| ACAPULCO, Mexico
ACAPULCO, Mexico This city of dazzling hotels and sunlit beaches rose to fame as a playground of Hollywood stars. Today, Acapulco has now earned a very different reputation-for gangland decapitations, kidnappings and extortion.
As Mexico's drug war grinds on, killings in Acapulco have almost tripled this year to nearly 900, making the Pacific resort one of the most violent cities in the world and the second-deadliest in the country. The endless reports of slayings have kept the drug chaos on the front page even as killing slows in some parts of Mexico, where in 2010 the war claimed a record 15,273 lives.
So horrifying was the death toll that the government, which declared 2011 to be Mexico's "year of tourism," has simply stopped publishing a count.
The first destination touted on Mexico's official tourism website is Acapulco. Outwardly, the beach front is calm, and the city remains studded with hotels, bars and restaurants steeped in its colourful past. But Acapulco's main promenades have taken on a more sombre aspect. Where cabs once jostled to pick up fares, taxi ranks stand empty; bars awaiting custom blast music into space; and idle waiters straighten chairs at countless tables that line the long boulevards of the Zona Dorada tourist drag.
"This has been really terrible for Mexico's image," said Victor Hernandez, bookkeeper at hotel Los Flamingos, a favourite getaway of film stars John Wayne and Errol Flynn. "If there's no tourism, the economy goes to hell."
The troubled areas now extend right into the historic square, or Zocalo, just 100 meters from the ocean between the Zona Dorada and the fabled diving cliffs of La Quebrada.
A killing at an internet café there on the afternoon of October 19 was nothing out of the ordinary, said Erika Hernandez, 20.
"I heard three shots and took cover," said Hernandez, a shop attendant at a clothes boutique ten yards from the café, where two gunmen walked in and shot dead a 35-year-old man. "A lot of young guys are mixed up in crime. You get used to it." But not enough to want to make a life there. "In two, three months I'm looking at a move to Mexico City," she said.
An examination of the drug war in Acapulco shows that Mexico's relentless stream of violence has hit this tourist haven harder than most cities precisely because for so long it was viewed as a place where people come to forget their troubles, not fear for their lives. The war's spread to this pillar of the country's tourism industry is a milestone in the conflict. The jolt to Mexicans' psyche is akin to that caused by the violence ravaging the business capital of Monterrey. Only the border city of Ciudad Juarez is more violent.
The fate of Acapulco and the broader Mexican tourism sector is crucial to the country's economy-and to the future of President Felipe Calderon's ruling party, which is seeking re-election in 2012.
Mindful of the damage being done, Calderon last month sent hundreds of extra soldiers and police to Acapulco's home state of Guerrero. Initial results of operation "Safe Guerrero" have given some in the city encouragement. But Calderon was in no mood to celebrate during a review of the situation on October 26.
"Guerrero and Acapulco in particular have for decades been part of Mexico's image, domestically and abroad," he said in the city. "They've been a fundamental factor in opening up Mexico as a natural destination for international tourists. But today, we know it has been attacked by a terrible cancer, the cancer that organized crime represents."
By mid-October, Acapulco's official homicide tally stood at 823, a jump of 188 percent from the same period in 2010, according to figures compiled by Guerrero's government. That gave the city of 790,000 a murder rate of 131 per 100,000 people, a figure rivaling the deadliest places on the planet. More than 50 other murders have since followed.
A haven for pirates in the age of empires, Acapulco began attracting the cream of Hollywood and politicians like U.S. President John F. Kennedy with its golden views of the Pacific in the 1950s. The city briefly enjoyed fame as a fictional battle zone in the 1980s when Sylvester Stallone used the surrounding area as a set for the violent Cold War adventure "Rambo: First Blood Part II."
"The city was as safe as any city in Mexico at that time," said Dave Friedman, a still photographer for the movie. "The only bad guys around were the ones in the film."
The body count in Rambo fell far short of the bloodletting unleashed on Acapulco in August: 148 people lost their lives, only seven fewer than the official number of civilians killed by violence in all of Iraq that month. The comparisons are not lost on local officials.
"We have to defend Acapulco to defend Mexico," said Miguel Angel Hernandez, a chief of the city's police department. "Acapulco is Mexico. It's a brand that sells."
Today most visitors to Acapulco are Mexicans, but its name is still talismanic for the whole tourism industry, which accounts for some 9 percent of the national economy and 70 percent of output in Guerrero, one of Mexico's poorest states.
Mexico's economy has lagged its Latin American peers on the road to recovery from a deep recession in 2008 and 2009, growing two percentage points more slowly than Brazil last year.
So Calderon has focused on attracting foreign investors and visitors, assuming the role of salesman-in-chief for tourism. In September, he starred as an abseiling adventure guide across Mexico in a film produced by the U.S. Public Broadcasting System.
"Mexico has everything you want to see as a tourist. The most beautiful country in the world," Calderon told an audience when premiering the film in New York. But the bloody headlines are making that a hard sell.
Government data show that spending by foreign tourists fell to $11.9 billion in 2010, down 11 percent from 2008, and was off another 4 percent in the first eight months of this year, despite some evidence gangland violence may have peaked.
Acapulco's annual hotel occupancy rates sank to 44 percent in for first nine months of 2011, a drop of 4.5 percentage points on the same period last year and down from 55 percent in 2006. The local hoteliers' group said its occupancy rate tumbled 11 percentage points on the year to a historic low of 23 percent in October. The 40-room Los Flamingos, which ordinarily expects to have 10 to 15 rooms filled throughout October, had just one room occupied in the middle of the month.
A slower U.S. economy has hurt Mexico's tourist trade. But the perception that Acapulco is unsafe is doing the most damage, said Pedro Haces, president of the city's association of hotels and tourism companies. Factoring in discounts, tourism revenues in Acapulco could fall 15 percent this year, Haces said.
"We have lower occupancy rates and lower prices. These months we're not even covering our costs," he said, sitting in a small office flanked by a smiling photograph of himself with Calderon. "We're in a vicious circle."
Acapulco's woes mirror a broader decline in the industry since Calderon became president in December 2006 and launched his war on the nation's drug cartels. To date, the conflict has claimed 45,000 lives.
Despite recovering somewhat from the impact of the swine flu outbreak in 2009, average Mexican hotel occupancy rates were down five points to 47 percent between 2007 and last year, according to figures from the ministry of tourism.
If current trends continue this year, the annual number of international visitors to Mexico, including cross-border vacationers, will have sunk nearly 30 percent since 2005, the ministry's data show.
Last year, when the drug war violence hit new heights, the number of foreign visitors fell nearly 8.5 percent, easily the worst drop during Calderon's presidency. The chaos is hitting domestic tourism as well.
"I used to go to Acapulco two or three times a year, but I haven't been for a year now. For middle class Mexicans it was the only place to go," said 34-year-old bakery manager Mauricio Ledesma, as he smoked a cigar in a cafe in central Mexico City. "You don't feel safe going out there."
Public angst over the drug war has also hurt Calderon's conservative National Action Party, which is running a distant second in polls to the opposition Institutional Revolutionary Party ahead of a 2012 presidential vote. Mexican law bars Calderon from standing for office again.
The government says its capture or elimination of bosses has fragmented gangs, sparking a temporary surge in fighting. Violence has fallen this year in parts of the country, such as Tijuana and Ciudad Juarez in the north. But new flashpoints have emerged in Monterrey and the Gulf of Mexico port of Veracruz .
In Acapulco, violence began to intensify after the killing in December 2009 of Arturo Beltran Leyva, the head of the cartel that had traditionally dominated the port city. A scramble for power ensued and Guerrero's state government says it has now identified 17 different groups working in the city, roughly one per district.
Locals says the source of the violence are the cluttered districts -- or "colonias" -- behind the beach front that house most of Acapulco's population. Tourists rarely venture deep inside them.
Sitting under a parasol sipping a beer, Francisco Mendoza, a 56-year-old academic from Mexico City, said he felt comfortable on the beach, much of which he had to himself.
"But there is fear here," he said. "A year ago people said there were gunfights at night. Now they're during the day."
The state government fears the violence, which has cost hundreds of jobs in Acapulco, will fill gangs with new recruits. Most incoming members are aged between 16 and 21, the city's police department said.
According to a recent United Nations study, youth unemployment in Mexico has doubled in the past decade to over 10 percent, about twice the official national average. But the real number is probably much higher because roughly a quarter of Mexico's economy is off the government's books. Many jobless young Mexicans have turned to crime for pay.
A 16-year-old hitwoman captured in June said she was paid 12,000 pesos for two weeks work - a sum three times the average national wage.
High casualty rates in the drug gangs have given ruthless youngsters new opportunities. "It used to take 10 to 15 years to reach higher ranks in any criminal organization," said Acapulco police chief Hernandez. "Now it's months."
Having forced the closure of bars, restaurants and hotels, the gangs fighting to control Acapulco's drug market and protection rackets have sapped the wealth that sustained them. Desperate for cash, they have resorted to kidnapping and extorting anyone with a job.
Teachers went on strike this summer to protest the threats, causing more than 100 schools in the city to close for weeks. Raul Ramirez, secretary general of a hotel workers' union in Guerrero, said about a third of the cooks, waiters and bellboys he represents had been subject to extortion attempts. Most earn around 6,000 pesos a month.
GLIMMER OF OPTIMISM
The city is also renowned for a powerful marijuana strain -- Acapulco Gold. Visitors with money to spend have kept demand for drugs strong. According to a study last year by security consultancy Risk Evaluation, Acapulco is the fifth-biggest drugs market in the country, after Mexico City, the two major cities of Guadalajara and Monterrey, and tourist resort Cancun.
As it batters tourism to Acapulco, the violence is also eating away at Cancun. The number of murders in Quintana Roo, home state of the Caribbean beach resort, almost doubled in the five years to 2010.
Average monthly hotel occupancy rates in the Cancun-Puerto Morelos area fell by nearly 14 points to 58 percent between 2007 and 2010, figures from the local hoteliers' association show, though they have improved this year.
Cancun is not taking the same level of punishment as Acapulco because it is firmly in the hands of one drug gang, the Zetas, said Alberto Islas of Risk Evaluation. "Guerrero is up for grabs," he added.
On the idyllic cliffside retreat of the Las Brisas hotel above Acapulco Bay, staff are optimistic the "Safe Guerrero" operation will pay dividends.
"People have started going out again during the night," said Osiris Torres, chief concierge of the luxury resort, where guests pay up to 23,000 pesos a night. The hotel registry glitters with the names of past visitors: Madonna, Elizabeth Taylor, Rod Stewart.
During the first month of the government's Guerrero initiative, the number of homicides in Acapulco fell by some 42 percent on the month, according to local authorities. However, such figures offer little comfort to those most vulnerable to the violence.
"I don't feel any safer," said a street vendor who says he has a family of five to feed earning about 2,000 pesos a month. He recounted the tale of how a colleague was recently shot dead by a drug gang in front of his family.
"They're always watching," he said. "I even know one of the people who did the killing. It's not safe for me to be seen with you. Wherever you are, they will find you."
(Additional reporting by Luis Enrique Martinez; Editing by Kieran Murray and Chris Kaufman)