RETAIL—Stronger Dollar Not Expected to Slow Tourist Spending

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The U.S. dollar is plenty powerful on international currency markets, which means that foreign shoppers in Los Angeles will at somewhat of a disadvantage this summer, with their native currencies having less buying power.

But local merchants who cater to foreign tourists should not be too concerned, industry observers said, because the number of Asian visitors long a crucial element of the local tourism industry is on the rise again after a slump in the late 1990s.

An improved economic climate in the Far East and an influx of Asian tourists who may have held off from traveling here in recent years should help offset the fact that many foreign currencies are relatively weak against the dollar, said David Sheatsley, director of research for the Los Angeles Convention & Visitors Bureau.

“I wouldn’t say it’s going to be a banner year, but it’s not going to be a bad year either,” Sheatsley said. “We are seeing some recovery from the Asian financial crisis of a few years ago, and even though the (Asian tourism) rate has declined for four years, it has decreased slower in the past two years.

“There is a possibility that it might rise this year,” he added. “I think there’s some pent-up demand from people who haven’t traveled here for several years, and they may feel it’s time to go shopping.”

In 2000, about 5.6 million foreign tourists came to the L.A. area, including visitors from Canada and Mexico. That figure was up from about 5.5 million in 1999 and 5.4 million in 1998, according to the visitors’ bureau.

Of those, about 3.6 million tourists came from overseas.

Japan, the perennial leader in the number of overseas tourists coming to L.A., led the pack with more than 673,000 visitors, followed by Great Britain (419,000), South Korea (246,000), Australia (194,000) and Germany and Taiwan (193,000 each).

The number of Japanese visitors remains far below the 1998 and 1997 levels of 747,000 and 848,000, respectively, before the effects of the Asian financial crisis curbed Japanese travel.

“The drop in Japanese tourists seems to have bottomed out,” Sheatsley said, citing information received from a variety of sources, including tour operators and hotel bookings.

That would be good news indeed for local retailers.

Not only does Japan represent approximately 20 to 25 percent of the overseas tourists to L.A., the Asian sector adding in countries such as South Korea, Taiwan and Hong Kong/China represents about 40 percent or more in any given year. This group also has the highest average annual household income among the major overseas tourist sources.

And that becomes particularly significant when considering that the No. 1 activity among overseas visitors to Los Angeles is shopping (89 percent), according to visitors’ bureau research. Of the estimated $4.4 billion that overseas tourists spent in L.A. last year, approximately $1 billion came from Japan alone, with as much as $1.75 billion coming from Asia as a whole.

The financial impact of overseas tourists is hardly a revelation to Shoshana Puccia, tourism and marketing manager at the Beverly Center mall, which for years has had tourism marketing consultants in places like Japan and Great Britain.

“I can tell you that approximately 30 percent of the Beverly Center’s business is tourism-related,” Puccia said. “And the people that come here don’t come to buy little trinkets that say ‘L.A.’ on them. The trinkets they buy are designer shirts, blouses and purses.”

To encourage this sort of activity, the Beverly Center opened the California Welcome Center, operated in conjunction with the California Division of Tourism. The visitors’ center is designed to be yet another draw to a place that already has a high-profile image with well-heeled tourists. Billboards along the Santa Monica (10) Freeway and La Cienega Boulevard help enforce that profile.

“The image is already created,” Pucci said. “The Beverly Center is an icon. This gives another reason for them to come here and stay awhile.”

The Beverly Center undertook marketing pushes to coincide with a variety of international tourist seasons. There is the Chinese New Year in January-February; Japanese vacation seasons in spring and fall; the summer vacation season of July to mid-September, when most of the European tourists come; and the South American tourist season in December-January.

Pucci notes an increase in South American tourists, perhaps brought about by a decrease in the runaway inflation that has plagued countries like Brazil and Argentina.

“South Americans are great shoppers; they love to shop,” stated Pucci. “But when their economy is bad, the fluctuations in the interest rate discourage them from traveling and charging things.”

Jacqueline Relyea, director of international marketing and tourism for Bloomingdale’s, said the retailing giant’s stores in the Beverly Center, Century City, Sherman Oaks and Newport Beach are holding such activities as breakfast fashion shows, afternoon teas, style presentations, makeovers and spa programs for international tourists.

“We’ll do something different for each group, depending on who they are,” Relyea said, pointing out that a variety of foreign-language directories are available at Bloomingdale’s stores, as well as interpreters in major dialects such as Japanese, Korean, Chinese and Spanish.

“We know that shopping is the top activity among tourists, and we’re doing what we can to persuade them to come to our stores,” Relyea said.

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