Tourists From Beijing to Buenos Aires Buoy U.S. Exports: Economy
For Leon Goldberg, the used clothes piling up at the lost-and-found at the New York Marriott Marquis hotel on Times Square are the latest sign tourists are spending.
“People come over with empty suitcases, and we see them leave with full suitcases,” while abandoning their older garments, said Goldberg, the director of sales and marketing at the 1,957-room hotel.
Spending by overseas visitors on everything from airfares to hotel stays climbed 8.1 percent over the 12 months ended in May to $13.9 billion, figures from the U.S. Commerce Department show. The increase was almost double the 4.2 percent gain in total exports. Purchases by foreign tourists count as exports, which have been among the mainstays of the three-year economic expansion.
More Latin American and Asian visitors are offsetting a slowdown in trips from Europe, where a weaker euro is making travel to the U.S. more expensive. The pickup in tourism, which Federal Reserve Chairman Ben S. Bernanke called a “bright spot” in the economy, is benefiting companies such as Marriott International Inc. (MAR), City Pass and San Francisco Shuttle Tours and bolstering the labor market.
“Tourism has been an over-performer,” said Chris Lafakis, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “This is an industry that’s fully recovered from recession.”
Victoria Varraza, who is visiting Washington from Culiacan, Mexico, said yesterday her family comes to the U.S. to shop. The 22-year-old said her parents book their hotel, airfare and activities with Expedia Inc. (EXPE) or Travelocity Holdings Inc.
“It is more easy to shop here because you have the malls with all the things for your family, and in Mexico you don’t have that kind of stuff,” Varraza said.
Spending by tourists is providing jobs for Americans at a time when the unemployment rate is stuck above 8 percent.
Some 13.59 million people work for leisure and hospitality companies such as restaurants, hotels, amusement parks and museums, the most in records going back to 1939. Employment at these businesses accounts for about 10.2 percent of all payrolls in the U.S., compared with 9.8 percent before the last recession, according to Labor Department data.
“People may not appreciate that when a foreigner comes and visits Hawaii that actually counts as a U.S. export,” Bernanke said before Congress on July 17 in response to a question from Senator Daniel Akaka, Democrat from Hawaii. “Tourism has been something of a bright spot. Not just in Hawaii, but in a number of places around the country.”
Shares of some tourism-related companies are outpacing the broader stock market. Marriott International is up about 23 percent this year, the Walt Disney Co. has advanced 28 percent and Gaylord Entertainment Co. (GET), which operates the Grand Ole Opry in Nashville, Tennessee, has jumped 49 percent. The Standard & Poor’s 500 Index is up almost 7 percent.
The Fed’s Beige Book survey of regional economies, released July 18, noted that tourism was “strong” in several districts, and hotel occupancy rates and revenue per room were “robust” in New York, Richmond, Atlanta, Chicago and San Francisco. It said Hawaii and southern California, where hotels are relying less on discounts to attract customers, were seeing more visitors.
Federal Reserve Bank of New York President William C. Dudley said the city’s economy is “doing quite well” and has become less dependent on Wall Street. Tourism to New York has helped and has been “really quite a success story,” Dudley said in public remarks on May 30.
Among visitors to the city is Giovanna Ruman, a 19-year-old from Sao Paulo, Brazil, who is on a 10-day trip with her mother and grandmother.
“It’s much cheaper for us,” Ruman said yesterday as she walked down Madison Avenue toting shopping bags from Bergdorf Goodman and Stuart Weitzman. “I just bought a Celine purse, shoes and a Herve Leger dress.”
Growth in tourism is led by visitors from Latin America and Asia. Pleasure travel from Argentina, Venezuela, Brazil and China, increased 20 percent or more from January through April compared with the same four months last year, the latest Commerce Department data show. Those countries sent about 1.3 million tourists to the U.S. in that period. The increases have outpaced visits from Germany and France.
Varying economic fortunes across the globe help explain the differences. Gross domestic product in the euro region was little changed in the first quarter from the same three months last year. In the same period, growth was 5.2 percent in Argentina, 4.6 percent in Mexico and 5.6 percent in Venezuela.
Signs of Slump
Adding to signs of a slump in Europe, euro-area services and manufacturing contracted for a sixth month in July, according to a survey of purchasing managers by London-based Markit Economics released today. In China, a purchasing managers’ index by HSBC Holdings Plc and Markit indicated the nation’s manufacturing may contract at a slower pace in July after two interest-rate cuts.
Honolulu saw a 22 percent jump in non-U.S. resident arrivals in the first four months of 2012 from the same period last year, Commerce Department data show. Orlando showed a 21 percent gain, Miami was up 12 percent and New York posted a gain of 7 percent.
International attendance at Walt Disney Co. (DIS)’s Walt Disney World near Orlando, Florida, typically accounts for 18 percent to 22 percent of visitors, and “we are at the very high end of that range,” Chief Financial Officer James A. Rasulo said in a conference call May 8.
“We’re not seeing any slowdown in the U.S. economy,” said John Bilello, owner of San Francisco Shuttle Tours, which takes travelers to places like Napa Valley and Yosemite National Park in California. “There’s a total disconnect for us.”
The tour company’s business picked up in March and has continued to increase, Bilello said. Many of his customers are from Asia and Australia, though the number of domestic tourists is also climbing, he said.
David Nadelman, general manager at Hyatt Hotels Corp. (H)’s Grand Hyatt San Francisco, said international guests account for about a third of the total.
“Occupancy is at a near-historic high, and the demand for San Francisco is very strong,” said Nadelman, who is also chairman of the San Francisco Travel Association.
In Los Angeles, foreign arrivals are expected to rise 5 percent to 6.24 million this year, thanks in part to growth from China and Brazil, said Susan Lomax, a spokeswoman for the Los Angeles Tourism and Convention Board.
Sales at City Pass, which offers a package of prepaid admission to attractions like Boston’s New England Aquarium, New York’s Empire State Building and the Philadelphia Zoo, are up 18 percent this year, according to Mike Gallagher, the Victor, Idaho-based company’s co-chief executive officer and co-founder.
City Pass built a new office and is renting space to accommodate growth, he said. In the past three years, 15 people were hired to bring staff to 35.
“From my point of view, leisure is very strong,” Gallagher said. “With all the bad news over the last few years, things are now getting better, because if you postponed that vacation, now you’re going to take it. More and more people are saying I’ve got to go take my family and do something.”
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