From Warfare to Fare Wars

By Christine Gorman

Six years ago, a train strike derailed Marilyn Manassee's plans to tour the Spanish countryside. Then, this winter, just when she was ready to try again, the Persian Gulf war came along, and she delayed putting her money down. "It was not fear of terrorism as much as uneasiness," says the retired music teacher from Denver. "It was the idea of spending this much money and having to look over my shoulder to see if it was safe." With the war over, Manassee is finally set to take her long-postponed trip. "I have been dreaming about this," she says. "Now I feel comfortable going."

Manassee is not alone. After two solid months of anxiously watching the war on television and preparing for the worst, euphoric Americans once more feel they deserve to get out of the house and take a vacation. Opinion polls suggest that consumer confidence is making a comeback. According to a mid- March telephone survey that will be published this week by D.K. Shifflet & Associates, a Virginia-based tourism-research firm, 76% of the more than 200 respondents said they expected to travel domestically or abroad in the next six months -- up from only half who had planned to do so when polled during the war. "Once the war ended, the floodgates opened," says Linda Scott, marketing director for American Express Travel in Chicago. The hottest tickets for her Midwestern customers: Caribbean cruises and package vacations to Mexico and Hawaii.

While the ambling spirit may be willing, however, the recession has weakened many tourists' ability to pick up and go. "After the war there were a lot of hopes that things would rebound by themselves," says James Cammisa Jr., who publishes the monthly newsletter Travel Industry Indicators. "The airlines waited two to three weeks, hoping that pent-up demand would be reflected in the bookings. It wasn't." Already buffeted by a surge in fuel costs after Iraq's invasion of Kuwait, travel companies watched in horror as air carriers' revenue-passenger miles for February plunged 26.8% internationally and 5.5% in the U.S. By mid-March, the firms realized that to surmount travelers' reluctance, they would have to launch their own version of the "Hail Mary" campaign that led the allies to victory in Iraq.

Enter the age of the Cheap Deal. No single maneuver has been more dramatic than British Airways' pledge to distribute 50,000 free round-trip tickets, good for travel to Europe, Asia, the U.S. and elsewhere, beginning April 23. Using forms supplied by the airline, contestants have filled out an estimated 5.5 million entries. Desperation clearly motivated BA, whose global traffic has dropped 30% since last year. The airline had canceled its Concorde service to Washington and reduced Concorde flights between London and New York City from two to one a day. Even with the alluring freebie gambit, BA does not expect to regain the peak traffic levels attained during 1989 until next year -- at the earliest.

Hertz UK has piggybacked BA's bold scheme by offering 200 free car rentals on April 23. Starting this week, Avis Europe is tempting American drivers with a $21-a-day rate and unlimited mileage. Better still, to buffer travelers against dizzying currency fluctuations, the price is guaranteed in U.S. dollars for up to a full year. The dollar's dramatic 15% rise in value against many European currencies over the past seven weeks is also encouraging American tourists to pull out their charge cards and go.

Some of the most attractive airfares are attached to flights that originate in Los Angeles. Air Canada has extended its low winter fares through the summer. An economy round-trip ticket between Los Angeles and Toronto that regularly costs $1,044 can now be purchased for as little as $309. Until the end of this week, Qantas, the Australian airline, is offering a number of round-trip tickets for travel in April, May and July from Los Angeles to Sydney, Brisbane or Melbourne for the unheard-of bargain price of $799. "In the first 11 days of our promotion, we sold 3,000 of these low-ball tickets," says Richard Porter, a Qantas senior vice president. "This is a fare to jump- start tourism."

Not to be outdone, U.S. carriers have plastered the newspapers with advertisements promoting their own low, albeit restricted, fares. For $418 round trip, travelers can fly from the West Coast to London, Paris or Frankfurt on United. Northwest Airlines will give a free round-trip domestic ticket to any passenger who flies to Asia between April 1 and June 15. Even the hotel chains are getting in on the act. This week Marriott Hotels, which suffered a 5% to 10% drop in inquiry calls during the war, will launch its first national television campaign in five years.

Some cities have started looking for their tourist dollars closer to home. "The Persian Gulf war gave rise to a resurgence of patriotism in the U.S. that in the long run may translate to more people staying Stateside for their vacations this year," says Merrett Stierheim, president of the Greater Miami Convention and Visitors Bureau. In mid-March his bureau unveiled the first in a series of advertisements for a $2 million year-long campaign designed to show off the city's colorful Caribbean culture. In one spot, hometown singer Gloria Estefan coos to her parrot, "We just love coming home to Miami, don't we Coco?"

Will these extravagant promotions resurrect the tourism trade? "Consumer fundamentals remain weak," Cammisa warns. His advice to industry professionals: "Don't fix the hotel or paint the ship for the people who are coming. They aren't going to be coming." But Cammisa's gloom may prove misguided. American Airlines booked 1 million reservations in the first week after it lowered its prices in mid-March. American Express reports that the low airfares are working so well that its travel agents are having trouble finding space on flights to Europe.

Travel companies may also take heart from signs that the U.S. economy is not doing as badly as many experts had feared. The U.S. Commerce Department announced last week that its index of leading economic indicators jumped 1.1% in February, the first rise since last June and the biggest in three years. "The worst is over," says Transportation Secretary Samuel Skinner. "People have begun to fly again." Americans, it seems, are in a mood to travel -- even if the wallets of many dictate that they should stick closer to home.

With reporting by Cathy Booth/Miami, Anne Constable/London and Elizabeth Rudulph/New York