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Weak dollar fuels strong sales at centers popular with tourists

BY ANNA ROBATON

Traveling overseas just to go shopping might not sound like an economical proposition, but scores of international tourists are saving money just that way. Prompted by the U.S. dollar’s weakness, they are venturing stateside in search of cheap sneakers, jewelry and electronics. The trend, among other factors, is boosting U.S. tourism, particularly in major destinations, such as parts of Florida, Hawaii, Las Vegas and New York City.

“We haven’t seen tourism increases like this since before 9/11,” said Karen MacDonald, director of communications at Taubman Centers, which owns such tourist-magnet malls as Beverly Center, in Los Angeles, and Dolphin Mall, in Miami.

Owners of tourist-trafficked malls report that not only are there more foreign tourists visiting, many are spending more because their money goes a lot further, especially at outlet centers and stores holding clearance sales.

The dollar peaked in early 2002 against the euro and the yen and has since declined, largely because of the roughly $650 billion U.S. trade deficit, says David Wyss, chief economist at New York City-based Standard & Poor’s. “On net there are more dollars going out of the country than coming in,” he said.

But the rise in the numbers of foreign tourists visiting the United States is helping to put a dent in that deficit, experts say. Last year 35 million international visitors arrived in the United States through November, up 11 percent from the same period the previous year, according to the U.S. Commerce Department. That will probably hit nearly 48 million this year the department says.

Florida frenzy
There has been a marked recovery in Florida, for example, one of the states hit hardest by the tourism downturn. “It is almost a feeding frenzy during sale time,” said Lynnette Lauria, director of marketing for The Florida Mall, Orlando, where tourists largely from the United Kingdom have been snapping up electronics, jewelry and popular American apparel brands like Tommy Hilfiger.

Simon Property Group, which owns Florida Mall, affirms that the weak dollar has been especially good for its properties in the Sunshine State.

In 2003 the number of international tourists visiting Florida increased for the first time in three years — admittedly by just 1 percent, to 6,076. Despite the four hurricanes of late last year, the state expects to post another increase in international visitors for 2004, according to tourism marketing organization Visit Florida, though no specific data was available at press time.

“What we are seeing is a nice recovery in international visitation and that’s expected to continue through next summer,” said Bud Nocera, CEO of Visit Florida. Summer is the peak season for travel to Florida from Europe. “Right now the value they receive in Florida and in other parts of the United States on purchases made with euros or the pound sterling is just spectacular,” he said. “They know it, and they are here spending money,” he added.

To be sure, there has been a lot of media attention in Europe, including ads by tour companies that tout the relatively low cost of travel to the U.S. and the shopping bargains to be had over here.

The British keep coming
This is especially true in the United Kingdom, which, according to the U.S. Department of Commerce already generates more visitors to the United States than any other foreign market.

“In the British press, there has been a lot of free publicity pushing people to go on shopping trips,” said Sean Tipton, a spokesman for the London-based Association of British Travel Agents. “Most of the national papers were running stories on that basis leading up to Christmas.”

The British apparently got the message. Last November airline bookings to the United States from the United Kingdom were up 45 percent over the previous November, and bookings to New York in particular were up a whopping 130 percent for the same period, Tipton says. New York and Orlando, he adds, are the top two destinations for U.K. travelers bound for shopping trips in the United States.

“We are expecting that last year was an all-time record for people traveling to America, and this year we are expecting to beat that record,” he said.

One U.K. traveler, Brian Calo of South Wales, says he spent about $3,000 during his November vacation in New York.

Taubman has been among the beneficiaries of this British invasion. While the company saw double-digit increases last year in the overall number of tourists to some of its malls in Florida, Denver and Los Angeles, the rise in the number of British travelers shopping its malls was particularly robust. At Beverly Center, Los Angeles, for instance, U.K. visitors swelled 38 percent last year compared to the previous year.

At Taubman’s Dolphin Mall, Miami, cruise-line groups mostly from the United Kingdom increased 60 percent last year, according to MacDonald. On a single day last year, those travelers plunked down $4,000 on electronics alone at Dolphin Mall, she says, citing random surveys by the tour guides.

Taubman uses vouchers redeemed by tourists at its malls for discount booklets to track the numbers and countries of origin. Tour operators and hotels working with Taubman supply the vouchers.

When tourists hit U.S. shores, some head for malls and urban storefronts, but many — especially the bargain hunters — seek out the nearest outlet center.

Currencies and conversions
For outlet center developer Chelsea Property Group, a subsidiary of Simon, foreign tourists have always been a major source of business at its outlet centers near Boston, Las Vegas and New York City, but dollar weakness has only ratcheted that up, says Michele Rothstein, vice president of marketing. The Roseland, N.J.-based firm has long worked with tour operators and transportation companies to market its centers to foreign visitors.

“We are already top of mind,” Rothstein said. “So when you see surges [in international visitors], we tend to be one of the shopping destinations” they think of. Chelsea, she adds, has been busy fielding requests from foreign reporters interested in the U.S. shopping scene.

Chelsea goes as far as equipping its stores with international sizing conversion charts and offering foreign currency exchanges.

“It is a bit of a responsibility when you know certain shoppers are getting off the plane at [New York’s] LaGuardia Airport and taking a taxi to [New York’s] Woodbury Common before they even go to Manhattan,” Rothstein said.

Indeed, the weak-dollar boon notwithstanding, some mall owners in major tourist destinations are taking nothing for granted. Their marketing efforts are aimed at keeping those tourists coming regardless of cyclical elements like the strength of the dollar.

“There is a general cycle of five years of overvaluation, followed by five years of undervaluation,” said Standard & Poor’s Wyss.

Taubman, for example, is working with the Department of Commerce to promote travel to the United States. Chairman and CEO Robert S. Taubman sits on a newly formed travel and tourism promotion advisory board to the Commerce Department (see story, How ad campaign helped lure U.K. shoppers).

“The real link between shopping and tourism is becoming a well-known subject,” said Doug Baker, deputy assistant secretary for services at the Commerce Department. “You see a lot of mall developers recognizing the benefit that travel and tourism make to their bottom line.”