Business: U.S. travelers getting more bang for their buck By JAMEY KEATEN, Associated Press

PARIS (July 23, 2001 6:18 a.m. EDT) - A strong U.S. dollar may be cause for grumbling among economic policy makers worried about global recession, but it's certainly pleasing Katie Ford. For the 17-year-old tourist in Paris, it's a shopper's dream come true.

"It sure is helping us buy a lot more clothes," said Ford, a high-school senior from Swarthmore, Pa., clutching a stuffed shopping bag as she laughed with friends on the Champs-Elysees.

Nicole Hayes, of Boise, Idaho, found the cost of her hotel stay to her liking.

"We paid about $50 a night for a hotel room practically across the street from Notre Dame," said Hayes, 26. "If we'd been in New York City, or any other tourist attraction like that in the U.S., we'd be paying way more than that."

Even in the coffee houses of Amsterdam, where smoking marijuana is legal, some Americans are getting more bang for their buck.

"Pot is much cheaper here," said 26-year-old Frank Burdo of Philadelphia, puffing on a hashish joint with friends. "So I say: 'Let's take two,'" Burdo added with a grin.

The dollar goes a lot further than it once did in Europe. Despite a recent dip, it's near its record high against the euro, which will become the sole currency for 12 European nations in 2002.

But what may be good for American travelers and Europe's tourism industry can be bad for economic growth.

"Overall, the weak euro is negative for the global economic outlook," said Antoine Brunet, a Paris-based economist at HSBC bank, saying it harms external trade in the United States and threatens inflation in Europe.

A strong dollar makes U.S. goods less competitive, by making European products relatively cheaper, and it reduces revenue from foreign sales for U.S. firms, he said.

In addition, the dollar is the currency for international oil sales, meaning European motorists must pay more to fill up their tanks. That can contribute to inflation - one of the biggest concerns of European monetary policy makers.(I did not know that)

The European Central Bank, which sets monetary policy for the euro zone, could be forced to lift interest rates to support the euro and stem inflationary pressures. But that would hurt economic growth by making the cost of borrowing money more expensive for companies and consumers.

Still, a weak euro has helped lure tourists to Europe and fuel a boom for tourism-related industries. In Berlin, overnight hotel stays in the first four months of 2001 rose 13 percent from 2000 levels, according to the German Travel Agents Association.

"We've seen a big increase in tourism out of America this year, and it's not because Germany has lots of beautiful beaches and nice weather," said spokesman Christian Boergen.

Maison de France, a public-private partnership that promotes tourism, expects visits by Americans in France to rise 4 percent to 5 percent this year, up from last year's record 3.2 million. In Greece, the National Tourism Organization expects a 15 percent increase, up from 220,000.

Against the backdrop of a weak euro, leaders of the world's biggest economic powers are meeting this week at the G-8 summit in Genoa, Italy, at a time of concern about the health of the global economy.

Bellwether U.S. companies such as Nike, International Paper, Dupont and Sara Lee have cited negative effects of a strong dollar on profits and jobs.

Growth in the United States - the engine of the world economy in the mid-1990s - has slowed to just 1.2 percent per year, and there have been signs that Europe may not be immune to the U.S. slowdown. Japan, the world's second-biggest economy, could be on the brink of a new recession.

The euro has been valued at between 85 and 87 U.S. cents for several months, after starting the year near 95 cents. It's down more than 25 percent from the dlrs 1.17 when it began trading in January 1999.

Brunet said the euro is likely to continue to face downward pressure until the end of 2001, particularly because longer-term U.S. growth rates are still higher than those in Europe. But after that, he said, the euro could bounce back.

European travel experts agree, saying the window of opportunity for bargain-hunting tourists may close when euro notes and coins begin circulating next year.

"When the cash and coins come out in January, it is likely the exchange rate will rise again, and the American advantage will disappear," said Boergen. "It's better to take advantage of it while the opportunity exists."

-- Guy Daley (guydaley1@netzero.net), July 23, 2001