At euro confab, trade urged to brace for impact

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AUDIO: The speeches referenced in the article below, and other speeches from Travel Weekly's Euro Conference, are available in their entirety, exclusively on Crossroads.

NEW YORK -- Although it won't be around as folding bank notes and pocket change for another three years, the euro could appear in invoices, price quotes and credit card billings from European suppliers starting in January, and it behooves travel agents to learn about it fast -- before clients start asking questions.

euro logoThat was a recurring theme from retailers and suppliers who addressed an industry audience during Travel Weekly's conference on the euro at New York's Marriott Financial Center. The conference was cosponsored by Visa and Marriott.

Speakers were also concerned about the one major question mark still hanging over the new currency for the European Monetary Union, which will kick in for 11 nations as of January 1: Exactly what will the euro be worth in U.S. dollars, and in the local currencies of the participating countries, and how much could those values change from where they are today?

Firm, fixed exchange rates between the euro and the currencies of participating EMU nations won't be finally set until January 1, and the dollar-euro exchange rate will fluctuate on world markets, just as the dollar does against the euro's predecessor, the European Currency Unit.

The euro will serve as an intermediary currency for all transactions; exchanges from dollars into local currencies, or between one local currency and another, will all involve translating them first into euros, then into the local currency--a process known as triangulation.

Ravi RaoThe problem for tour operators who are just now printing their 1999 brochures with dollar prices is that they don't yet know exactly how the new exchange relationships will shake down once the euro is introduced.

"Maybe we shouldn't put any prices in our [1999] brochures; maybe we should send out [separate] pricing lists," said Jet Vacations president Ravi Rao, only half in jest.

Sandy Cutrone, president of European Connection, Mineola, N.Y., a meetings and incentive specialist, said, "We don't know at this point what will happen in the next few months. There will be quite a bit of confusion in the beginning."

Understanding the euro is especially important for agencies that have corporate clients with heavy European travel, and for retailers who handle groups and/or deal directly with European suppliers, speakers said--in both cases, presenting some opportunities as well as potential problems.

At BTI-WorldTravel Partners, a big commercial agency with many multinational companies as clients, "we view this as an opportunity -- a chance to deliver better value and a broader range of services to our customers," by educating them about the euro and helping them transform their own systems and procedures to deal with the new currency, said Dan Maschoff, BTI's vice president-international. "We will be looked to, to provide them the answers."

The same thing will happen to smaller, leisure-oriented agencies, as clients who are planning a trip to Europe in 1999 start to notice news stories about the new European currency, said Ken Sause, president of TravelWorks in Wallingford, Conn., an agency with seven employees. "Most American travelers have yet to take notice of what is less than eight weeks away," Sause said. "The arrival of the euro may be a blessing for those agencies, large and small, that move quickly to understand it and position themselves to be informational leaders for their clients."

Speakers predicted some benefits for U.S. travel companies from the transition to the euro, including immediate savings from not having to maintain separate currency accounts for the 11 euro-zone nations where they may have dealings, and a newfound ability to easily compare euro prices for hotels, tours and other travel services from one country to another, without having to calculate currency exchange rates, since prices would be listed in both euros and local currency.

The same benefits will apply to travelers as well, and the latter concept -- referred to as "pricing transparency" -- could influence suppliers in some of the higher-priced countries to lower their rates so that they appear more competitive, some speakers suggested.

Charles RoumasCharles Roumas, senior vice president-strategic planning for Travel One, a corporate agency in Mount Laurel, N.J., said commercial agencies should already be talking to their major clients to see how their management information systems might have to be adjusted to handle invoicing or reporting in euros after January 1. "I don't think a lot of corporations really know what they're going to need yet," Roumas said. "But I'm convinced that they are absolutely going to need parallel tracking reports for a while -- dual currency reports. Whether they ask for them or not, you should prepare your systems to get ready for them." As for automated credit card reconciliations, "we're not sure how this is going to pan out, but there's going to be reprogramming that has to be done in that area," he added.

Both Roumas and Maschoff suggested that the introduction of the euro might also open the door to new commission cuts. "It will probably be an avenue for suppliers to standardize or reduce commissions throughout Europe," Roumas said. "They might say, 'It's x number of euros per ticket,' and there might be a cap of so many euros per ticket."

The potential ramifications of the euro on travel companies could easily have filled a much longer conference, speakers noted. For example, Peter McCormack, vice president-sales and marketing for Trafalgar Tours, noted that after the hard euro currency is deployed in 2002, his company will lose one source of revenue: Because many of its escorted tours are on multi-country itineraries, the operator often sells clients little currency packets with small amounts of local currencies they can use as their trip proceeds. After the euro banknotes and coins arrive, those currencies will disappear.

One other little thing that's bedeviling Trafalgar's parent office in London as it readies its internal systems for euro pricing, McCormack noted, is that the company not only has to revise its software to handle dual-currency pricing and currency exchange triangulation, but it also has to come up with a new key for its computer keyboards--one with a "euro" symbol on it.

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  • Ken Sause, president, TravelWorks Inc.
  • Sandy Cutrone, president, European Connection
  • Charles Roumas, senior VP, strategic planning, Travel One
  • Dan Maschoff, VP international, World Travel Partners-BTI Americas
  • Gary Rosenthal, senior VP, int'l lodging finance, Marriott International
  • Ravi Rao, president, Jet Vacations International Inc.
  • Peter McCormack, VP, sales and marketing, Trafalgar Tours
  • Ian Taylor, VP, corporate foreign exchange dealing, Thomas Cook Canada
  • Q&A session 1 (Sause, Cutrone, Roumas, Maschoff)
  • Q&A session 2 (Rosenthal, Rao, McCormack, Taylor)
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