Weak Economies May Ground Overseas Shoppers

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Byline: Betsy Vereckey Associated Press

NEW YORK Overseas shoppers who once arrived in the U.S. with empty suitcases to take back their holiday loot may decide to stay home this year amid high-priced airline tickets, unfavorable exchange rates and lingering economic woes.

Consumers in the U.S. are already holding the line on spending, spooked by grim economic news, Wall Streets financial crisis and rising layoffs. As the economic malaise makes its way around the globe, its less likely that tourists who gave U.S. retailers a boost in the past will decide to shop overseas again.

"In places like the U.K., France, Spain and Germany, people there are much more hesitant for the outlook in their own countries, so theyre probably much less likely to take a vacation in the U.S.," said Adam Weissenberg, vice chairman of tourism, hospitality and leisure for consulting firm Deloitte & Touche USA. "The rest of the world was doing OK through the summer, but October was just dismal."

The stronger dollar may also have travelers thinking twice about traveling thousands of miles for the holidays. After sliding for years, the dollar is gaining strength, making purchases in the U.S. less of a bargain than before.

Kate Lyes of Brisbane, Australia, said she aimed to spend a few hundred dollars while shopping in New York City for 10 days at Macys and other stores, but thats still down from the $500 the 19-year-old originally planned to spend a few months ago.

"Its the exchange rate," she said.

Airline tickets have also become more expensive, leaving many travelers pondering whether to make the trip. Passenger traffic on the worlds airlines during September fell 2.9 percent from a year ago, marking the first decline in five years, according to the International Air Transport Association.

"I dont think there will be the same level of travel as last year," Weissenberg said. "People will probably take vacations closer to home."

In previous years, international visitors have flocked to metropolitan areas like Chicago, Los Angeles and New York looking to catch a glimpse of retail landmarks like Tiffanys and Macys.

But this year, several retailers are already looking toward the holiday season with trepidation, expecting fewer tourists to walk through their doors.

Macys Inc. Chief Financial Officer Karen Hoguet told analysts earlier this month that tourism slowed in the second half of the third quarter in New York, the location of its famous Herald Square store.

"I suspect it has to do with tourism, but I cant tell you that definitively," Hoguet said.

At FAO Schwarzs flagship location in Manhattan, "tourism has declined noticeably," said Ed Schmults, the companys chief executive. "The U.S. is still a relative bargain, but its not the screaming deal it was in June and July."

As a way to jump-start sales to travelers, FAO Schwarz has duffel bags available that shoppers can use to take gifts back home with them. …