Fluctuations in Euro Can Have Profound Impact on Local Tourism

Anna Maria Island – Dr. Walter Klages knows the European market. An economist and statistician, he has had a long and successful career as an economic consultant, helping corporations and governments collect and understand data in order to maximize the effectiveness of their marketing. For the last two decades, he has been deeply involved with tourism and public research projects in Florida, including Manatee County's 2009 Visitor Profile Report.

On Monday, Klages was able to give the Tourist and Development Council feedback as to what was and wasn't working, as well as advice on managing the message, in the wake of the gulf oil spill. Among the interesting notations Klages made, was pointing out differences in the tendencies of the European traveler and the broad implications they can have on tourism.

"Unlike Americans, Europeans tend to take a great deal of time in planning their trips. Whereas many Americans will travel on the spur of the moment, Europeans will often book their holidays five or six months in advance", Klages told the Council.

He pointed out variations in occupancy and where the Euro was in the months preceding declines. Yesterday, as both the Euro and British Pound hovered near one-year lows, the currency market gave indications that we may see similar patterns.

The European Union has been plagued by financial crises in Portugal, Spain and Greece that have undermined confidence in its currency. Similar to America's banking crisis, the EU is dealing with the aftermath of member countries extending risky credit to already leveraged nations, by way of purchasing their debt bonds. In much the same way that U.S. banks continued to make risky loans to individual borrowers who were bad credit risks, EU members continued to buy bonds issued by countries with questionable repayment ability.

This weekend, the IMF, European Finance Ministers and its central bankers hammered out a relief package of loan guarantees, which they hoped would stabilize the currency. However, doubts about future interest rates and the ability to sustain growth throughout many of the smaller economies seem to have prevented the desired effect from taking shape.

What does that mean to local economies? Most importantly, it may indicate that last year's dip in tourism revenue may not rebound in sync with the U.S. economy, which looks to be recovering. After an unseasonably cold winter hampered tourism in the second half of high-season, the local economy is desperately hoping for a strong summer. While we have been fortunate enough to escape actual damage from the recent oil spill, the image of oil spewing into the same gulf waters that eventually reach our shores hasn't exactly been positive P.R.

Though Europe's woes are indeed salt in the wound, arming ourselves with such data does give local travel-related businesses the opportunity to gear more marketing toward the domestic sector, in an effort to offset a decline in European visitors. In-state vacationers are particularly attractive, because their proximity tends to keep them better informed as to the health of the beaches. If they do not have to book flights in advance, they are also less anxious about the possibility of the oil spill becoming a factor.

So, while the local economy has not exactly been dealt an attractive hand for 2010, efforts can be made to use such information to capitalize on a resurgent domestic economy. As things begin to get better, I'm sure many Americans could use a well-earned vacation. We'd best do what we can to lure them to our shores.