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Dollar, Traveler Take a Beating

Businesses are discovering that devaluation means spending more money for less luxury

March 31, 2004|Laurie Berger | Special to The Times

JUST when it seemed safe to go on the road again, business travelers have been dealt another budget-busting blow: devaluation of the dollar.

Mark Stultz, who recently returned from a 5 1/2-week business trip to Europe, is still reeling from sticker shock. "It's just so stinking expensive over there," said Stultz, the director of global facilities planning for El Segundo-based Computer Sciences Corp. "Especially in the U.K., where everything's two [dollars] for one [pound]."

To comply with company expense guidelines, the 120,000-mile-a-year flier now stays in cheaper hotels, takes trains instead of taxis and eats fast food instead of fancy hotel meals. And he's spending more money for less luxury. "I paid 159 [pounds, about $288] at a Hilton in London, and it was a dump," he said. "The paint was peeling and the elevator didn't work."

As the dollar gets hammered on the Continent and in Britain, once-privileged road warriors like Stultz are being forced to travel like penny-pinching vacationers. No longer are they holding court in fancy hotels and restaurants.

The name of the game is trading down.

Companies began stripping fliers of entitlements after Sept. 11, when travel budgets were cut to the bone. A weak economy keeps many of those measures in place today, according to a survey of 19 Southland companies by the Los Angeles Business Travel Assn., which counts the region's largest companies as members. Dismal exchange rates are compounding the problem.

"Companies and their travelers have made all the cuts they can; now they're just feeling the pain," said Katharine Samuels, president of LABTA.

The pain is even greater for independent or small-company business travelers, who lack negotiating power. "When I worked for a large company, I'd make plans at the last minute," said Earl Foster, a Hawley, Pa.-based travel management consultant. "Now I'm forced to think about an international trip six months out and do my own Internet searches for the best deals."

Dismal Outlook

Despite companies' best efforts to keep costs in check through aggressive negotiations, the greenback's losing battle against the euro (the trading currency of a dozen European nations) and British pound has been a major setback. The dollar is now worth 20% to 30% less than it was two years ago; on March 18, the euro was worth $1.22 and the pound $1.81.

Financial experts say there's no end in sight to the slide. "The traders we talk to have a grim outlook on the U.S. dollar's future overseas," said Steven Dengler, chief executive of Inc., a Toronto-based currency tracking company.

That's discouraging news for corporate travelers to Europe's major business centers. The biggest "ouch" for U.S. execs is London, which has become one of the most popular -- and priciest -- cities in the world.

A taxi from the airport to downtown now costs about $75, a first-class hotel goes for $365 per night (deluxe is $619) and a compact car rents for $165 a day, according to daily travel costs tracked by Runzheimer International. Companies with preferred agreements have been able to shave hotel costs by as much as 60%.

Even at the negotiated rates, some travelers are barely scraping by. The U.S. State Department has been forced to continually adjust upward its international per diems, the maximum allowable limits on daily lodging, meals and incidentals for government travelers going to foreign cities. Private-sector companies and government contractors often use these per diems as benchmarks for their own travel expense guidelines.

In February, the per diem for Paris, for example, increased to $408 per day for lodging, food and incidentals, a 45% increase from the previous year. "When there's a change of 3% or more in the exchange rate, it triggers a change in the per diem," said Juanita Stokes, deputy director of the State Department's Office of Allowances. "We've seen rates in most European cities increase significantly, due to devaluation of the dollar."

Goodbye, Perks

As a result, more travelers have been forced down the travel food chain. Now, even elite travelers are squirming like sardines in the back of the plane.

"There's very little 'paid for' first-class travel across the ocean these days," said Carol Salcito, a Norwalk, Conn.-based travel management consultant.

Low-cost airlines, nonrefundable fares and inexpensive intra-Europe carriers such as Ryanair and EasyJet have become the air-travel method of choice. What's more, companies are buying tickets in Europe to take advantage of stronger currencies, despite the airlines' attempts to crack down on these strategies.

Travelers such as Bob Ayers are taking matters into their own hands by doubling up on trips. "Instead of going for seven days, it's now 10 to 12 days," said Ayers, the western area sales manager for Schaumberg, Ill.-based DMG America, a metal-cutting manufacturer. "And by making my plans way in advance, I can save up to 30% on fares."

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