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If Belgium Is 30% Off, This Must Be 1991

Top of the News


For at least two years, Michael S. Conner of Arlington, Tex., has dreamed of visiting relatives in Germany. But he flinched at the thought of paying up to $800 in airfare. Recently, when the cost of a round-trip ticket from Dallas to Frankfurt fell to $318, Conner, an assignment editor at a local TV station, jumped at the offer. On Apr. 27, he's leaving on his first trip to Europe.

Thanks to a rash of deep discounts and glitzy giveaways by travel companies, Conner isn't the only one suddenly raring to go. After months of deep freeze in the travel business because of the gulf crisis and recession, signs of revival abound. Delta Air Lines Inc., having almost abandoned its flights between Cincinnati and Paris during the war, will be flying the route every day of the week by May. And France's Accor, the world's biggest hotel company, says its advance bookings show that summer tourist travel should be back to normal.

SUGARING THE PILL. But the worldwide travel business is hardly rejoicing. While the fledgling recovery is good news, demand in most sectors is still at low, recessionary levels. Hal F. Rosenbluth, president of Rosenbluth Travel Inc., reports bookings by his Philadelphia agency are still off 10% from prerecession days. "Americans have learned not only how to save money over the past nine months, but I think some people are actually enjoying it," he says with a sigh. Walt Disney Co. Chairman Michael D. Eisner recently told shareholders that although bookings are picking up, Disney's theme-park attendance has been "crummy." Volume this year is likely to be down at least 4%, analysts estimate.

Getting guys like Mike Conner to travel isn't cheap, either--especially to Europe, where Saddam Hussein's boasts sparked fears of terrorist attacks. Airlines and others have been forced to sprinkle all sorts of sweeteners around to lure travelers (table). American Airlines Inc. says bookings climbed "substantially" after the war's end. Then again, the carrier has discounted some fares as much as 45%. Since the gulf crisis began, airlines worldwide have been discounting steadily, erasing profits. "All the euphoria you hear is relative," says Donald J. Carty, American's executive vice-president for finance and planning. "We're not optimists at all." The Air Transport Assn. predicts U. S. airlines will, at best, break even in the second quarter. That's after expected losses of $2 billion in the first.

And airlines aren't likely to throw away their crutches anytime soon. The recession, excess capacity, and ailing carriers desperate for cash are keeping up the pressure for discounts. "This is the year of the bargains. Just sit back and wait," says Thomas W. Parsons, editor of Best Fares, a monthly publication that tracks travel bargains. He predicts at least two more fare wars before summer. Delta is already planning to cut its 7- and 14-day advance purchase fares so that they'll almost match American's 30-day discounts. Says Roger H. Ballou, president of American Express Travel Related Services Co.: "It's a fight for the last available fanny."

Desperation makes strange bedfellows, though. Shocked by the extent of the travel slump during the war, some 60 airlines, hotels, and other travel-related businesses are backing a $6 million-plus promotion campaign. Members of the "Go USA!" coalition, usually archrivals, have joined together to lobby the Commerce Dept. to encourage U. S. business travel. They've also pressed for a meeting with Japanese tourism officials during a U. S. trade mission to Tokyo in April. Hopes are the talks will jump-start Japanese travel to the U. S., which fell 40% during the war and has been slow to recover.

British Airways PLC, however, isn't messing around. With the airline's traffic off 30% since the war, "we felt we had to do something dramatic," says Chief Executive Sir Colin Marshall. "We didn't want to delude ourselves by talking up the business as some have done." In one of the splashiest promotions of late, BA plans to give away all 50,000 of its seats worldwide on Apr. 23. That will kick off a broader, six-month campaign, which will include hotel and theater discounts as well as various prizes. All told, Marshall says, the effort will cost BA $100 million.

ISLAMIC ENCOUNTERS. Others are taking bold steps as well. Club Mediterranee recently launched a test promotion at its Moroccan seaside village in Agadir. Vacationers leaving from Paris get free air transport during April, reducing the cost of a one-week vacation by 30%, to $790. With the 2,000 discounted spots fully booked and a long waiting list, Club Med plans to roll out similar deals to other vacation villages in Morocco, Tunisia, Egypt, and Turkey. It's no coincidence those are all Moslem countries. Europeans had shunned vacations there when Saddam tried to characterize the gulf war as a jihad.

With a turnaround in sight, some are reluctant to slash rates and risk tarnishing their images. The Steigenberger hotels in Germany, which cater to a well-heeled crowd, say they are planning no new discounts, even though occupancy rates are off 20% in some places. While tour operators in Italy lament that business there is lagging as well, "the trick is to push the packages we had thought up before the war," says Mauro De Vecchi of Francorosso International, a leading tour company.

More than likely, though, the savvy traveler can find deals the world over. London hotelier Savoy Group won't discount rates, but it is offering limos, and vouchers for such services as hairdressing. Even the Soviet Union is playing along. With tourism depressed by both the gulf war and internal political strife, Intourist, the Soviet travel bureau, is pushing "adventure tours." Says Director of Marketing Vladimir M. Braginski: "We are going in for trekking tours in Siberia or in the desert of Central Asia." Trekking in Siberia? We'll take the limo.


BRITISH AIRWAYS Giving away all of its 50,000 seats worldwide on Apr. 23. Also giving away a time-share in a Scottish castle

SAVOY GROUP Offering a `Welcome to England' package to hotel guests from the U.S. and Canada. The offer at Savoy's British hotels includes limo from the airport and $220 worth of vouchers for little extras such as hairdressing

HYATT For visitors who stay at Hyatt hotels at least three times before May 15, offering two Northwest Airlines tickets for the price of one for travel in the U.S. and Canada

ALAMO RENT A CAR Offering a free SeaEscape cruise to anyone renting an Alamo car in Florida for as little as one day

ROYAL CARIBBEAN CRUISES Two vacationers can sail for the price of one on Royal Caribbean's cruises to the Bahamas

DATA: COMPANY REPORTSWendy Zellner in Dallas, with Stewart Toy in Paris, Mark Maremont in London, and bureau reports

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