Where in the world are we? Recreation and Tourism
Because Eagle County is home to two of the worlds top international ski resorts, our place in the global economy matters.The United States has become a travel bargain, with the sagging dollar luring more international visitors to the ski slopes. That also means more people staying in lodges and hotels, riding in taxis, eating in restaurants, leaving more tips and more people purchasing retail goods all of which means locals have a chance to make more money.
How you net out personally will depend on how much you consume goods made abroad.It should be a boon to the tourist industry, said James Markusen, economics professor at University of Colorado, Boulder. The weak dollar makes it more affordable for foreigners to buy.Thats a switch for the ski mountain with the priciest single-day lift ticket in the country. But everything seems to be relative.The weak dollar right now creates an environment where every tourism activity in the U.S. will be on sale, said Bill Jensen, chief operating officer for Vail Mountain. Colorado is a popular destination with international tourists.Last year, during the first year of a weakening dollar, Vail Resorts saw a 10 percent increase in the number of international visitors, said Adam Aron, the ski companys chief executive.Between the dollar falling more and people realizing vacationing in the U.S. is cheaper than it has been, it will help us, Aron said.Headed the other direction, Jan Strauch, owner of Overland & Express Travel in Edwards, said he hasnt seen locals curtail their travel to Europe because of the weak dollar.Business seems to be brisk, he said. It definitely should be good for the tourism business here. It cant hurt.
Our exportTourism is an export industry, Markusen said. The weak dollar makes it more affordable for foreigners to buy these exports.The dollar now is worth 30 percent less than it was last year at this time and is at an all-time low with the euro, a currency shared by a score of European countries. When euros are exchanged for dollars, a single euro now is worth $1.30. The exchange rate with currencies south of the border arent quite as disparate.Last year one in 10 of the 1.6 million skiing visitors to Vail Mountain came from abroad with the most international visitors from the United Kingdom, followed by Mexico, South America and Germany, Jensen said. The dollar is weaker against all of those currencies. The beneficial thing about a weak dollar is you can generate increased visitation, he said. Most of the expense of the tourism industry is created inside our own economy.
A dollar disparity was enjoyed by British Columbias Whistler/Blackcomb and other Canadian ski resorts in the late 1990s and early in the first years of the new millennium, Jensen said. The Canadian dollar then was weak compared to the American dollar and visitors surged north, both stretching their spending power and boosting Whistlers skier numbers and popularity.But the ski boot is now on the other foot, Jensen said.That advantage has shifted away from Canada and back to Colorado, he said. Were hoping for a boom in tourism. Colorado is a popular winter and summer destination for European travelers.A mild multiplier may be realized by domestic ski resorts because American skiers wont be as apt to head north of the border for their snow sports, Aron said. Girly-man dollarEconomists say the dollar is weak because of record deficit spending by the U.S. government and a record trade deficit.The budget deficit eats into the value of the dollar the same way a teenagers profligate use of a credit card eats into personal income. Until huge deficits and trade imbalances exerted themselves in the last decade, the dollar was been seen as a sound currency by investors, economists said.
President Bush told world leaders at the Asia Pacific Economic Cooperation summit in Chile he is committed to halving the U.S. deficit. That deficit now stands at $7.4 trillion and Congress recently approved an additional $800 billion increase in what the U.S. can owe.To cover the deficit, the government issues Treasury bonds, Markusen said. Anyone can buy them. Some $250 billion are being bought by the Japanese and Chinese. We have to pay them back some day.As the deficit grows, the government has to issue more, diluting the value of the dollar, Markusen said.That also creates uncertainty about the true comparative value of the dollar relative to other currencies. In fact, investors who had bought deeply into U.S. investments are now changing their investment strategy and investing in the euro, Markusen said. Thats exacerbated by the trade deficit because it requires more dollars to pay for the goods that are purchased abroad, he said.The euro has proven durable and a very credible alternative to the dollar, Markusen said. A lot of the dollar demand has shifted to the euro. Deficit government spending is just another bill that will need to be paid and it is hanging over the American economy.The United States potential to run up a larger deficit caused the International Monetary Fund, an organization that seeks to create global monetary cooperation and stability in its 184 member nations, to issue a report predicting American deficit spending will likely continue.Hard travelingBut the relative strength of currencies to each other is a constantly shifting tableau. Its just a question of how far the dollar will dip before rebounding into another economic cycle.Dont look for the dollar to flex its economic biceps any time soon. Markusen said currency cycles typically take five or more years to reverse themselves, and sometimes longer.If the dollar remains weak too long, it could cause jump-start inflation, which has been running at 2 percent, according to Federal Reserve Chairman Alan Greenspan. He has been cautiously raising the rate charged for borrowing money. A weak dollar also means goods and services purchased overseas would cost more, forcing American businesses to charge more to cover the additional expense.Still, there may be another upside to the weak dollar. Foreign investors may see real estate here which has been selling at a torrid pace for the last year as a good investment, he said.Vail Colorado