LONDON – Despite its retreat from a peak of nearly $1.60 last April, to about $1.40 now, the euro's muscle remains formidable. That's not to mention the continued strength of Britain's pound – now about $1.76.
Because of those unfavorable exchange rates, cost has become a major factor in planning a European business trip.
"I fly business class to London but stay with a friend," said Jordan Ringel, a New York attorney with international clients.
When traveling outside the euro zone to cities like Shanghai or Buenos Aires, he says he customarily stays in Four Seasons and other upscale hotels. Many other American business travelers use the same tactic of finding alternatives to pricey hotels, from bed and breakfasts to long-lost relatives.
Shunning expensive taxis, some frequent business visitors to London now walk or ride bicycles to appointments – or ride the city's Underground.
The ongoing gamesmanship of trying to beat the poor exchange rates takes many forms.
"American business travelers are making their European trips as short as possible, particularly to London," said Caleb Tiller, spokesman for the 4,000-member National Business Travel Association in Alexandria, Va.
"I heard about one business traveler who round-trips it to Europe and back home in 30 hours without staying at a hotel by planning flights over and back when he can sleep and getting a day's work done in Europe."
Other businesses are moving multinational meetings to the United States, significantly lowering costs based on the advantageous euro-to-dollar exchange rate, Tiller said.
One American hotelier recounts how a German businessman he knows flew to Minneapolis-St. Paul, went on a spending spree at the Mall of America, got back on a plane, and returned to Stuttgart loaded with bargains. And typical of the foreign invasion is a sign in the window of a boutique in East Hampton, Long Island: We Accept Euros.
The strong euro hurts Americans even more when coupled with the slowing economies in the United States and in Europe. In a survey of some 125 U.S. travel managers, 49% said they had cut travel spending in the past year, according to Susan Gurley, executive director of the 2,500-member Association of Corporate Travel Executives, also based in Alexandria. She traces the belt-tightening partly to skyrocketing oil prices.
"Most companies are getting tougher on enforcing compliance with travel rules," she said. "These days supervisors want to know exactly what a traveler expects to accomplish before signing off on a European trip. They're scrutinizing trip expenses the way the airlines are unbundling costs and charging for them. Some companies figure the tightening will run straight through 2009."
The crackdown ranges from the expected to the unpleasant. Companies encourage employees to fly on low-fare airlines in Europe like Ryanair and, in some cases, consider even business class out of bounds on trips to Europe.
(Corporate jets can help shorten European visits, but the jet fuel costs minimize any financial gains.)
To cut back on expensive European trips, some companies have turned to sophisticated teleconferencing like Cisco's Telepresence and Hewlett-Packard's Halo.
Others offer different advice.
"Take advantage of advance-purchase deals," said Frank Schnur, vice president of strategic planning at American Express. "One out of two business travelers don't even ask for – or know about – preferred rates that their employer has negotiated."
"Travel like an entrepreneur rather than what I call the entitled corporate traveler," Schnur advised. "It's a sandwich rather than sushi for lunch. The entitled travelers want to be comfortable and do what's convenient, but that flies in the face of economic realities like the euro's strength and deteriorating business conditions."
Leslie McGibbon, a senior vice president of the InterContinental Hotels Group whose seven brands include Holiday Inns, said they have seen fewer Americans in Europe, both leisure and business travelers, because of the euro.
"But the Russians and Middle Easterners have picked up the slack at the upper end of the market," McGibbon said.
The familiar hotel brands, in fact, are now less dependent on American business guests, partly because of heavy travel within the European Union. A spokesman for Marriott, Gordon Lambourne, says that most of its 158 hotels in Europe get the bulk of their business within the EU.
In any case, business travelers are being forced to cope with an unattractive form of austerity when venturing into euro territory: occasionally doubling up in hotel rooms. "It's a new thing rarely done before," said Gurley of the corporate travel executives group, "and not popular."
Source: International Herald Tribune