Vegas' decade-long effort to reinvent itself as a hipper place is translating into a nightclub-building boom. This month, the $6 million Ice lounge will open just off the Strip. The young and beautiful already wait hours to get into Light, a disco at the Bellagio, and Ghost Bar, a club atop the Palms Hotel. In February, the $7 million Tabu Ultra Lounge opened at the MGM Grand. The nightclubs are a way to lure younger gamblers. But it's not all about casinos: The clubs make money, too. An espresso martini garnished with biscotti will set you back $15 at the Bellagio's latest club, the Caramel Bar & Lounge. "Nightclubs are valid investments," says Ice promoter Michael Fuller. For those who crave the Vegas of old, velvet-voiced lounge reliable Lou Rawls sang at the May opening of OPM, an Asia-inspired club at the Caesar's Forum Shops. Some things never change. By Christopher Palmeri WILD BLUE YONDER Mighty Pricey Con Air Even as the air force fends off criticism that it did not put a $19.6 billion aircraft lease deal out to bid, a similar arrangement at the U.S. Marshals Service is drawing scrutiny. Prompted by complaints from aviation execs, in June the General Accounting Office forced the agency to reopen bids on leasing six aircraft to transport prisoners. Critics say the Marshals Service could have put taxpayers on the hook for millions of dollars in needless costs by limiting competitive bids. The agency had said it would consider only Boeing 737s, though its own consultants noted that other jets could do the job. Leasing execs also slam the agency for assuming that renewable, one-year leases would cost less than a 10-year lease. Marshals Service spokesman Dave Sacks says that bargains on one-year leases can be had in this poor economy. But an earlier bid the agency sought allowed yearly leases and came in at $30 million a year -- 25% more than the agency had predicted. "A one-year deal doesn't make any sense," says Chip Hunter, president of V1 Aviation. He says retrofitting a jet can run up to $1 million, which can be recouped only over the long term. And that could save taxpayer money. By Lorraine Woellert  FINANCIAL SERVICES I Love You--but I'm Leaving You Common sense says that satisfied customers should be loyal customers. That doesn't seem to be true when it comes to financial services. A survey of 767 corporate executives that buy insurance or finance services -- such as pensions or health insurance -- shows a gulf between satisfaction and loyalty. Some 75% of execs said they were happy with their supplier, but almost as many -- 66% -- were planning to find a new one or simply end the relationship. While the execs describe themselves as pleased with their supplier, they still suspected they could do better. "Unless firms focus on customer service and personal relationships, even satisfied customers could easily leave," says Marc Drizin, with surveyor Walker Information. Other clues to client wanderlust: Just 49% of execs thought their providers were highly ethical, and only 28% thought their suppliers treated their own employees well. Execs in the finance industry are shopping around, too. Only 45% said they were loyal to their providers. Even among their own, financial-services companies face a tough sell. By Pallavi Gogoi TRAVEL LOG The Euro-Tourists Are Trickling Back Europe's travel industry is pulling out of its slump, even as American travel to Europe stays in the doldrums. The signs of an uptick are tentative but promising. Lufthansa saw a slight rise in passengers in May over last year. Travel company Thomas Cook says bookings are up 8% since major fighting ended in Iraq. Club Med eked out a first-half operating profit of $14 million, vs. a $5 million loss last year. And while June bookings for German travel company TUI were off 10.7% from a year ago, that beats May's 15.2% dip. Says TUI CEO Michael Frenzel: "I am absolutely convinced that the positive developments will continue." Europeans are taking trips postponed during the Iraq war, and a strong euro makes travel to the U.S. and Britain cheaper. Some clouds remain. France's opposition to the Iraq war has kept some Americans away, says François Delahaye, director of luxury hotel Plaza Athénée Paris. He is planning a New York publicity tour to lure them back. Britain saw a 12% drop in U.S. arrivals in the first four months of 2003, possibly due to security concerns. But for now, European tourists are picking up the slack. By Jack Ewing GENDER WATCH Where Every Night Is Ladies' Night What's hot on the club scene in Japan? Host clubs for women, which feature pretty boys in their 20s pouring women drinks, lighting their cigarettes, and hanging on their every word. For years, Japanese men have visited hostess clubs where they are pampered by young women. But the number of host clubs -- with names like Club Gigolo -- has increased to over 100 in Tokyo, from about 30 four years ago, according to Ryo Hoshikawa, who runs a club promotion Web site called fusionclub.net. The clubs are "catering to desires and wants, like eating," says Shigeki Takahashi, the manager of Club Sugar, a host club. It's a phenomenon that carries a certain irony in Japan, where society dictates that women defer to men in public. Most of the female clientele, who pay upwards of $400 a night to be spoiled, get their money from working as hostesses themselves. "It does not usually happen that I get to be in the boss's seat," says one 22-year-old client who gave her name as Sereka. By Sheridan Prasso THE BIG PICTURE 
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