Europe On Fewer Dollars A Day

"Prices here are outrageous!" exclaims a stunned Roberta Foster. She and husband David, a computer repairman from Manassas, Va., have just paid $6.20 each to walk to the top of Notre-Dame Cathedral. Now, tourist map in hand, she ponders where in Paris to buy sandwiches for her family's dinner. But she's glad they've made the trip to Europe after years of dreaming. When airlines slashed transatlantic fares last spring, the Fosters bought a six-night London/Paris package--plus a pair of Cheap Eats guidebooks.

This is the summer that camera-swinging Americans are returning to Europe. Tourists who stayed home because of the gulf crisis, recession, and a plunging dollar are at last dusting off suitcases and--like the Fosters--taking those long-postponed trips. Trouble is, they're not returning in big enough numbers to make it a smash summer season for anyone.

Among the disappointed are U.S. airlines. Anticipating a major rebound, they eagerly boosted transatlantic capacity only to end up cutting fares to fill planes. By March, American Airlines Inc. had already slashed spring and summer fares by as much as a third. European traffic at Continental Airlines Inc. is back to pre-gulf-crisis levels, but lower revenues have canceled out the gain, says John Nelson, an executive vice-president. About 9% more Americans will visit Europe this year than last. But that still leaves traffic well below earlier years (chart).

PENNY-PINCHERS. Moreover, with the dollar close to historic lows, Americans are staying for shorter periods and pinching their wallets. France's Tourism Ministry says more Americans are shunning high-cost Paris and heading to the provinces. They're spending at least 10% less than last year's $130 a day per person. At Madrid's posh Hotel Ritz, Americans now "check the prices carefully" instead of plunking down their credit cards, says Sales Director Manuel Toba.

Yet Europe's battered tourist industries can use every American they can get. British hotel occupancy is at its lowest since 1980, pushing 93 hotels into receivership so far this year, on top of 125 last year. London theaters, where foreigners buy one-third of the tickets, are closing shows early. In Italy, soaring prices and Mafia assassinations are keeping tourists away. "I've never seen it like this," says Marzia Lefebvre, a longtime resident of the Amalfi Coast, south of Naples, where the top tourist watering holes are half empty. Instead of its traditionally fat trade surplus in tourism, Italy will probably show a deficit for August.

Spain should be crawling with tourists, given the Barcelona Olympic Games and Expo '92 in Seville. But the Year of Spain is a bust for tourism. The number of foreign visitors is up only 7% from last year's depressed levels. Instead of 18 million visitors expected at Expo '92, about 11 million will likely show up by the Oct. 12 closing day. The fair's huge Spanish Pavilion is dimming lights and cutting air-conditioning to save money.

RETURN FLOW. In contrast, Spaniards and other Europeans are heading for the U.S. in record numbers to cash in on the weak dollar. Trans World Airlines Inc.'s business in Spain is strong, thanks to weekend shopping trips that it's promoting for Spaniards visiting New York. And New York's Tower Air Inc. is packing its planes more tightly with Germans heading for Miami than with Americans flying to Europe. Like last year, when the U.S. earned a $1.5 billion tourism surplus with Europe, more Europeans than Americans will cross the Atlantic this year.

Luckily for budget-conscious Americans, the squeeze on Europe's tourist industry is forcing price-cutting. The Hotel Negresco in Nice, where Americans account for one-third of the clientele, is discounting its $300 minimum daily rate by 15% for one-week stays. "With the dollar so low, we have to do something," says Guy Bellet, the hotel's manager. In tourist-hungry Seville, half-empty hotels are slashing rates by 33%. And in London, the Royal Garden Hotel near Kensington Palace and the Hampshire Hotel in the West End theater district are offering half-price rooms to U.S. travelers.

France is a happy exception to the tourist slump. Visitors include Germans who can't go to Yugoslavia, Eastern Europeans who crave a look at the City of Light, and more Americans than last year--by about 15%. True, Americans in Paris aren't as abundant as U.S. airlines had hoped. But after a long absence, tourist businesses are glad to see more of those once-familiar faces, poring over maps and clicking cameras.

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