Mexico tourism braces for swine flu slowdown

European travel warnings and canceled trips likely to hit Mexico's $13 billion a year industry.

Europeans today were told to avoid travel to Mexico unless essential. The biggest tour operators in Germany and Japan canceled all trips to Mexico.

Asian countries with memories of the 2003 SARS scare banned Mexican pork imports. And several US and Mexican airlines have waived fees for passengers wanting to change their travel dates – as concerns of a swine flu pandemic, with its epicenter in Mexico, grow.

Already reeling from the global economic crisis, Mexico's tourism industry in particular, is bracing for a further blow.

This past year, tourism industry brought in $13 billion, making it the third largest source of foreign currency after remittances and oil revenues.

While the severity and scope of the swine flu outbreak is still unclear, if past health scares are any indication, its recovery could take time.

"Tourism is one of the first things impacted; it is a fragile industry, because people get scared," says Hailin Qu, director of the Center for Hospitality and Tourism Research at Oklahoma State University. He says that tourism industries in Asian nations impacted by SARS took between one and two years to rebound.

"It depends on how many cases there are," says Mr. Qu, who says he received an e-mail this morning from colleagues from China who are canceling their trip to the US amid the scare.

Investors were concerned enough to drive the Mexican peso down three percent Monday.

Fewer tourists are only part of the economic picture. Mexico's economy shrank by 1.6 percent in the fourth quarter of last year. In addition to the peso decline, the stock market also fell Monday by 3.5 percent.

Blue-mask tourism

Arriving in Mexico City does, indeed, seem an intimidating prospect these days. Upon arrival, all airport employees and officials are donning surgical masks. Most arrivals – some of whom quickly put on masks they brought from abroad – say they are aware of the risks, but not scared enough to avoid travel.

But once here, tourist choices in Mexico City, at least, are limited. Museums, public events, and dance clubs have closed their doors. The mayor of Acapulco told the Associated Press that he had ordered bars and night clubs closed in the Pacific resort city.

Mexico City restaurants have not been ordered to close, says Silvia Guzman, the general director of the Mexican Association of Restaurants in Mexico City. "They are following all of the recommendations, including wearing masks to cover their mouths," she says.

But many eateries were empty Monday, and some have closed temporarily. Many residents here have stocked up on food and are staying home.

"There is concern in our association about the impact," says Ms. Guzman, whose members include 250 restaurants across the capital.

The association is currently compiling data to find out how many restaurants have temporarily shut down and what their losses have been thus far.

But the bigger concern is a projected decline in international tourist dollars.

Travel advisories

European Union Health Commissioner Androulla Vissiliou said Monday that Europeans should delay travels to the US and Mexico unless it is "urgent."

His advisory is only a recommendation; each nation in Europe decides what advisories to set, and none so far has followed suit.

The Associated Press reported that Germany's largest tour operator, the Hannover-based TUI, suspended all charter flights to Mexico City through May 4. And Japan's largest tour agency, JTB Corp., suspended tours to Mexico at least through June 30.

While any reduction hurts, the US is Mexico's key market: 80 percent of its tourists come from America, according to the government's tourist department.

Richard Besser, acting head of the US Centers for Disease Control and Prevention (CDC), said the EU recommendation to avoid travel to the US was not warranted. But Dr. Besser said that the CDC is preparing a travel advisory to be released later Monday instructing Americans to avoid nonessential travel to Mexico.

While 149 deaths are believed to be related to the swine flu in Mexico, cases in other parts of the world have been milder.

"We understand countries are setting up precautions, but they are not saying 'Do not come here,'" says Noe Elizarraras Rios, president of the Mexican Association of Travel Agencies. "As of now we are open for tourism."

Trade stalled, schools closed

The reaction – and economic penalties – abroad goes beyond tourism. China and Russia both banned pork products from Mexico – Indonesia banned imports of pork overall – and from the US states that have reported cases of the flu.

Mexico announced today that schools across the country will be cancelled until May 6 – an expansion of a ban that was already in place in the capital and some Mexican states.

Government offices were not closed Monday, but Mexico Finance Minister Agustin Carstens warned of a high potential for disruption. "It's hard to say at this stage how deep and how wide and how long this episode will be," Mr. Carstens told reporters.

Eugenio Aleman, a senior economist at Wells Fargo Economics, said in an analysis sent to clients that if the situation does not rapidly deteriorate, the impact on the economy could improve by the summer.

"Of course, the Mexican tourism sector is going to be one of the most affected sectors in the country and this is going to add to the pressures on the economy," he wrote. But he sees a bright spot. "Some of the late developments in tourism into Mexico are not of the 'popular' type. This means that tourists are going to isolated places where the contact with local population centers is limited. Thus, we may not see much of an added impact for this particular, high-end tourism."

* Wire services were used in this report.

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