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Swine flu outbreak adds to Mexican tourism woes

The travel industry was already reeling from a rash of drug-world violence and the effects of the global recession.

April 28, 2009|Hugo Martin

Reeling from a rash of drug-world violence and the effects of the global recession, Mexico's tourism is now taking a beating from the swine flu outbreak that is suspected in the deaths of 149 people and prompted the closing of theme parks, soccer stadiums and other public places.

The country's benchmark IPC stock index plunged 3.3% on Monday, and the peso slumped as the ramifications of the outbreak filtered through the business and tourist community.

Adding to the country's woes, an earthquake with a magnitude of 5.6 struck central Mexico on Monday, rattling the nerves of residents. Two elderly people died of heart attacks apparently related to the temblor.

On Wall Street, U.S. blue-chip stock indexes were modestly lower, suggesting that investors didn't expect the swine flu to become a global crisis that could further deepen the recession. The Dow Jones industrial average slipped 51.29 points, or 0.6%, to 8,025.00.

But the average New York Stock Exchange issue slid 1.4%, weighed down by steep losses in airline, hotel and cruise line stocks, and by another pullback in financial shares.

Mexico ranks as the world's 10th-most-visited tourist destination, with more than 22.6 million international visitors last year. With the swine flu outbreak, national museums have been closed, restaurants are empty, soccer stadiums vacant, tourist attractions are blocked by soldiers and streets teem with anxious residents donning surgical masks.

"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," said Eugenio J. Aleman, a senior economist for Wells Fargo & Co. "My first reaction is that this is not going to be terribly bad for the Mexican economy because things are already bad."

The U.S. recession and a spate of drug war shootings already have put the country's economy in a downward spiral, he said.

Although Mexico's IPC stock dropped 755.06 points, or 3.3%, to 21,827.11, it was down as much as 5.1% at its low for the session.

Because of the swine flu outbreak, U.S. Homeland Security Secretary Janet Napolitano declared a public health emergency Sunday and the Centers for Disease Control and Prevention issued a "travel health precaution," urging Americans to avoid nonessential travel to Mexico. The European Union health commissioner issued a similar warning for Mexico and parts of the U.S.

The CDC and state public and animal health authorities are investigating dozens of human cases of reported swine flu in the U.S., some of which have been linked to travel to Mexico. The CDC also recommended that travelers to Mexico with high risk of severe illness from flu take antiviral medications during travel.

Over the weekend, Six Flags Inc., prompted by the Mexican government, closed its indoor facilities -- including restaurants, show venues and rides -- at its Mexico City theme park.

Mexico's Ministry of Tourism issued a statement Monday, noting that there were no restrictions on travel into Mexico. "We are confident that as soon as this situation returns to normalcy, Mexico's diverse tourism destinations, first-class infrastructure and hospitality will continue to attract and welcome millions of international tourists," the statement said.

Regardless of whether health effects of the outbreak are contained, analysts say TV images of closed Mexican business and of soldiers handing out surgical masks on the streets of Mexico City may have an even greater threat to the country's well-being.

"Mexico already has two marks against it," said Carl Winston, director of San Diego State's hospitality and tourism management program. "I can see the potential for a pretty significant decline in travel."

U.S. cruise lines and airlines have yet to cancel any routes to Mexico, and none have reported finding any cases of swine flu on the ships or planes. Six major U.S. air carriers, however, have agreed to waive penalty fees charged to passengers who cancel or change flight reservations to Mexico.

Carnival Cruise Lines, which serves 13 ports in Mexico, said it didn't anticipate that "our guests' cruise experience will be impacted by this type of illness" and therefore it wouldn't make "any adjustments to our itineraries."

Princess Cruises, which stops at six ports along Mexico's coast, plans to step up the screening of passengers and crews and has stocked up on antiviral medication to combat a potential outbreak. Royal Caribbean Cruises is now giving guests a letter that includes a fact sheet from the CDC.

Still, travel industry analysts and others say the true impact of the outbreak won't be known for several weeks, once airlines, hotel and other tourism outlets gauge the travel cancellations that are expected to come in the wake of the outbreak.

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