Weak Dollar is Encouraging Strong Tourism

A weak dollar is contributing to record numbers of foreign and domestic tourists to New York City. 

Foreign tourism growth has been particularly pronounced.  In 2010, the big Apple attracted 39 million domestic visitors representing a growth rate of close to 20% since 2003.  Foreign visitors numbered 9.7 million, reflecting a  growth rate of more than 100% for the same time period (see graph below). 

(source: NYC/the official Guide)

A quick stroll to Rockefeller Center will yield a cacophony of foreign languages.  According to NYC/the Official Guide, the top 6 countries by visitor provenance are the UK, Canada, France, Brazil, Germany and Australia.

The promenade at Rockefeller Center

Interestingly, many of the stores lining the promenade at Rockefeller Plaza are of European origin.  L’Occitane specializes in soaps, lotions and perfumes from Provence, a region of south-eastern France.   I questioned one of the salespersons there whether one would be better off purchasing their products in France.  She responded that in her experience, their store is typically overwhelmed by European and Asian tourists, attributing the demand to the weakness in the dollar and the absence of value added taxes.  Across the way is Crabtree and Evelyn, another international perfume and soap store.  The sales help there had a similar narrative.  There was no shortage of European tourists.  A little further down, abutting the skating rink, is Lego, the Danish toy construction store.  Upon exiting, several shoppers  attested to the attractive prices relative to their home country.

A weak dollar does not only mean more foreign tourists.  It also means fewer American tourists are traveling abroad.  Events & Co. is a Paris based company specializing in high end, specialized tours catering to wealthy Americans.  Rachel Kaplan, the company president, notes that her business mix is more diversified.  “I now have more Australian clients, and more from emerging markets. Many Americans convert funds from dollars into euros and have sticker shock.”

So while the growth in foreign tourists is off the charts, domestic visitors, who may have otherwise ventured abroad,  are also arriving in record numbers, albeit at a slower rate.  This all translates to record levels of tourist spending.  Visitor expenditures in 2010 totaled $31.5 billion, doubling the level attained in 2001.

In the absence of a major currency reversal, New York can expect a continued influx of visitors, both domestically and from abroad.