Foreign fluctuation: weak U.S. dollar spurs increase of international travelers to America

Hotel & Motel Management, May 3, 2004 by Robert Selwitz

National Report--Quietly yet persistently, the weak U.S. dollar is proving to be an important business builder for several U.S. hotels, particularly those catering to foreign travelers.

While occupancy increases haven't been large enough to spark rate increases, foreign leisure and business traffic appears to be growing, partly because, during the past two years, the dollar has lost value steadily, particularly against the British pound and euro.

Since the euro's January 2002 debut, the dollar shifted from an advantageous position (then $1 bought about 1.1 euros) to where a dollar currently buys less than .80 euros. Two years ago, a dollar bought roughly 80 British pence (100 pence to a pound). Currently, that exchange is less than 60 pence.

However, what's bad news for U.S. travelers overseas has proved to be a bonanza for Europeans, benefiting upper-end hotels. Erwin Schinnerl, area general manager for Boston's two Ritz-Carltons, said the weak dollar had spurred an increase of advance summertime leisure bookings and a rise in the number of commercial travelers coming to Boston to conduct business.

One result of the weakened dollar is that many European travelers have been able to book more high-end properties they previously couldn't or wouldn't choose.

"We're seeing more incentive groups coming this way, again taking advantage of the fact that planners can get so much more out their budget here rather than in other western European countries," Schinnerl said.

Schinnerl also expects more Americans to visit Boston and other domestic destinations this year because the cost of a European trip is, for many, verging on being prohibitive. At the Four Seasons Hotel in Manhattan in New York, Brian Honan, director of sales and marketing, said international summer traffic should increase from 10 percent to 12 percent ahead of last year, with the bulk of that increase coming from the United Kingdom.

Honan said this is good news because international travelers traditionally spend much more on average than domestic guests. And that spending doesn't happen only outside the hotel they're staying at, but also at hotel restaurants and other hotel services.

Chris Mander, g.m. and regional v.p. of the Hotel InterContinental Chicago, said the increase of foreign visitation is a perfect match with the city's tourism-targeted summer programs.

"During July and August, we have terrific jazz and food festivals, plus a wonderful air and water show happening on and over Lake Michigan," Mander said. "That's always been a great selling point for overseas visitors. But this year, we feel the weak dollar has made these events even more appealing."

Chicago also benefits from a growing practice among airline and tour packagers that bundle two U.S. cities in one offering, Mander said. Chicago is often the "other" town linked with New York or Miami. As the appeal of these packages is spurred by the currency status, he expects the Windy City to benefit.

Mander said he's concerned about the possible negative impact of new security regulations that take effect Sept. 30. These requirements--for photography and finger printing to take place at U.S. customs from visitors who previously never required a visa to come to the United States--have worried U.S.-travel-industry executives. However, these added--and potentially time-consuming hassles--won't deter most visitors as long as the U.S. remains a serious bargain, Mander said.

Jacques Villeneuve, g.m. of the Pan Pacific hotel in San Francisco, expects to benefit from a surge of U.S domestic visitation. Villeneuve anticipates a considerable summertime surge of Americans deciding to stay in one of the few places the dollar still is strong--at home.

"Our property will definitely benefit from this, as well as from increased numbers of foreign visitors," he said. "After all, whatever brings more people to San Francisco benefits all properties, even those that don't normally rely on foreign traffic."

In Los Angeles, the impact of increased international travel goes far beyond an increase of summer leisure bookings.

"Businesses at the heart of Los Angeles' key industries are now coming here in ever greater numbers," said Dennis Hofilena, director of sales and marketing at the Sunset Marquis Hotel and Villas.

"All types of entertainment--film, music television, advertising, commercial production, fashion, publishing and photography--are the most important industries in town," Hofilena said. "And, more often than not, the executives in charge can create their product in a variety of places. And their decisions about where to work are frequently determined by on-the-ground costs. Several years ago, when the dollar was strong and labor strife prevailed, production companies left here, or never came here, choosing to work in places anywhere from Canada to Prague, the Czech Republic.

"[Now], labor is calm, and the weak dollar makes Hollywood's traditional strong appeal even stronger," he said.

That means more work for Los Angeles hotel workers and that those from outside the United States can enjoy higher quality accommodations.