(FORTUNE Magazine) – THE TRAVEL INDUSTRY is scrambling to cope with the millions of missing tourists and business travelers scared away from Europe by the threat of terrorism. Companies that work both sides of the Atlantic can concentrate on the U.S., which so far retains an aura of safety from bomb throwers. Airlines that depend on the European market, along with many European hotels and resorts, have tightened security. But they cannot brag too much about it lest they heighten travelers' fears and tip off terrorists on ways to get around the new precautions. Tourist boards of Western European countries, which already spend $45 million a year on advertising and promotion in the U.S., doubt they can say anything new to turn things around. The frustration is evident. A writer in the Spectator in London branded reluctant U.S. tourists ''crybabies'' and said they ''lacked moral fibre.'' Potential winners, such as Walt Disney Co. and other companies that primarily operate in the U.S., are reluctant to appear too aggressive. ''We are not going to run an ad that says, 'Come to terror-free Seattle,' '' says Michele Holter, a public relations official with the Westin hotel chain. No one wants to appear to be profiting from the tragedies that have spilled across the headlines in recent months. Nor can anyone be sure the U.S. will stay terror- free. Pan Am and TWA have been hit the hardest. The blow is especially bitter for Pan Am, which sold its lucrative Pacific routes to United Airlines last winter so it could concentrate on Europe. Pan Am is shifting about 8% of its European capacity to U.S. routes. Among the canceled flights are a daily trip from Chicago to Frankfurt and routes between Paris and the West Coast. TWA cut its European capacity by about 12% to 15% last December after one of its planes was hijacked and bookings began to collapse. Among the flights canceled was the Cairo-Rome-Athens flight that had been hijacked. For both carriers, getting deeper into the supercompetitive U.S. market is hardly consolation for losing European traffic, though there are a few bright spots. A new TWA St. Louis-Hawaii flight scheduled to begin June 1, for instance, is sold out for the first two months. Pan Am is spending big money on security around Europe. The carrier's security costs at airports in Rome and Milan will total more than $1 million this year, compared with $650,000 last year. To get its message across discreetly, Pan Am executives have been holding private meetings with large corporate clients and groups of travel agents. Many hotels in France are beefing up security too. If a suitcase is left unattended in a lobby, police are called immediately. The hotels are also redirecting their advertising from the U.S. to fellow Europeans. West German tourist industry officials last month dropped in on travel agents in Washington and New York to try to persuade them that travelers' fears are overblown. The stakes are huge for Europe: last year U.S. travelers, spurred on by the strong dollar, spent over $6 billion there in addition to air fares. Steep price cuts might help, especially to lure adventurous younger travelers. So far, though, little price-slashing has been announced. Nor have Europeans mounted an advertising blitz. ''With an emotional issue like this, it is very difficult to be heard,'' says Donald Martin, a consultant to the European Travel Commission, a Dublin-based marketing organization for European tourist boards. ''It is not a problem that can be successfully attacked frontally.''

BACK IN THE U.S. and Canada, meanwhile, travel is booming. All those displaced vacation dollars have to go someplace. The beaches of Hawaii and California are likely to be crammed all summer, and special events such as Vancouver's Expo 86 and the 100th-anniversary celebration of the Statue of Liberty in New York City will attract hordes of tourists. One giant U.S. travel company, unable to find hotel rooms anywhere near Vancouver, chartered a ship that had been scheduled to cruise the Greek islands. The ship will serve as a floating guest house in Vancouver's harbor. Executives at United Airlines, which should pick up lots of new passengers on its numerous flights to California and Hawaii, take pains to avoid any hint of cashing in. John Zeeman, United's executive vice president for marketing and planning, insists he is not contemplating major changes in marketing strategy or flight scheduling. Rather than slice advertising budgets to save money in these plush times, says Zeeman, United may redirect some of its advertising to the U.S. to go for a larger share of the U.S. market. American Airlines may save some advertising dollars on its Hawaii flights, which have been largely sold out for some months, and the carrier may also trim marketing efforts for its routes to the Caribbean and Mexico. But Ann Smits, American's assistant vice president for advertising, talks about a subtle shift of resources rather than a full-scale redeployment. No major domestic airline seems to be considering a significant fare increase, despite the pickup in traffic. However, most big U.S. carriers should be able to boost revenues by using their computers to change the number of cheap seats on each flight. That $99 fare to the West Coast advertised in newspapers may suddenly apply to only a dozen seats on a flight that becomes popular. Eastern Airlines, which has a strong route system from the northeastern U.S. to vacation spots in Florida, the Caribbean, and South America, should prosper mightily this summer. But even Eastern is suffering from the European slump. It was forced to scrap a new Miami-to-Madrid route after six months of promotional work, which included heavy advertising in the U.S. and Spain. Terrorism has also taken the luster off American Airlines' plans to expand in Europe. American began flying to Europe in 1982. Clinging to the hope that Europeans visiting the U.S. this summer can help make up for some of the traffic loss, the airline's officials are going ahead with plans to start more flights this spring to cities in Britain, France, and West Germany. U.S. rental car companies may be able to back off from the ruinous price war that has cut their profits in recent years, but they have not yet seen a surge in reservations traceable to the terrorist threat. Prices at Hertz, the largest U.S. rental firm, will be about 15% higher than last year. But even if demand does pick up, the company will not need more cars. According to Malcolm Speed, vice president of marketing at Hertz, most car-rental firms are suffering from gross overcapacity right now. They have had a hard time trimming their fleets because the used-car market is especially soft. The Hilton hotel chain, which sold all its international hotels to TWA in 1967, has shunned direct references to Europe in advertising and promotion. Instead, Hilton has opened a vacation hot line and has put together special vacation packages to lure travelers to its resorts in Hawaii, California, and Florida, among other places. ''We are in a position to take advantage,'' says Carl Mottek, president of Hilton's hotel division. Others are less reticent, though the message they are putting out is subtle. Recent ads for the U.S. Virgin Islands refer to tranquil beauty ''far from the rush and crush of Europe.'' Busch Gardens, a family-oriented resort near Williamsburg, Virginia, is running television commercials asking travelers to ''experience all the thrills of a trip to Europe'' without leaving the U.S. The travel industry's low-key approach to U.S. business may be wise. Not all the trips canceled because of terrorism were bound for Europe or other distant places. More than a dozen school groups were too afraid of bombs and bullets to visit the Smithsonian museums in Washington, D.C. BOX: RIDING IN A CAR IS DEADLIER Despite all the gruesome headlines, Americans are far likelier to be killed or seriously injured in an auto accident at home than in a hail of bullets at some foreign airport. Last year 1.7 million Americans out of 240 million died or were badly hurt in auto accidents. The odds: 1 in 140. Meanwhile only 162 of the nearly 28 million Americans who traveled abroad last year were killed or wounded in terrorist attacks. Those odds: 1 in 170,000.