Strong dollar could scare tourists away from U.S.
By Jilian Mincer
(Reuters) - New York restaurant owner Jeremy Merrin has seen business droop in recent weeks at his Havana Central eatery in Times Square. The reason: not enough international tourists.
"We’re fighting a double-whammy,” said Merrin, who owns three restaurants and is on the board of the New York State Restaurant Association. “Not only is the dollar going up and making things more expensive, Europe as a whole is not doing well.”
International tourists to the United States spend more than $200 billion annually on travel, hotels, dining and shopping, but growth in 2015 is expected to decelerate as would-be visitors balk at the stronger dollar and grapple with weaker economies at home.
"That could impact the length of their stay and the composition of their spending in the United States," said David Huether, senior vice president, research, at the U.S. Travel Association, which sees the influence of the stronger dollar becoming more severe in 2015's second half.
The problems of the tourism industry are not the only ill effects of currency appreciation. The strongest dollar in a decade, by some measures, is causing some U.S. manufacturers to cut financial forecasts as the costs of U.S. exports rise. U.S. companies with foreign operations also will see lower revenue as offshore earnings are converted back into dollars.
Travel experts hope some of the drop in spending in the United States will be made up for by increased tourism from China, where visitors can now get a visa that lasts 10 years. Lower gas prices and a stronger U.S. economy also may encourage more domestic travel, they said.
Still, some retailers, including Tiffany and Co (TIF.N: Quote), are already feeling the impact.
"The strong dollar has created headwinds for foreign tourists in the United States," said Mark L. Aaron, vice president of investor relations at Tiffany, which warned of slower sales to tourists at its flagship New York store. Continued...