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AMERICAN TOURIST TRAP

Strict border rules could hurt retail spending and tourism

By Joel Groover

The U.S. shopping center industry strives to make overseas shoppers feel, if not like visiting heads of state, then at least like warmly welcomed VIPs. At Chelsea Property Group’s outlet malls in such tourist hotspots as Las Vegas and Orlando, Fla., for example, international visitors enjoy a customer experience carefully crafted to put smiles on their faces. Loudspeakers play messages of welcome in up to six languages. Currency exchanges swap greenbacks for dinars, euros, rubles and yen. Rosetta Stone-like charts display universalized apparel sizes to help shoppers from diverse continents find the perfect fit. “We’ve always worked to create what we call internationally friendly shopping centers,” said Michele Rothstein, senior vice president of marketing at the Roseland, N.J.-based developer, a Simon Property Group subsidiary. “We’ve done a lot of research, and we work closely with overseas tour companies to understand exactly what [foreign shoppers] need.”

Despite efforts to promote the U.S. as a shopper-friendly destination, however, foreign travelers overwhelmingly believe that, in the aftermath of Sept. 11, American officials will treat them more like security threats than valued guests, says Geoff Freeman, executive director of the Discover America Partnership. This Washington-based business coalition is working to reverse what it says has been a nearly 20 percent drop in overseas tourism into the U.S. since 2000, including a full 10 percent drop in worldwide business travel into the country in 2005 alone.

Freeman cites a survey commissioned by Discover America and conducted last year in which foreign travelers ranked America’s entry process the world’s worst by a 2-1 ratio. Of the 2,000 travelers interviewed, 54 percent described U.S. immigration officials as rude, two-thirds said they feared being detained at the U.S. border because of a simple mistake or misstatement, and a majority claimed to be more afraid of American officials than terrorism or crime. “We’ve dug quite a hole for ourselves in the past few years,” Freeman said. “All of the trend lines show fewer and fewer overseas travelers coming into the U.S.”

According to Discover America, the U.S. share of the $6 trillion global travel market shrank to 6.1 percent last year, from 7.5 percent in 2000. If the U.S. had maintained that market share, 58 million more overseas visitors would have come into the country than actually did. Those travelers, many from affluent, highly industrialized nations, would have spent about $94 billion at U.S. businesses, the organization says. “These are enormous spenders,” Freeman said. “Right after they check into that hotel, the first thing they do is head for the shops.”

The tourism downturn may be unwelcome news for the retail industry, but its exact effects on retail are difficult to quantify. Language barriers are part of the reason. At The Fashion Outlets of Las Vegas, a 360,000-square-foot outlet mall located 36 miles south of the Las Vegas Strip, in Primm, Nev., international visitor numbers might at first glance appear somewhat flat. In an intercept study conducted in 2000, for example, 17 percent of visitors to the center, owned by the Coral Gables, Fla.-based Talisman Cos., hailed from other countries. In a similar study conducted earlier this year, that number had dropped to 14.7 percent. The percentage of Asian visitors to Fashion Outlets declined from 6 percent to 4.4 percent, and European visitors dropped from 5 percent to 3.9 percent.

“Unfortunately, you have to take that with a bit of a grain of salt,” said Ann Marnell Ackerman, SCMD, vice president and director of marketing at Talisman. “When I do an intercept study, I do it in English, so their ability to converse with my English-speaking interviewers is limited. It is hard to say whether it has been a steady decrease.” Talisman runs a shuttle bus that brings shoppers to Fashion Outlets nine times a day, seven days a week. According to Ackerman, about half of the 50,000 annual riders do not speak English. Presumably, many are international travelers.

The retail industry should be concerned about America’s reputation abroad, Ackerman says. “We have a bad reputation internationally, period, because of the politics,” Ackerman said. “[Foreign travelers] either agree or disagree with our current administration, and I think some are afraid of being targeted as a terrorist.”

Moreover, the rapid growth of the international shopping center industry means that today’s shoppers now can use a globe, rather than a map of the United States, to plan their shopping trips. Dubai, United Arab Emirates, for instance, bustles with shoppers from all over the world. According to the Dubai Municipality Statistics Centre, 13.8 million people traveled to and from Dubai International Airport during the first half of 2006 alone. (The city’s total population stands at about 1 million.) Part of the reason for all that traffic, in addition to the dozens of lavish resorts and glimmering new malls, may well be Dubai’s efforts to boost its traveler-friendly image. The oil-rich emirate is relaxing some of its travel restrictions even as the U.S. adds new ones, such as those requiring travelers who now get into the country with a driver’s license to obtain harder-to-get forms of identification, such as a passport, says Ian F. Thomas, chairman of Thomas Consultants, a global retail consulting firm based in Vancouver, British Columbia. “Dubai is going to double their tourism in the next five to seven years, and, of course, shopping for them is the single biggest pastime,” Thomas said. “Clearly, they are winning at other countries’ expense.”

Given the presence of such global competition, the U.S. must act now to reform its sometimes confusing and claustrophobic entry process, Freeman says, and it also must embark on an aggressive public relations campaign to improve its overall standing among foreign travelers. Failure to do so could result in a permanent decline in tourism that causes serious economic harm, he cautions.

In January Discover America issued a blueprint of ways the U.S. might turn the situation around. The plan calls for a “21st-century visa system” that enables applicants to be processed in 30 days or less by using the Internet, video conferencing or mobile consulates. Thus, applicants could avoid having to travel long distances to fill out forms at consular offices. The experience of actually entering the country, too, should be made more user-friendly, in part through an international registered traveler program enabling arrivals at U.S. ports to go their way in 30 minutes or less. The plan also recommends expanding the criteria for the Visa Waiver Program, which allows certain foreign nationals to enter the U.S. without visas, and spending $300 million on technology and personnel improvements. Those resources should be focused mostly on the riskiest travelers, says Discover America.

But by pushing Congress to relax travel restrictions, could this powerful business lobby inadvertently make it easier for terrorists to get into the country and target the very hotels, resorts and shopping centers it seeks to help? “Expediting things doesn’t automatically mean less security,” said James R. Black, a senior security consultant with Irvine, Calif.-based TRC Security. “For example, there are ways to check databases and watch lists against folks or groups of folks that are faster and more efficient than the ways in which some go about it now.”

The blueprint’s emphasis on using technology and personnel to screen the riskiest of travelers makes sense to Black, whose specialties include airport and transportation security. British security officers, for example, rarely yank grannies out of line and force them to take off their shoes. “They have a better handle on the realities rather than having encumbering or ridiculous procedures,” Black said. “They also have a reputation for fewer knee-jerk reactions to the threats of the day. Of course, the Brits don’t have an ACLU. No one is suing them for profiling.”

In fact, the federal government already has made substantial improvements to the entry process in recent years, but the persistently negative opinion of that process, as revealed by the Discover America survey, highlights the government’s inadequate approach to public relations, says Rick Webster, director of government affairs at the Travel Industry Association of America. “On the visa side, for a lot of the countries the wait times have been reduced, the long lines are gone and it is not as much of a hassle,” Webster said. “But when you talk to federal officials and you say, ‘Well, what have you done to communicate those changes in that particular market?’ they say, ‘Nothing, really. That is the private sector’s job.’ ”

Some in the real estate industry, however, regard the political debate over how to handle foreign travelers as outside their purview. “That is not something we as shopping center developers have any control over,” said one executive, who requested anonymity. “We can only work within the scope of our world.” If the number of overseas visitors shopping at American developers’ malls continues to decline, however, the scope of that world could shrink, as could their profits.

Discover America is pushing the federal government to get more aggressive about public relations, but it also wants the private sector to shoulder some of the burden of public policy. Marketing experts could work with federal officials to develop campaigns that will bolster America’s image abroad. Theme park companies could help the government do a better job of keeping people happy while they stand in line. Developers traveling overseas to promote American malls could pass out glossy brochures pitching America’s new state-of-the-art, user-friendly entry process, should the federal government choose to create one.“Our survey showed that those who have been to the U.S. were 74 percent more likely to have a favorable opinion of it,” Freeman said. “Using the private sector to accomplish public diplomacy means getting more travelers into this country so we can do what we do best — put smiles on their faces.”

Rolling out the red carpet for foreign shoppers is, after all, useless if there are none to walk upon it.

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