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From Tuscany to Trafalgar square, tourism in slump

In a pine forest on the Tuscan coast, Simone Cardini says vacationers are pinching pennies.

A tenth fewer Germans have turned up so far this year at Le Marze, the holiday camp he runs. Those who have "are careful," Cardini said. "They eat out less and order two beers instead of four."

Slumping stock markets and rising unemployment mean Europeans are spending less and staying closer to home. Americans are doing the same amid the fallout from last year's terrorist attacks and a weaker dollar. It's a twin threat to an industry with 9 million workers that accounts for 5.5 percent of the 15-nation EU economy.

Europe, the world's No. 1 tourist destination, faces its slowest vacation season since 1996, travel agents and hotel managers say.

TUI AG, Thomas Cook AG, MyTravel Group Plc and First Choice Holidays Plc, Europe's biggest tour operators, expect profits to decline this year. NH Hoteles SA, Spain's second-largest hotel operator, said profit fell 17 percent last quarter.

Airlines, reeling from their worst year, are selling fewer tickets. In the 10 months since the Sept. 11 attacks, European air traffic has fallen 11.3 percent from the year-earlier period, the Association of European Airlines said. Tourist demand won't return to pre-attack levels until early 2004, according to the London-based World Travel & Tourism Council.

The slowdown comes after some 700,000 job cuts announced in Europe during the past year, according to Credit Suisse First Boston. The economy of the dozen nations sharing the euro grew 0.3 percent in the first quarter, and companies expect a drop in exports because of the euro's 12 percent rise against the dollar since January.

More Europeans are staying put after the Dow Jones Stoxx 50 index fell by a third so far this year, erasing 1.1 trillion euros in the value of stocks. The UK's key FTSE index dropped by a quarter.

A European Union survey of 25,000 consumers showed that an index of consumer confidence dropped to minus 9 in June from minus 8 in May.

"Germans are spending their holidays closer to home this year or booking at the last minute," said Nina Dumbert, a Thomas Cook spokeswoman. Bulgaria, Croatia and destinations "within driving distance" are popular, she said.

UK travel agents say they expect their first yearly decline in holiday bookings in six years. Britons are favoring short stays in Paris or Amsterdam and holidays to relatively cheap destinations such as Greece, where British travel this year hit an all-time high, they said.

Americans pared travel after last year's attacks, and the dollar's decline isn't helping boost their confidence, said Leslie Cherfils, sales director at the four-star Carlton Intercontinental Hotel in Cannes, where revenue is down.

"It's not a great way to lure Americans to Europe," said Cherfils, whose hotel charges at least 370 euros (US$370) for a night's stay along Cannes' palm-tree-lined promenade.

The turn-of-the-century Hotel Negresco in Nice, which has hosted James Dean and Clint Eastwood in its seafront suites, said US visits have fallen 15 percent this year. "The shock of Sept. 11 hasn't been absorbed," said hotel manager Guy Bellet.
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