Travelers save dollars with euro

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NEW YORK -- Last May, a double room at the Kempinski's Hotel Adlon in Berlin started at $283; the same room now goes for $205.

The savings to be had in Germany by U.S. travelers also can be found at Belgian restaurants, Italian dress shops and even on the Paris metro.

All over the euro zone -- which includes the 11 countries that adopted the euro currency -- the dollar is worth about 23% more than the euro now compared with when it was launched in January, 1999.

The steep decline of the euro is a boon for U.S. visitors to Europe, but tourism officials were uncertain as to whether it will drive business there, in what is already turning out to be a strong booking period for the region.

"The average traveler a year ago did not even know what a euro was," said Phillip Gordon, chief operating officer for Globus in Littleton, Colo.

"Now, these stories about it are popping up everywhere, not just in the Wall Street Journal but in the Denver Post," he said.

"The publicity over the greenback's buying power in Europe might be a draw for last-minute travelers who were not thinking about Europe, especially independent travelers," Gordon added.

Escorted tour operators calculated their prices before the decline of the euro, so brochures prices do not reflect the dollar's recent gains.

"But the escorted market is still interested in the benefits of a strong dollar, such as deals on shopping and meals not included on tour," said Gordon.

Globus' summer bookings to Europe are up 10% to 25% over last year for the U.K, Spain, France and the alpine region, with single-digit growth for the Mediterranean.

Maureen Van Metter, vice president of marketing for Trafalgar in New York, said her company's prices were lowered on most escorted European tours by 10% this year because of the dollar's growing strength.

She said bookings to Europe were up by at least 25% over last summer. Also showing growth was Rail Europe, which reported a bookings increase of 10% to 15% over the same period last year.

Escorted tour prices may be fixed by brochures, but operators of FIT programs are able to adjust prices according to currency fluctuations, a spokeswoman for Chicago-based DER said.

She said the firm had no evidence that a strong dollar was driving sales, but she noted the firm's bookings to Europe were up 20% over last year, excluding bookings to the Oberammergau Passion Play in Germany, which would raise the increase to 65%.

Gordon of Globus, Van Metter of Trafalgar and other operators agreed the strong economy, pent-up demand after last summer's Kosovo conflict and flat growth in air fares were key factors that would make this summer an exceptionally strong one for Europe.

Some operators pointed to the every-10-year Oberammergau play as a source of double-digit growth. There were mixed responses to the impact of the Jubilee Holy Year in Rome, with Trafalgar citing Italy as its strongest source of growth and Globus reporting flat sales there.

On the cruise front, Costa said its bookings to Europe were up 20% over last year, with the strongest showing coming from the Mediterranean, which experienced a lull last summer because of the war in Kosovo.

Meanwhile, hoteliers such as Radisson-SAS and Marriott said that although Americans can reap the benefits of a strong dollar because hotel prices are usually in local currency, they didn't expect this to cause a dramatic rise in sales, since most of their guests are Europeans.

A spokesman for the European Travel Commission here said there is some proof that a strong dollar drives business to Europe.

"In 1984 and '85, the dollar was at a record high and there was a tremendous surge in travel to Europe in this period.

"Of course, this was also a reflection of the strong economy, so it's difficult to say that it was specifically the strong dollar that drove business," he said.

There are several caveats to the "sinking euro drives business to Europe" theory.

The commission spokesman admitted that travelers to Europe tend not to be as price sensitive as those heading for some other leisure destinations, such as the Caribbean, Mexico and Florida.

Additionally, Europe-bound travelers often plan their trips months in advance with no knowledge of where the dollar will be pegged when they arrive overseas.

Finally, the majority of travelers to Europe get there without purchasing a tour or cruise. If they are looking at prices, transatlantic air fares, which are not affected by the dollar's relationship to the euro, are a key consideration.

The spokesman said that based on "anecdotal" evidence, he anticipated fewer summer air sales.

This could be partly due to the adjustment in air capacity, which grew only slightly this summer, in contrast with last summer, when so many carriers responded to the economic crisis in Asia by putting more service on transatlantic routes.

A Delta spokeswoman said demand was much stronger for Europe this summer, and she predicted fewer last-minute sales.

Euro to be circulated in 2002 Until 2002, when euro bills will be distributed, the euro is an electronic currency that can only be used for credit card transactions and euro travelers checks.
...The value of local currencies, such as the German mark or the French franc, mirror the value of the euro, of which they are now denominations.
...So whether travelers exchange their dollars for the local currency in the euro zone or have their credit card company convert euros to dollars, the value of the dollar against the euro determines the rate of exchange.
...The euro came in at $1.17 and is currently trading at 90 cents. In a parallel, the German mark, for instance, was 60 cents on Jan. 1, 1999, and is now worth 46 cents.
...The euro zone countries are Austria, Belgium, Finland, France, Germany, Holland, Ireland, Italy, Luxembourg, Portugal and
Spain. -D.A.S.
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