TIME: Almanac 1993/TIME Almanac 1993.iso/time/040891/0408200.000

Text File | 1992-08-28 | 6.8 KB | 151 lines

                                                                                BUSINESS, Page 49

From Warfare to Fare Wars


After staying home through a bleak winter of conflict and
recession, Americans are eager to bust loose -- and travel
companies are wooing them

By CHRISTINE GORMAN -- Reported by Cathy Booth/Miami, Anne
Constable/London and Elizabeth Rudulph/New York


    Six years ago, a train strike derailed Marilyn Manassee's
plans to tour the Spanish countryside. Then, this winter, just
when she was ready to try again, the Persian Gulf war came
along, and she delayed putting her money down. "It was not fear
of terrorism as much as uneasiness," says the retired music
teacher from Denver. "It was the idea of spending this much
money and having to look over my shoulder to see if it was
safe." With the war over, Manassee is finally set to take her
long-postponed trip. "I have been dreaming about this," she
says. "Now I feel comfortable going."

    Manassee is not alone. After two solid months of anxiously
watching the war on television and preparing for the worst,
euphoric Americans once more feel they deserve to get out of the
house and take a vacation. Opinion polls suggest that consumer
confidence is making a comeback. According to a mid-March
telephone survey that will be published this week by D.K.
Shifflet & Associates, a Virginia-based tourism-research firm,
76% of the more than 200 respondents said they expected to
travel domestically or abroad in the next six months -- up from
only half who had planned to do so when polled during the war.
"Once the war ended, the floodgates opened," says Linda Scott,
marketing director for American Express Travel in Chicago. The
hottest tickets for her Midwestern customers: Caribbean cruises
and package vacations to Mexico and Hawaii.

    While the ambling spirit may be willing, however, the
recession has weakened many tourists' ability to pick up and go.
"After the war there were a lot of hopes that things would
rebound by themselves," says James Cammisa Jr., who publishes
the monthly newsletter Travel Industry Indicators. "The airlines
waited two to three weeks, hoping that pent-up demand would be
reflected in the bookings. It wasn't." Already buffeted by a
surge in fuel costs after Iraq's invasion of Kuwait, travel
companies watched in horror as air carriers' revenue-passenger
miles for February plunged 26.8% internationally and 5.5% in the
U.S. By mid-March, the firms realized that to surmount
travelers' reluctance, they would have to launch their own
version of the "Hail Mary" campaign that led the allies to
victory in Iraq.

    Enter the age of the Cheap Deal. No single maneuver has
been more dramatic than British Airways' pledge to distribute
50,000 free round-trip tickets, good for travel to Europe, Asia,
the U.S. and elsewhere, beginning April 23. Using forms
supplied by the airline, contestants have filled out an
estimated 5.5 million entries. Desperation clearly motivated BA,
whose global traffic has dropped 30% since last year. The
airline had canceled its Concorde service to Washington and
reduced Concorde flights between London and New York City from
two to one a day. Even with the alluring freebie gambit, BA does
not expect to regain the peak traffic levels attained during
1989 until next year -- at the earliest.

    Hertz UK has piggybacked BA's bold scheme by offering 200
free car rentals on April 23. Starting this week, Avis Europe
is tempting American drivers with a $21-a-day rate and
unlimited mileage. Better still, to buffer travelers against
dizzying currency fluctuations, the price is guaranteed in U.S.
dollars for up to a full year. The dollar's dramatic 15% rise
in value against many European currencies over the past seven
weeks is also encouraging American tourists to pull out their
charge cards and go.

    Some of the most attractive airfares are attached to
flights that originate in Los Angeles. Air Canada has extended
its low winter fares through the summer. An economy round-trip
ticket between Los Angeles and Toronto that regularly costs
$1,044 can now be purchased for as little as $309. Until the end
of this week, Qantas, the Australian airline, is offering a
number of round-trip tickets for travel in April, May and July
from Los Angeles to Sydney, Brisbane or Melbourne for the
unheard-of bargain price of $799. "In the first 11 days of our
promotion, we sold 3,000 of these low-ball tickets," says
Richard Porter, a Qantas senior vice president. ``This is a fare
to jump-start tourism."

    Not to be outdone, U.S. carriers have plastered the
newspapers with advertisements promoting their own low, albeit
restricted, fares. For $418 round trip, travelers can fly from
the West Coast to London, Paris or Frankfurt on United.
Northwest Airlines will give a free round-trip domestic ticket
to any passenger who flies to Asia between April 1 and June 15.
Even the hotel chains are getting in on the act. This week
Marriott Hotels, which suffered a 5% to 10% drop in inquiry
calls during the war, will launch its first national television
campaign in five years.

    Some cities have started looking for their tourist dollars
closer to home. "The Persian Gulf war gave rise to a resurgence
of patriotism in the U.S. that in the long run may translate to
more people staying Stateside for their vacations this year,"
says Merrett Stierheim, president of the Greater Miami
Convention and Visitors Bureau. In mid-March his bureau unveiled
the first in a series of advertisements for a $2 million
year-long campaign designed to show off the city's colorful
Caribbean culture. In one spot, hometown singer Gloria Estefan
coos to her parrot, "We just love coming home to Miami, don't
we Coco?"

    Will these extravagant promotions resurrect the tourism
trade? "Consumer fundamentals remain weak," Cammisa warns. His
advice to industry professionals: "Don't fix the hotel or paint
the ship for the people who are coming. They aren't going to be
coming." But Cammisa's gloom may prove misguided. American
Airlines booked 1 million reservations in the first week after
it lowered its prices in mid-March. American Express reports
that the low airfares are working so well that its travel agents
are having trouble finding space on flights to Europe.

    Travel companies may also take heart from signs that the
U.S. economy is not doing as badly as many experts had feared.
The U.S. Commerce Department announced last week that its index
of leading economic indicators jumped 1.1% in February, the
first rise since last June and the biggest in three years. "The
worst is over," says Transportation Secretary Samuel Skinner.
"People have begun to fly again." Americans, it seems, are in a
mood to travel -- even if the wallets of many dictate that they
should stick closer to home.