Hotel Online 
News for the Hospitality Executive



 
Overseas Tourists to Chicago Up by 8% in First 9 Months of 2007; Europeans
 Providing No Resistance to Four Seasons Chicago Room Rates

By Kathy Bergen, Chicago TribuneMcClatchy-Tribune Regional News

Jan. 6, 2008 - -- Laden with shopping bags and a long-lens camera, Jose Luis Sanchez and Raquel Perez ducked into the Chicago Hershey's store on a mission: to continue filling the empty suitcases they brought from their homes in Madrid with gifts and goodies for friends and family.

"We don't have these chocolates in Spain," said Perez, "so when I go back, I take Kisses, and say 'Here are kisses from the United States.'"

Overseas tourists such as Sanchez and Perez are delivering their own kisses, helping boost overseas visitor numbers by 10 percent nationwide and by 8 percent in Chicago for the first nine months of 2007 after a flat 2006. Those kisses are not plentiful enough to offset a slowdown in consumer spending, one economist notes, but they are just about the only kisses being planted on the economy at the moment.

"I don't think the Europeans or the Japanese are going to save retailers in America or the hotel business either, but it'll help," said Paul Kasriel, chief economist for Northern Trust Co. "And we need all the help we can get right now."

With a severely weakened dollar making American goods and services very cheap, visitors are indulging their appetites for American brands and luxury items, restaurant meals with all the trimmings and plush hotel rooms, observers say.

Perez, a teacher, and Sanchez, a bank security adviser, are no exceptions. "We are looking for American brands -- Gap, Ralph Lauren, Timberland," said Perez, who was staying at the Hyatt Regency. "They are more expensive in Spain."

With one euro worth nearly $1.50, and with post-Christmas sales in full swing, "that's two things working for us," she said.

In fact, exchange rates are so favorable to visitors that three tourists from St. Petersburg in Russia, in town for just two days, were blowing off the museums in favor of cruising North Michigan Avenue.

"That's why we're shopping," said Natasha Kerusova, a human resources specialist and fan of skyscrapers who had just visited the top of the John Hancock Center with her friends. One planned stop: The Burberry store.

Another recent visitor, British author and freelance writer David Howe, blogged about the bargain he got on a Thanksgiving meal, complete with champagne, at Harry Caray's Italian Steakhouse. Noting the bill for his group came to the equivalent of 15 British pounds per person, he wrote, "the exchange rate is very friendly to us Brits in the U.S. at the moment."

Illinois has been aggressively marketing itself as a "bargain," particularly in Britain and Germany, where the state concentrates its overseas marketing, noted Jan Kostner, deputy director of the Illinois Bureau of Tourism. "We're saying, 'We're on sale,'" she said.

The message seems to be getting out, with overseas visitors spending 6.2 nights here on average in 2006, up from 4.5 nights in 2005, according to the most recent figures available from the state tourism agency. In contrast, domestic visitors average two nights in Chicago.

High-end retailer Paul Stuart, in the Hancock Center, is among those seeing a bigger influx of foreign shoppers, including visitors from France, Romania and the Czech Republic. "With the weakening of the dollar and the strength of the euro, there is a definite appetite for luxury goods," said Blake Johnson, the general manager. "With us, that's very nice cashmere sweaters and luxury leathers, like shearlings."

Some trade shows are reporting greater international participation. The Radiological Society of North America's 2007 convention at McCormick Place, one of the city's biggest, drew about 7 percent more professional attendees from outside North America than it did in 2006, said Steve Drew, the organization's assistant director. He cited increased educational offerings, but noted the exchange rates didn't hurt either.

Staying longer, spending more

Overseas visitors are a small slice of Chicago's tourists. Of more than 40 million visitors to the city in 2006, only 1.06 million came from overseas, according to the Illinois tourism bureau. But such visitors tend to spend more than domestic tourists or those from Canada or Mexico.

"Overseas visitors spend an average of $4,000 per trip when visiting the U.S., more than five times the amount spent by visitors from Canada and Mexico," said a spokeswoman for the Travel Industry Association, citing data from Oxford Economics.

Asked how much she would be spending on her Chicago shopping spree, Perez laughed and said, "I don't want to think about it. I will spend all my savings."

Nationally, foreign visitor spending accounts for about 13 percent of tourism spending, Kasriel estimates.

And the exchange rates are making U.S. prices increasingly attractive.

"We're seeing no resistance to our room prices at all for Europeans, which probably three years ago was different," said Hans Williman, general manager at the luxurious Four Seasons Chicago.

While downtown hotel occupancy rates remained at a healthy 76 percent through the first 11 months of 2007, about the same as last year, average daily room rates rose by 5 percent, to $191.77, according to Smith Travel Research. And that comes atop a 14.4 percent rise in average room rates in 2006.

The Hilton Chicago reports strong growth in European visitor levels this year, especially from Britain, Spain and the Netherlands. And "the Hiltons of Chicagoland sales team has increased its budget for overseas travel by 20 percent for 2008," said spokesman Robert Allegrini.

The influx of overseas visitors this year is whetting appetites in the hospitality industry for a return to boom times in the '90s.

At that time, recalls Grant DePorter, president of Harry Caray's Restaurant Group, "the Japanese visitors spent more money in our restaurant than anyone; they had the highest check averages and the biggest tips ever. One group came in and spent $3,000 for 10 people, and left the waiter a $1,500 tip. Everyone remembers those days."

While the yen hasn't strengthened against the dollar as dramatically as the euro or the British pound, DePorter said, "We've been noticing a lot of Japanese coming back recently."

"The Cubs just got [Japanese outfielder Kosuke] Fukudome, so I think there will be a lot more interest from the Japanese," he said. "I will be updating our Japanese [language] menu."

Numbers still on rebound

Even with the 2007 boomlet, visitors from outside North America have yet not returned in numbers equal to pre-9/11 levels, leaving that niche as the only one that has not recovered fully.

In the first three quarters, 17.7 million people from outside North America visited the U.S., up 10 percent from the same period in 2006, according to the U.S. Department of Commerce. And 975,800 visited Chicago, a rise of 8 percent.

For the full year, the department projects 23.1 million overseas visitors nationally, up 7 percent but still below the nearly 26 million in 2000. A return to that level is not expected until 2010.

"The fact is, we still have a very significant problem when you compare the U.S. to where it was pre-9/11," said Geoff Freeman, senior vice president for public affairs for the Travel Industry Association. Between 2000 and 2010, global travel will increase by 44 percent, while overseas visits to the U.S. are projected to rise only 1 percent, the association noted, citing data from Global Insight.

The organization is lobbying for legislation aimed at lessening wait times for visas, shortening the time it takes to enter the country through its airports and spreading the message overseas that the U.S. welcomes visitors, Freeman said.

The Commerce Department paints a rosier picture, citing overall international visitor levels, which include overseas visitors and those from neighboring Canada and Mexico.

"International travel receipts are at record-breaking levels, producing a trade surplus for the industry, creating jobs and expanding economic growth," spokesman Matt Braud said.

All international visitors spent $107.9 billion in 2006 and preliminary forecasts show another increase occurred in 2007, he said.

As well, the department has taken steps to ease travel from China, he said. "Our most recent calculations show that Chinese citizens on average spent $6,000 per visitor, which ranked higher than any other nation."

The key question is whether the 2007 trend can be sustained, and economist Kasriel said there are reasons to be cautious with projections.

"Overseas tourists may find their income growing at a slower pace in 2008," he said. "Part of the reason they have seen stronger growth is because they were selling a lot to us, and we're not buying as much from them.

"In addition, their central banks have been raising interest rates in many instances, and that is going to have a negative effect on domestic activity in their countries."

Still, on a bracing evening just after Christmas, overseas tourists were playing a distinctly American game on North Michigan Avenue, known colloquially as "shop till you drop."

As she prepared to slip into the revolving door leading into the Hershey's shop, after hunting for bargains on clothing, underwear and perfume, Perez offered up a weary smile.

"I'm tired," she said, standing on the threshold of yet another store.

kbergen@tribune.com

-----

To see more of the Chicago Tribune, or to subscribe to the newspaper, go to http://www.chicagotribune.com.

Copyright (c) 2008, Chicago Tribune

Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NASDAQ-NMS:NTRS, NYSE:RL, LSE:BRBY, LSE:RTN,




To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Industry Resources | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.