Will euroland be terra incognita?


ImageNEW YORK -- Mention "euroland" to clients, and they may think you're talking about a new theme park.

This is because the imminent arrival of a new economic union combining the monetary systems of 11 western European nations -- dubbed 'euroland' for the currency upon which it based -- has generated relatively sparse coverage in the U.S. media, leaving retailers and their customers unsure what it will mean, according to participants in Travel Weekly's Euro Conference.

A number of agents who do business with Europe expressed concern about how the new system will affect their commissions and payment procedures.

Allen Rich, president of Rich Worldwide Travel of Harrison, N.Y., said that many practical questions are still unanswered. "We're trying to figure out how we will get our commissions," he said.

Currently, he receives commissions from European suppliers in two ways: larger companies, such as major hotel chains, often maintain U.S. bank accounts and pay agents in dollars; smaller firms, however, may simply send a check in their own currency.

"So we want to know, when they pay us commissions, what the values are going to be and how it will differ" from current practice, Rich said. "That's very important when you consider that's our livelihood and our income we're talking about."

The main uncertainty lingering now is over the euro-to-dollar exchange rate, which will be set early next year but will fluctuate -- just as the dollar does now against European currencies.

Rich said he hopes that the new system will make it less expensive to convert European currencies into dollars. Currently, he deposits commission checks in foreign currencies at his bank -- which does the conversion itself and charges a substantial service fee. It may be easier for the bank -- and more economical -- when numerous currencies are combined into one, he said.

Another key question for agents is how much extra time they may have to spend interpreting the new system for their clients.

Moreover, starting early next year, clients will be able to purchase euro traveler's checks and make other transactions involving the new currency. As they do now, agents will rely on their computers to calculate prices in euros and to do other financial computations.

However, in the short run, when local currencies will first have to be translated into euros and then into another currency, it could be more complicated -- and more time-consuming, Rich said. "We are going to be in a mathematical ball game with clients," he said. "If I see a figure like 1,600 lire, I know what that means in dollars. But if you first have to convert 1,600 lire to euro and then to dollars, it's going to be extra work."

Fred Goldberger, of Macpherson Travel, New York, agreed that "during the interim period, it'll be a little trying." He added, "It may be confusing when you see all these different price quotes," which conceivably could be calculated in dollars, euros and the local currencies for the countries on a traveler's itinerary."

Goldberger also commented that he finds it curious that few clients have raised the subject. "I have primarily corporate clients, and nobody is asking about it.But in that sense, it's like the Y2K problem: Nobody knows what's going to happen till it happens."

Goldberger said that agents could possibly use some services available through their CRSs -- such as a program offered by Worldspan that enables agents to overnight packets of currency to their clients -- to promote the new euro. "It'll be a good thing once it settles down," he said. "But like anything, it will take some time to get the kinks out.

"I don't think it will have much of an impact at all, at first," said Heinz Wesner, president of DER Travel Services in Rosemont, Ill. Wesner said that even in Europe, the advent of the euro is being downplayed. "I was in Germany just the other week, and most people said they couldn't care less about it. Once the Germans got over their initial shock that the D-mark isn't going to be in existence in three years, they said, 'So what?' " he recalled.

The subdued mood surrounding the euro's debut may be due to the fact that the currency itself won't be in circulation until 2002; at that point, it will replace the local currencies of the participating nations, and bank notes issued in francs, pesetas and other denominations will be retired.

However, the euro will be launched as an intermediary currency next year.

Wesner pointed out that travel agents need to be prepared for possible accounting changes that will arise if the euros appear in price quotes.

He predicted, however, that eventually the new system will lead to more stable prices and simplify agents' lives. "In the past, I used to keep 11 different bank accounts for those countries," he said. "Now I can do that in one bank account. That means I can also plan in larger quantities, which certainly makes things easier."

JDS Travel News JDS Viewpoints JDS Africa/MI