American Express Sees Profit in Eastern Europe in First Year
Jun. 25, 1991
WARSAW, Poland (AP) _ American Express Co. opened its third travel service office in Eastern Europe on Tuesday, and the head of European operations predicted a first-year profit because of the region's tourism boom.
The office will provide regular travel services and offer financial services including American Express travelers checks, cash-checking and replacement of loss or stolen charge cards and travelers checks.
A 24-hour cash machine will also issue Polish zlotys or U.S.-dollar denominated travelers checks.
An office was opened in Hungary in January and one is due to open in Czechoslovakia in October. American Express has had a tourist service office in the Soviet Union since 1958.
Juergen Aumueller, president of American Express Travel Related Services for Europe, Middle East and Africa, said the company's expansion in Eastern Europe results from the explosion of tourism in the former Soviet-bloc countries.
''This is going to be profitable in the first year for the reason that there is increasing business, primarily charge volume coming from international visitors,'' he said.
Charge volume in Poland doubled in 1990 over 1989 and Aumueller said there was further ''tremendous growth'' in the first five months of 1991.
''Central and Eastern Europe is the travel destination for the '90s,'' he said, limited only by the number of available hotels. Quality hotels in Eastern Europe report over 90 percent occupancy rates, high by Western standards, he said.
Charge and credit cards were virtually unknown in Poland outside international hotels until last year. However, Visa and a group of banks this year has begun to market a credit card to business clients with bank accounts equal to $20,000.
American Express has signed a network of 500 businesses to accept the card throughout Poland and expects to have 1,000 this year, according to Marek Luba, manager of the Warsaw office.
Next they hope to start issuing charge cards settled in U.S. dollars to Polish citizens, but only those with hard-currency bank accounts.
Inside Poland, the zloty is freely convertible but it is not abroad, preventing American Express from issuing cards settled in zlotys, said Aumueller.
''This business in its own right can be profitable, but one has to be careful,'' Aumueller said of charge cards for Poles. ''We have to go very slowly.''
Eddy Buehlman, senior vice president responsible for the Eastern Europe offices, said it was ''a very, very rocky road'' to open the Warsaw office.
''It took us 18 months from the moment we expressed an interest in being here to when we opened, whereas in a Western country we could do it in four months,'' he said.