Vacancies, more deals for tourists

After record growth, travel businesses are reporting the end of a long boom.

To Jamie McGoldrick, peering out from his tiny ticket booth on Fisherman's Wharf, everything appears normal.

Pier 39 is teeming with tourists, shivering in their short sleeves and stopping at every third step to point and pose, click and gawk. In the flag-flapping wind, the accents of dozens of different states and homelands blend into the salt air as seamlessly as the smell of fresh popcorn and the tang of seawater.

But the blond-haired and clear-eyed Mr. McGoldrick knows something more: Ticket sales for his Gray Line tours of the city are down 5 to 10 percent. The same is true for competitors and nearby hotels, which have seen occupancy rates slip.

From here to New York, the story is the same. After years of record growth, tourism is flat or even declining - with some tourist havens like Orlando, Fla., facing the worst summer for almost a decade.

At this point, the situation is not a crisis. Yet, as the cooling economy keeps more Americans close to home, and the strong dollar leads tourists from abroad to spend less, boom times for travel businesses appear to be over. To cope, some hotels are allowing employees to take time off during what would normally be the high season, and everyone - from inns to airlines - is offering deals to attract those tourists who continue to sightsee and spend.

"[This summer] we have a more cost-conscious consumer being a little more fickle about their vacation decisions," says Cathy Keefe of the Travel Industry Association of America in Washington. "They're shopping around and staying with relatives."

National surveys won't be released until the fall, but the Federal Reserve's "beige book," a region-by-region analysis of economic trends released last week, noted that tourism was being hurt by the economic slowdown. Other local reports also suggest that leisure trips are stagnating or declining:

• After explosive growth for several years, the tourism market has flatlined in Las Vegas. Hotel and motel occupancy is down 1.7 percent compared with 2000.

• Tourism in Atlanta is down, perhaps as much as 20 percent, according to the Atlanta Convention and Visitor's Bureau.

• In California's Napa Valley, it has fallen 10 to 20 percent.

• New York City recently lowered its 2001 tourist forecast by 2 million.

• Single-day visits to Orlando, Fla., declined 11 percent from 1999 to 2000, and the tourism industry regionwide increased by only 1.6 percent, the lowest number since 1992. Both trends are expected to continue in 2001, for which data are not yet available.

Hotels: Time to take action

In some ways, the slowdown was inevitable. The previous two years had broken records for tourism across the United States, straining hotels, shops, restaurants, and tour operators to their limits. Now, many businesses are finding themselves overstaffed.

"I'm normally at 90 percent occupancy or more in July and August," says Jon Handlery, senior vice president of The Handlery Union Square Hotel in San Francisco. "That's not going to happen. We're off even for a normal year."

Throughout San Francisco, hotel occupancy rates are down almost 10 percent from last year, and shop owners insist that foreign travelers are buying less. For Mr. Handlery, that has meant taking a close look at everything in his hotel to make sure it hasn't gotten "a little fat." He hasn't had to resort to layoffs, but he's allowed more staff to take their vacations in the summer, instead of asking them to delay their plans to the fall, as is normally the case.

"Now we're saying maybe this is a good time," he says.

Other hotels have taken more active steps to lure tourists. For the first time in several years, hotels such as the Radisson at Fisherman's Wharf are offering special packages that include extras like dinner at a posh restaurant or tickets to a museum.

"We are concerned because all hotels didn't meet their budgets for the second quarter," says Madeleine Villar of the Radisson, who has worked in sales for various San Francisco hotels for 20 years. "This year is similar to the '80s, when there was an [economic] fall, or maybe 1992."

The downturn seems to have hit hardest in expensive places that draw tourists mostly from far away, such as San Francisco, Las Vegas, and Orlando - with its $50-a-day theme parks. By contrast, Cape Cod in Massachusetts has fared better, largely because most of its tourists come from nearby New York or Boston.

"We know that Orlando is off, but people aren't traveling that far away," says Wendy Northcross, head of the Cape Cod Chamber of Commerce. "We've been able to remind people that Cape Cod is unique and close by."

That doesn't mean the Cape and islands have escaped the national trend, though.

Edgartown Bicycles on Martha's Vineyard is having its worst season in five years, and rentals at nearby Cutler RW Bikes are down 25 percent this summer. Some shops are even offering free delivery of daily rentals.

"They're making deals they normally don't make," says Clint Slone of Edgartown Bicycles. "It shows that ... maybe they're hurting for business."

A welcome break

Like most others, Mr. Slone says the decline won't hurt his business too badly.

Some businesses are even grateful for it; after two years of scrambling to hire new workers and meet unprecedented demand, a slower summer offers a welcome respite.

"Based on the number of calls, we're down about 20 percent," says Scott Cooper, who runs Napa Valley Tours in Angwin, Calif.

"But we usually have more business than we can handle, and a lot of times have to refer people to other places.... I don't think this is going to break anyone."

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