THE DOLLAR’S FREE FALL : $3,000 for Dinner: Dollar’s Fall Hits Broadly

John Hall, a Dallas business executive who has been to Japan 83 times, exchanged his traveler’s checks for dollars today at the Imperial Hotel exchange counter for 91.53 yen to the dollar. Even for a veteran Pacific traveler used to Tokyo’s astronomical prices, it was a jolt not soon to be forgotten.

“Breakfast, $32. Coffee, like $5 and change. I’ve got American customers over. We’ll be eating in traditional Japanese restaurants, and (in) some of the nicer places, probably dinner for six is in the neighborhood of $2,000 or $3,000, at least. That’s being conservative.”

The dollar’s historic decline has reverberated through cities around the globe, upending tourists’ budgets and confounding business executives trying to spend their dollars in far-flung markets.

The greenback continued its free fall Tuesday, losing a stunning 3.3% against the Japanese yen and 2.5% against the German mark. But the impact is uneven. In Mexico and Canada, U.S. travelers are enjoying the benefits of a strong dollar.

For Japanese and German tourists in this country, the turmoil in currency markets has brought a windfall.

And that, in turn, could be a boost to Southern California tourism, local tourism officials say, perhaps offsetting the expected impact of the Jan. 17 Kobe earthquake. Japan is the largest source of foreign tourists for the Los Angeles area, at about 700,000 visitors annually.

To those who operate outside the arcane world of finance, the forces behind the downward slide of the dollar may seem as mysterious as the origins of the universe.

One veteran Japanese executive based in Los Angeles who was trained in international economics confessed that he could not figure out what confluence of international events was driving the U.S. currency down, down, down.

“This is very scary for me,” he said.

It is also very real.

The worst news for Americans with dollars comes in Japan and Germany, whose currencies are at record highs against the greenback.

Dennis Smith, regional sales manager for SRS Hotels of Los Angeles, one of the largest U.S. players in the German hotel market, has started up a program that offers U.S. travelers a guaranteed room rate in Germany and other European countries.

“Every time the mark gets stronger against the dollar, this program gets more popular,” he said.

Smith said the German hotels are willing to take a chance on losing out on a currency fluctuation because the program attracts such high volume.

Last year, SRS booked 35,000 hotel-room nights in Europe through its guaranteed rate program, and the firm is predicting a significant increase in business this year.

“Sometimes they lose on a transaction, but they make it up in volume,” he said.

Meanwhile, the surging yen has made life harder for the Los Angeles sales staff of All Nippon Airways. Their job is to sell seats on the Japanese airline to Americans--no easy task as Japan becomes an ever more expensive destination.

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“It is causing a lot of potential travelers to bypass Japan in favor of mainland China, Hong Kong, Taiwan and the rest of Southeast Asia,” sales director Dennis Tanioka said of the rising yen.

It has also put business decisions on hold.

Ken Amano, president of Nippondenso of Los Angeles, the U.S. subsidiary of a major Japanese auto parts manufacturer, said he is holding off price increases until he determines whether the dollar’s sharp fall is a “temporary emotional happening” or a long-term adjustment in currency rates. If the latter is true, he will have to increase prices on the 20% of his product line that comes from Japan.

U.S. exporters, on the other hand, could profit handsomely from the dramatic currency shift, which has made U.S. goods much cheaper in yen prices.

For example, Yohji Kameoka, president of Pacific Century Inc. of Redmond, Wash., is gearing up to sell more U.S. lumber, windows and doors to builders in Japan.

On the other hand, there’s Mexico.

Mexico is one of the few places where the dollar is buying more these days, in fact twice as much as it did on Dec. 20, when the worst economic crisis in a decade got started south of the border.

An exchange rate of 6 pesos to the dollar has been a bonanza for tourists such as Luis Cartagena, 56, who is visiting from Puerto Rico.

“This is really incredible,” Caratagena said as he stopped outside a Mexico City money exchange house to examine the posted rates. “I feel very bad for the Mexicans.”

But he has benefited. “I just bought a new suitcase to carry home all of my purchases. I did lots of shopping. I think I have overdone it; I went as far as to buy all the Mother’s Day presents already,” he said.

For Mexicans, the peso crisis has been virtually all bad news. But for the moment, Manuel Roldan, 20, just back from San Diego, is riding high.

“We just came back from a trip, so we have dollars,” the student said as he left a money exchange house where he had just bought pesos at six to the dollar. “We are trying to save them in case the rate goes up again.”

But his smile did not last long as he considered what that exchange rate will mean for him now that he is back home in Mexico. “Everything is going up in price,” he said.

Meanwhile, north of the border, when the Yankee dollar gets kicked the Canadian dollar takes a bruising too. Still, along with Mexico, it’s a rare good place for Americans with U.S. dollars. On Tuesday, just 70 U.S. pennies fetched a whole Canadian dollar.

Thus a business traveler from the United States who checked into Toronto’s Four Seasons Hotel on Tuesday paid $156 a night. In Washington, he paid $270. At the Four Seasons in Los Angeles, he would have plunked down $335.

Because of the relative weakness of the Canadian dollar against its U.S. counterpart, a decline in the U.S. currency produces a similar drop north of the border. But this week’s nose dive of the U.S. dollar was particularly hard for Canadians to take.

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Last week, their announcement of an austerity budget caused the Canadian dollar to rise to 72 cents against the U.S. dollar--a high for the year--and banks cut lending rates dramatically. But the fall of the U.S. dollar this week more than wiped out last week’s gains--and sent interest rates back up.

“We seem to have little control over our own dollar here,” said Wayne Schrader, chief executive officer of ReMax Canosum, a real estate sales firm in Victoria, Canada. “The price of gas at the pump seems to be more stable than our interest rates.”

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Holley reported from Tokyo and Iritani from Los Angeles. Also contributing were Times staff writers Jesus Sanchez in Los Angeles and Craig Turner in Toronto and researcher Susan Drummet in Mexico City.