Tuesday, May 22, 2007

Delighting in the dollar's decline

Foreign visitors find bargains abound in S.F, other tourist areas

While Federal Reserve Chairman Alan Greenspan is worried about the weak dollar, it has been a boon for foreign visitors and San Francisco's tourism industry.

The precipitous drop of the dollar against the euro and other major currencies has increased the buying power of foreign tourists. Hotels are seeing more overseas guests, and business at shops and restaurants has picked up.

"I'm definitely saving quite a lot," said Richard Smith, a British tourist who's been on a shopping binge during his two- to three-month tour of the United States. "I bought clothes, electronic items and a lot of beer. And I've been on a lot of tours. I'm able to see a lot more (because) the value of the (British) pound to the dollar makes it so cheap.

"I bought four iPods, one laptop, CDs, a CD player, two digital cameras and DVDs. I'm thinking about buying a camcorder. I met a lot of English people in New York and they were shopping in droves."

The weak dollar -- mainly the result of this country's growing budget and trade deficits -- has benefited American exporters, making their goods cheaper abroad. The slippage has been dramatic, with the dollar having lost 4. 3 percent of its value against the euro in the past 12 months, and 34 percent in the past 36 months.

The erosion of the dollar, though, is drawing tourists to this country in growing numbers. "There has been a significant uptick in the U.S. tourism industry because of the dollar's relative weakness to the euro, but the biggest pickup is in New York and southern Florida," said Thomas Callahan, chief executive officer of PKF Consulting, a firm that monitors the hotel and travel industry.

"It's a long way from Europe to San Francisco. We see an increase here, too, but to a lesser degree."

Tourism rebounding

The influx of foreign visitors is welcome news for San Francisco's tourism industry, which has been on the mend after Sept. 11, the SARS outbreak and the Iraq war, which shook air travelers for some time. The most recent data from the city's Convention & Visitors Bureau notes that 14.4 million domestic and international visitors, including Bay Area visitors, spent $6.03 billion in 2003. Of that total, there were 2.15 million foreign visitors who spent more than $536 million.

Although the bureau's 2004 data won't be available for a few months, David Bratton, its research director, said the overseas visitor count should be up significantly over what it was in 2003.

And the weak dollar is a big reason for the rise. "Four or five years ago, one euro was worth 89 cents. Now it's worth $1.30," said Jon Handlery, the owner of the Handlery Union Square hotel.

"It's extremely attractive for Europeans to come here, and the same goes for Australians and New Zealanders." Handlery cited Air New Zealand's direct flights from Auckland to San Francisco that began July 1 as a boost to business.

"And Iceland Air is starting a direct flight in May, which will be good for the Scandinavian market," he said.

San Francisco International Airport said the number of international passengers grew by 14 percent to 6.9 million during the first 11 months of 2004 compared with the same period in 2003.

Niki Leondakis, chief operating officer at Kimpton Hotels, said the group's hotels had seen a 127 percent gain in international tourism in 2004 compared with 2003. The biggest increases were seen in the number of visitors from France, followed by Germany, Britain, Australia and Japan.

"We definitely see an increase," she said. "Our Grand Cafe at the Hotel Monaco (on Geary Street) has seen its late-night business pick up, which the staff attributes to European travelers who are late-night diners.

"As long as the euro is strong, we project this (trend) will continue during 2005 and into 2006."

Occupancy rates up

According to Smith Travel Research, hotel occupancy in the San Francisco- San Mateo area was 68 percent in 2004, compared with 62.8 percent in 2003. At the same time, the average daily room rate edged up to $117.96 in 2004, compared with $116.68 in 2003.

The presence of foreign visitors has also been felt in the Napa Valley. "We have absolutely seen a big increase in our foreign visitors and also in foreign journalists who are writing about us," said Diana Gerlach, hospitality operations manager at Beringer Vineyards. "We see people from India, the Philippines and China."

For Gerlach, that's a welcome change. "Visitor traffic has been soft for the last three, four years, and for U.S. visitors, the trend is still flat," she said.

The weak dollar has made U.S. goods a bargain. "I'm going to buy clothes and maybe a digital camera," said Kuo Hui-yu, who had just arrived from Taiwan for a weeklong stay in San Francisco and plans to shop and sightsee.

"The dollar's exchange rate is quite good for us. It would have influenced us to buy more had we been able to carry more," added Helen Crowe, a British tourist who is passing through San Francisco on part of a four-week world tour.

For some businesses, though, foreign tourists have been hard to come by. That's understandable, because January is traditionally a slow time of the year for the tourism industry. The Blue & Gold Fleet said it doesn't have very many sightseers braving the rain and cold to go on a cruise.

"For us on the boats, the weather is a factor. It's usually up and down this time of year," said Robert Knigge, vice president of sales and marketing for Blue & Gold. "We saw an increase in international travelers of around 10 to 12 percent last year compared with 2003. But this year it has so far been flat compared with last year."

Japantown waiting

Several shopkeepers and restaurant owners in Japantown also said they haven't seen many foreign tourists. They said Japanese tourists travel extensively from late April to early May during "golden week," the festive period of national holidays in which schools, government offices and stores are closed. They also expect business will pick up when overseas tours come through during the summer.

Callahan of PKF Consulting predicted the increased number of international travelers will be visible when the warm weather arrives. "(Europeans ) will typically travel in the summer months, so we will see the real benefit from June to August," he said.

Unfortunately, most foreign visitors are not big spenders. "We mainly see budget-oriented tourists," Callahan said.

Tina Chen, who owns Tina's Jewelry on Powell Street, said that although there have been a lot of overseas tourists at her store, they haven't generated more business. "Eighty percent of the people that came into the store yesterday were foreigners," she said. "But only 20 percent were spending money, and they mostly bought small things.

"Last year, more local people came in, but many have lost their jobs and may not have extra money to buy luxury things. People have champagne taste but only soft-drink money."