International International Business
SUN, SEA, SAND--AND RINGING CASH REGISTERS
Like many executives in Europe's long-depressed tourist industry, Sebastin Barcel is winding up the summer a happy man. A flood of foreign visitors at the Spanish hotel chain he runs, Grupo Barcel, has let him boost prices--producing a 15% to 20% rise in his company's profits. "It's a very good year," he says.
For a Europe seeking reassurance that its economic woes are truly ending, that's encouraging news. The returning mobs of tanned and relaxed vacationers may provide the strongest indicator yet of a crucial upswing in consumer psychology. With some exceptions--notably German resorts and luxury establishments--Europe's vacation cash registers have been ringing louder this summer than any year since the pre-Persian Gulf War summer of 1989.
Recovering economies are clearly behind much of the upturn. In surging Germany, so many free-spending vacationers have headed for Spain's beaches this summer that local wags dubbed one stretch of Spanish coast the "Costa Germanica." Americans, who also have fewer economic worries, are rediscovering Europe as well. Despite a weakening dollar, their numbers should rise to a record level this year, up 8% to 10% from last year, predicts the Paris-based European Travel Commission.
RUBLES GALORE. Western Europe's tourist industry is also tapping a quirky new market: nouveaux riches from the former Soviet Union. At the swank Hotel Negresco in Nice, where the cheapest room costs $287 a night, 5% of this summer's customers were Russian and Ukrainian entrepreneurs. Dollar-bearing Russians on a rash of new Aeroflot flights are also invading the beaches--and stores--of Italy's Adriatic coast. "They raid supermarkets, snatching jeans, stereos, mountain bikes," says Santino Pangarzi, who heads Columbus Tours, a specialist in tourism from eastern Europe.
Europe's tourist boom isn't universal. A strong mark has caused double-digit declines at such German tourist destinations as Bavaria and the Black Forest. In Normandy, the 50th anniversary of D-Day wasn't quite the boon that promoters expected. More Americans came, but not more English--the bulk of the foreign market. At the Lion d'Or, a top hotel in the Normandy town of Bayeux, business was up from last year, but there were vacancies.
Analysts worry that Euro Disneyland may not profit from the tourism upturn, either. The Paris park won't disclose attendance numbers. But Euro Disney stock plunged 20% in late August, before partly recovering. The fall resulted from reported gloom by a leading analyst--Nigel Reed of Paribas Capital Markets in London. The company has asked the Paris Bourse to investigate the trading.
"LIVING IT UP." But most of Europe's vacation centers are reporting a strong summer. Prague's hoteliers are breathing easier after a scary 10% fall in occupancy rates last summer made many fear that the Czech Republic's tourist bubble had burst. This year, from May through July, the number of foreign tourists leaped 29%, while hotel occupancy is up from 60% to 80%. "Even we are surprised," says a Czech tourism-agency official. Germans are 55% of the visitors.
Recovery or no, Europe's vacationers are still price-conscious. That partly explains why Italy and Spain are the summer's big winners: Both countries are still profiting from currency devaluations in 1992 and 1993. Spain's gross income from tourism soared 18.5%, to a record $9.3 billion, in this year's first half. Hotels that had to shave prices to win business last summer are sticking to listed rates. In Italy, "Americans are living it up and moving from four- to five-star hotels," reports Aureliano Bonini, head of Rimini-based tourism consultant Trademark Italia.
Europe's tourism executives are planning for an even stronger 1995. French vacation village operator Club Aquarius, a unit of Club Mediterranee, is "very actively looking for new sites" in Portugal and elsewhere to profit from the recovery, says President Paul Roll. A flurry of Italian hotel buyouts by such foreign chains as Novotel, Crest, and Holiday Inn has fanned Italy's tourism boom. itt-Sheraton Corp., which so far this year has built up a 35% stake in Italy's Ciga hotel chain, aims to buy an additional 35% by the end of this year.
Now, as vacationers return home, retailers are hoping that the rosy glow of summer holidays lasts well into the fall. Europe's recovery needs consumers who spend as freely at home as they did at the beach.Stewart Toy in Paris, with Silvia Sansoni in Rome, Cynthia Durcanin in Prague, and Al Goodman in Madrid