Flu outbreak means lost summer for Mexican tourism

By Michael O'Boyle and Jason Lange - Analysis

MEXICO CITY (Reuters) - Fears of contracting a new flu virus have emptied the beaches, restaurants and nightclubs of Mexico's main tourist destinations, hobbling a key industry just as a severe recession is gripping the country.

Mexico's tourism sector has weathered fierce hurricanes and raging drug gang battles, but the H1N1 outbreak could spur the biggest collapse in international visits in decades.

Tourism Minister Rodolfo Elizondo says it could take until December for the flow of foreign tourists to recover, wiping out the key summer season when millions of Americans and Europeans traditionally escape to Mexican beaches.

"The summer for foreign tourism is obviously lost," said Miguel Torruco, head of the National Tourism Confederation, or CNT, which represents small- and medium-sized companies.

Travel alerts by countries like the United States, Britain and Canada -- lifted in recent days -- drove many foreigners to cancel vacations to Mexico.

Airlines have reduced flights to beach resorts like Cancun, leaving hotels mostly empty and putting hundreds of thousands of jobs in the hotel and restaurant sectors at risk.

"Travel agencies are only receiving cancellations. It is as if the Bubonic plague was here," said Oscar Amerigo, vice president of the CNET, an umbrella group representing more than a dozen tourism industry associations.

Mexico is considered the epicenter of a flu outbreak that has spread to dozens of countries. Initial cases were linked to visits to Mexico, one of the world's top 10 destinations.

The drop in tourism will be sorely felt as a drop in U.S. demand for Mexican manufactured goods has pushed Mexico into its most severe recession since a 1995 financial crisis.

Tourism is one of Mexico's top sources of foreign currency, accounting for about 8 percent of the economy. The sector employs about 2 million people across the country.

As the government moved to shut down much of public life in late April and early May, foreign tourists rushed to leave and international flights into Mexico arrived almost empty.

Continental Airlines (CAL.N) cut around half its capacity to Mexico. Carnival Cruise Lines (CCL.N) axed all its Mexican cruises through mid-June, although it plans to resume some port visits at the end of May.

LOST SUMMER

Desperate to lure back vacationers, hotels in Cancun and down the Caribbean coast have cut rates by up to 70 percent. Some are even offering three years of free vacations to any visitor who catches the new flu from a visit to Mexico.

But tourism woes look set to last long enough to dent an economy already seen shrinking around 5 percent this year.