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YELLOW A10 | Wednesday, September 4, 2013 THE WALL STREET JOURNAL. WORLD NEWS COPENHAGEN—Denmark’s central-bank governor said the adoption of negative interest rates a year ago at the height of Europe’s debt crisis has kept the krone steady even amid renewed turbulence on currency markets. In an interview, Nationalbank Governor Lars Rohde said the central bank’s decision to cut its deposit rate to below zero has helped defend the krone’s fixed exchange rate at little cost to the country’s banks. The krone has remained sta- ble within its narrow peg against the euro in recent months, while currencies ranging from the Bra- zilian real to the Indian rupee and the Norwegian krone have seen sharp moves as investors ready for the U.S. Federal Re- serve to gradually ease its mone- tary stimulus. Nationalbank’s decision put it among a select few to adopt neg- ative interest rates, and its rela- tive success suggests such a pol- icy can be pursued without creating unforeseen conse- quences for banks. “The good news is that [the negative rate] has had an impact on the currency market,” Mr. Rohde said. “It has been a very efficient tool to avoid unwar- ranted capital inflows.” In July 2012, with the euro crisis deepening, investors were scrambling to sell euros and buy Danish kroner, then seen by in- vestors as less risky because of Denmark’s relatively strong pub- lic finances. Nationalbank cut in- terest rates to sap investor en- thusiasm for the currency. When the deposit rate reached zero, and with the krone still rising, the bank cut the rate to minus 0.2% before later rais- ing it in January to minus 0.1%, where it has stayed since. More than a year later, the krone is little changed against the euro. The euro currently trades at about 7.461 kroner, compared with its high of 7.4311 kroner in mid-June 2012. BY CHARLES DUXBURY Denmark’s Top Banker Extols Rates Policy The Russians came, and they saved hotelier Gustavo Cabedo’s tourist season. Spanish visitors to his Tryp Port Cambrils hotel, down the coast from Barcelona, had dwindled in recent years as the economy slumped. But a rush of Russian and French tourists put off by turmoil in Egypt— and lured to Spain by falling prices—has picked up the slack, lifting occupancy in the 156-room hotel near the beach above 90% this summer. The growth in international tourism “has been vital,” said Mr. Cabedo, the hotel’s general manager. “I don’t wish anyone harm, but problems in North Africa have been good for Spain.” Tourists have been flocking this year to the euro zone’s southern vacation spots, boost- ing the struggling economies collectively known as “Club Med.” Foreign visits to Spain since January have set a re- cord, while Greece and Portu- gal are enjoying banner years. International tourist arrivals in Southern Europe grew 6% in the first half of the year over the same period in 2012, a per- centage point above the global increase, according to the U.N. World Tourism Organization. In the previous decade, rela- tive stability and new hotel de- velopment helped Egypt and other North African countries compete for tourists seeking sun, sand and cultural attrac- tions, industry analysts say. But falling prices in the euro-zone periphery—hotel rates in Spain are down around 10% since 2008—and the con- tinuing political upheaval that began in the Arab Spring of 2011 has made the Mediterra- nean’s northern shores look more attractive. Cruise-ship operators are adding six Greek ports to their routes this year and next as they cancel planned port calls in Egypt. The Finnish tour op- erator Finnmatkat canceled trips to Egypt for more than 20,000 people this coming win- ter, offering to route them to Spain’s Canary Islands and elsewhere. The tourist boom under- scores how economic restruc- turing is helping Southern Eu- ropean countries regain international competitiveness. In Greece, labor-market changes have helped cut pay- rolls—which account for about 40% of a hotel’s operating costs—pushing down average wage bills by a fifth. That has translated into an average 8% reduction in rates in the past year, industry sources said. In Portugal, where the At- lantic Algarve region entices throngs of British, prices for hotels and other services de- clined while spending by for- eign tourists rose 8.2%, to €3.7 billion ($4.9 billion), in the first half of the year over 2012. To be sure, tourist spending is too small on its own to end Southern Europe’s recession or sustain a recovery. Still, it could make the re- cession shallower than forecast for this year and hasten a re- turn to growth, said Sara Bal- iña, a partner at Madrid-based economic analysis firm Analis- tas Financieros Internacionales SA. It is “an important stabiliz- ing factor” for Southern Euro- pean economies, she said. Fears of an abrupt Greek exit from the euro zone have receded in the past year. The violent protests that rocked Athens at the start of the crisis and frightened away would-be visitors have petered out. Carsten Palvig, a 62-year-old Danish information technology developer, a frequent visitor for more than three decades, said Greece’s turmoil kept him away for the past few years “but we thought we would try it again this year.” A few steps away, Margaret Smith perused tourist shops beneath the Acropolis. The 49- year-old real-estate agent from Virginia had organized a 10- day trip with half a dozen friends to Crete and the Greek capital. “Who doesn’t want to come to Greece anyway?” she said. “But the low prices were an extra inducement.” The Greek government has over the past few years eased visa restrictions for various countries, including traditional rival Turkey, helping to draw new visitors. In Spain, regional and central governments also have been trying to attract tourists from beyond the usual sources—Britain, Germany and France—by, for example, send- ing delegations to tourism fairs in Russia. In Cambrils, a fishing port, foreign-tourist overnight stays since January hit a record de- spite a 20-percentage-point de- cline in Spanish visits. Russian nationals accounted for 13% of July occupancy this year, com- pared with almost none in 2009, according to the local tourism board. Mr. Cabedo said his average revenue per room has declined 7% since 2009, in part because he is offering more promo- tions. Vladimir Ovtchinnikoff, a tourist from Moscow who sells tractor parts, said safety con- cerns about Egypt influenced his decision to vacation in Spain. He marveled at the cleanliness of the water, de- spite the proximity of large ships and a chemical plant. “I see tankers in the sea, but no oil fumes in the water,” he said. “It is unbelievable.” By Ilan Brat in Cambrils, Spain, and Alkman Granitsas in Athens Sunbathers in Barcelona in July. Spain is picking up foreign tourists avoiding strife in northern Africa. Getty Images Sun, Sand, Prices Buoy ‘Club Med’ Weak Economies in Southern Europe Benefit as Tourists Pour In, Skirting Instability in Arab Vacation Spots Visitors Welcome A rise in tourism could help bolster troubled Southern European economies. *Includes jobs indirectly supported by tourism industry. †Measured by International tourist arrivals for Spain and Greece, hotel stays by non- residents for Portugal. Sources: World Travel & Tourism Council; Bank of Greece; Spain’s Tourism Ministry; Portugal's National Statistics Institute SHARE OF GDP IN 2012 RELATED TO TOURISM SHARE OF JOBS IN 2012 SUPPORTED BY TOURISM* CHANGE IN TOURISM FROM LAST YEAR† Portugal 18.5% 15.9% Greece 18.3 16.4 Spain 15.5 15.2 12.3 January– June Up 8.6% January– June 3.9 Jan.– July Watch a Video >> Scan this code for a video on foreign tourists vacationing in Spain, or watch at WSJ.com/World. AT A GLANCE. 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