Weak dollar puts U.S. on sale for foreign tourists
Reuters | May 02, 2007
With the U.S. dollar at multi-year lows, tourists from Britain, Australia, and other countries with strong currencies, are flocking to the United States to stretch their pounds and Aussie dollars by lengths not seen for years.
Tourism in the U.S. was already booming at the end of 2006, growing at an annualized rate of 8.0 percent in the fourth quarter, the fastest pace since the first quarter of 2005, according to U.S. government data.
In addition there was a 2.3 percent weakening in the U.S. dollar over the year, according to the U.S. dollar index (.DXY: Quote, Profile, Research, which measures its performance against a basket of major currencies.
Now with the British pound (GBP=: Quote, Profile, Research breaking through the $2 mark for the first time in 26 years, and the Australian dollar at a 17-year high versus the greenback, U.S. destinations can expect the tourist invasion to continue for a while longer at least.
"It's fantastic," said Linda Blundell from England, shopping downtown in Manhattan, New York for clothing with designer labels. "I'd already planned a trip and was just lucky to be here at the right time."
The United States has long been a magnet for foreign tourists, with cities like New York and San Francisco and renowned natural features like Wyoming's Yellowstone National Park and Arizona's Grand Canyon in particular demand.
But rarely has it been on sale at such cheap prices.
The British have probably the most to gain, with the pound already up 1.6 percent in 2007, extending its 13.7 percent gain from 2006.
Foreign exchange specialist Travelex in the UK reported a 150 percent increase in purchases of dollars by British consumers between Monday and Thursday in the week of April 16 when the pound cleared $2.00.
Australian travelers to the United States are also getting bargains after converting to the local currency. The Australian dollar rose 7.5 percent in 2006 against the dollar (AUD=: Quote, Profile, Research. It has strengthened another 4.7 percent so far in 2007.
The number of Australian travelers to the United States rose 3.7 percent in 2006 over the prior year, according to the Office of Travel and Tourism Industries.
Jeppe Schroll from Copenhagen, studying for three months in the U.S., said the dollar's weakness against the Danish Crown, which was down 3.1 percent in 2007 (DKK=: Quote, Profile, Research, was a bonus.
The deals were "mostly in shopping as the hotels are still a little expensive," Schroll said.
The Washington D.C.-based Travel Industry Association estimates that travel and tourism generates $1.3 trillion in U.S. economic activity every year. That is $3.4 billion a day.
Just a 1.0 percent increase in the U.S. worldwide market share for tourists would equate to 8 million more visitors, $12 billion more in international expenditures, 151,000 new jobs, $3 billion more in payroll, and $2 billion more in federal, state and local tax revenue, according to the TIA.
"We can expect to see an increase in visitation to the U.S., particularly from the U.K. and Europe," said Arnold Slesers, an associate economist with Moody's Economy.com in WestChester, Pennsylvania. "With U.S. goods and services becoming cheaper, European consumption of U.S. exports is likely to receive a boost."
Countering the weaker dollar is some international hostility to U.S. foreign policy and stiffer visa entry restrictions after the September 11, 2001, attacks. Without those limits, U.S. travel hotspots could be seeing even more tourists.
"The cheaper dollar should have meant even more tourists, but it hasn't had the bump effect it should have because of perception issues," said John A. Challenger, chief executive officer at Challenger, Gray & Christmas. "That creates problems for employment increases," he said.
And of course, the dollar will never be weak enough for all visitors to the United States.
"So far the cheapest crappy hotel without bathroom in New York is something like $120 plus tax and that's not cheap for travelers," said Trevor Gray from Australia trying to book a New York hotel from Argentina.
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