FORECAST DARKENS ON TRAVEL TO U.S.;STATES LOWER TOURISM BUDGETS AS WEAK DOLLAR STRUGGLES ABROAD

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The weak dollar should have been good news for U.S. tourism-a harbinger of more foreign travelers this year-but it hasn't. The dollar, unable to stretch as far as last year, is pinching already strained U.S. tourism offices' international ad budgets.

But the Catch-22 is breeding creative advertising solutions among state and local tourism groups, pitching the U.S. to travelers from Europe, Asia and Latin America.

Washington's U.S. Travel & Tourism Administration is predicting fewer international visitors to the U.S. in '95. Its crystal ball shows the number of arrivals from outside the U.S. dropping 4.2% from last year to 43.8 million, and international tourism revenue slipping 1.4% to $56.4 billion.

If the prediction is right, for the fifth straight year the U.S. will lose market share in either world arrivals or receipts. And for the second straight year, the U.S. will lose market share in both categories.

Japan, the U.K. and Germany, the markets where the U.S. spends most heavily on tourism ads, lead the world in travel to the U.S. German travelers will increase 1% in 1995, USTTA predicts, but fewer Japanese tourists are likely to come, following the Kobe earthquake. Canadian visitors are expected to decrease 10%, and U.K. visitors 12%, due to sluggish economies.

But where international tourists go-or if they go at all-depends on marketing and advertising.

Fifteen U.S. states had lower domestic and international travel ad budgets last year than in 1993. Four states' budgets were flat, and two flourished: Mississippi, up 290%, and Maine, up 187%.

The Greater Miami Convention & Visitors Bureau depends on trade campaigns in markets such as the U.K., Germany, Argentina, Brazil, Venezuela and Canada. But the bureau said it doesn't have the budget for consumer ads.

It's a similar story at the Great Lakes Governor's Council, where the issue of currency fluctuation "is touchy because advertising is so expensive," said Brad Weber, executive director of tourism for the Great Lakes North America division. "For us to go out and buy advertising [abroad] is just cost-prohibitive."

And media is becoming a careful consideration. The Illinois Bureau of Tourism recently moved its account to Foote, Cone & Belding, Chicago, from Ogilvy & Mather for a campaign for Canada, the U.K. and Germany.

Exchange rates will determine the media Illinois buys, said Gail Orr, international marketing manager. "We want to see what our dollar will buy over there."

Other tourism offices are taking advantage of co-op advertising and using appropriate media.

One such office is the Scottsdale, Ariz., Chamber of Commerce, which organized a 60-page ad section in a February issue of Germany's Stern weekly magazine-costing only $250,000. The section touted the region as a destination, highlighting Scottsdale and Western states.

Utah, Arizona, New Mexico and Colorado are banking on the 2 million Germans expected to visit the U.S. this year. And the co-op campaign, handled in-house, was designed to stretch thin budgets, said Rachel Sacco, director of the Scottsdale chamber's convention/tourism division. "By using co-op dollars, we ended up spending very little on this," she said.

The Scottsdale idea was well received by Stern. Ms. Sacco said publications eagerly offer ways for states to stretch their dollars.

Maine is also taking a regional approach with an in-house program. "By pooling our resources through the Discover New England program [of themed collateral material], we have greater power to attract visitors to our part of the country," said Hilary Sinclair, Maine's travel director.

The Southwest is looking south for visitors. Texas made a $400,000 buy on Mexican network Televisa, said Steve Dalbey, senior VP-group account director at GSD&M, Austin, handling the state's $9 million tourism account. The state will get an equal amount of free airtime because it paid upfront.

San Antonio's Convention & Visitors Bureau, handled by the Atkins Agency, is spending nearly $200,000 on Mexican print ads and $10,000 more on a single buy in an English-language Mexican quarterly.

Many regional organizations don't spend large sums in international media because it's an inefficient use of limited funds, said Gary Esolen, exec VP, the New Orleans Tourism Marketing Corp.

"Media placement is not as cost-effective as is developing personal relationships with tour wholesalers," Mr. Esolen said. For the third year, New Orleans is promoting tourism on a $300,000 budget through wholesalers in France, the U.K., Germany and Mexico.

Peter Combaz, managing director of the International Advertising Association, New York, has another marketing theory. "A weak dollar [should have] little or no influence on advertising," he said. "You don't do less or more. You [spend] the same."

But because funding for many state tourism agencies in the West is declining or gone, most marketing has fallen on private efforts by businesses that depend on tourism. Such efforts work in Nevada, where the Las Vegas Convention & Visitors Authority is the only public entity doing significant advertising. And business is booming, said Joan Jose, marketing director.

"Wholesalers are having a hard time getting room blocks in Vegas," Ms. Jose said. "We are No. 7 or 8 as an international destination, and we aren't even a direct flight [from Europe] yet."

Las Vegas greets nearly 3 million international visitors a year, more than half from Canada. It advertises in more travel trade publications overseas than TV, in ads by R&R, Las Vegas.

More ad dollars could help Washington state improve its performance, with visitors down 14% last year. "We generate $15 million in new revenue and tourism in a $7.2 billion industry here," said Betsy Gable, marketing director of the Washington State Tourism Department. "With just a little more money we could probably double or triple that."

Oregon officials say the state has only $190,000 for advertising for 1994 and 1995, handled in-house.

But funds are drying up in Oregon and in California, which does in-house co-op advertising with overseas magazines. The state gets free ads in exchange for endorsing a magazine and providing lists of tourism industry businesses-to which the magazine sells space.

New York state will spend $10 million on tourism for the fiscal year ended March 31, the New York Department of Economic Development said. The state views tourism support as an investment, even as many other agencies are being downsized, said Bert Rotman, director of communications.

New York focuses on event programs and special supplements, but it runs co-op tourism ads with Delta Air Lines and Japan Air Lines in Germany, Japan and the U.K.

New York City's agency, Ogilvy & Mather, New York, is preparing a new "I Love N.Y." TV campaign, and print for foreign markets.

But the biggest budget in the world won't always help. Germans were scared off when two of the country's citizens were murdered in south Florida in 1993, and tourism there hasn't recovered, said Ginger Watters, senior VP at the state's agency Fahlgren Benito, Tampa.

"If you're German, it doesn't matter if you see all the ads in the world," Ms. Watters said. "It won't convince you to come to Florida."

Florida may replace its value-oriented German advertising with promotional efforts to bring tour directors to the state.

Miami officials said the city's $1.5 million budget can't repair its violence-torn image. Most advertising by Miami Visitors Bureau's agency, Turkel Schwartz & Partners, Miami, runs domestically, said Margaret Megee, VP-marketing and tourism.

Contributing to this story: Jo McIntyre, Andrew Cranin, Jeffery D. Zbar, Peg Masterson, Charles Siler, Dagmar Mussey and Candace Talmadge.

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