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News Article

How badly will influenza affect tourism economy?


Mexico eases restrictions, but economy still suffers

There are signs that the influenza outbreak (popularly referred to as swine flu, but more accurately termed A/H1N1 influenza) in Mexico has passed its peak. There is a fall in new cases recorded in Mexico, and the number of deaths attributed to the disease has been revised downwards after testing of suspected cases. Restaurants and cafes in Mexico City are to reopen from Wednesday 6 May, and libraries, museums and churches will follow suit the following day. However, cinemas, theatres and bars will remain closed for the time being, and it is impossible to say at the moment how long the effects on tourism will remain. What is certain, however, is that the economic consequences of the outbreak have already been severe for Mexico.

On Saturday 2 May, the government said that Mexico's tourism has been hit hard by the H1N1 flu outbreak. The occupancy rate for major tourist sites in Mexico is expected to decline by 44.8 percent in the coming ten days, Mexican tourism authorities predicted.

Tourism Minister Rodolfo Elizondo told a press conference that a series of cultural, business and academic activities in Mexico have been canceled, including the world pediatrics conference which had been expected to draw some 4,000 podiatrists worldwide.

In such resorts as Cancun and the Maya coast, the occupancy rate of hotels, which should have been flooded with tourists in this season, has decreased to 77.8 percent since April 23 when the government announced urgent anti-flu measures.

He also confirmed that such countries as Cuba, Canada, Argentina, Ecuador, Peru and Chile have canceled their flights to Mexico, while the number of U.S. tourists to Mexico has seen a sharp fall.

The minister asked the country's tourism centers to conduct a precise analysis of their economic losses caused by the outbreak of A/H1N1 flu.

The Mexican economy had already been struggling. Oil prices have dropped since last years high, and remittances from Mexican workers in the United States have fallen due to the economic downturn there. With tourism hit, millions of low-paid waiters, maids and other workers have seen their incomes plummet and jobs put under threat.

The worst effects have been in Mexico City, where the economy has been virtually shut down for the last few days. Hotel occupancy rates in Mexico City are at record lows, between 5 and 7 percent, according to economic forecasters at IHS Global Insight. Mexico City accounts for nearly a quarter of the country's economic output, and its Chamber of Commerce said business closures are costing the city $57 million a day, more than a third of the local economy.

The official Cancun tourism Web site said that although no H1N1 flu cases have appeared in the state of Quintana Roo, the top Mexican resort destination, "sanitary measures have been extended to all hotels, restaurants and shops along the Mexican Caribbean corridor." The Cancun airport is using infrared thermometers to detect fevers among arriving passengers, although the agency is predicting "an important drop of tourist arrivals and hotel occupancy...in all Quintana Roo destinations, as well as a significant reduction of air traffic."

According to Rodrigo de la Pena, president of the Cancun Hotel Association, the destination has lost an estimated $2.4 million in the last week as hotel occupancy dropped well below the norm for the time of year.

Five of the world's largest cruise lines, including Royal Caribbean, have cancelled stops at ports in Mexico. Other cruise lines are continuing to stop in Mexico but are assuring passengers that ships are clean and risk is low because most reported illnesses are inland. No cases of swine flu have been reported on any cruise ships that have docked in Mexico, a country ranked in the world's top 10 cruise destinations, with nearly 6.5 million passengers in 2008.

While Mexico is losing out, other cruise destinations are benefitting from changed itineraries. Key West is reaping about $400,000 in extra disembarkation fees from cruise ships that were destined for ports of call in Mexico, but changed destinations because of the H1N1 virus.

"There is an increase in ships being rerouted to Key West," said Alyson Crean, a spokeswoman for the city. "We're receiving about 19 extra calls this month."

And the Caribbean may benefit from tourists booking trips there rather than to Mexico. Travel agents in the USA are reported to be recommending destinations such as Jamaica and the Dominican Republic as alternatives to Mexican beach resorts.

Mexico has said it will take an intense publicity campaign to win back tourists. Tourism Minister Rodolfo Elizondo says he will send officials to China and Canada to learn how those countries revived their industries after being slammed by SARS six years ago. Taxes on visiting cruise ships are being reduced to try and lure them back. But meanwhile, Continental Airlines, the largest U.S. carrier to Mexico, has said it will cut in half the number of seats it flies to that country because of reduced demand. The airline is using smaller planes and reducing flight numbers, and plans to waive penalties for flight cancellations for passengers traveling to Mexico through May 31.

The lessons of SARS

The 2003 outbreak of SARS (severe acute respiratory syndrome), resulted in more than 8,000 cases and 810 deaths in 29 countries, according to estimates by the World Health Organization.

The economic impact of SARS in East and Southeast Asia was about $18 billion, or 0.6 percentage points of the 2003 gross domestic product, according to the Asian Development Bank. Tourism was hit the hardest, falling 20 to 70 percent in April 2003 and leading to an estimated tourism revenue loss of nearly $15 billion.

SARS-affected economies also saw retail sales fall 5 to 10 percent in early 2003, the Asian Development Bank said. Hong Kong's economy shrank 2.6 percent and Singapore's declined 2 percent in the first half of 2003.

The virus spread to Canada, costing that country about Can$1.5 bn in lost gross domestic product, including about $1.1 billion in tourism revenue in 2003, according to the Conference Board of Canada.

The impact of SARS on tourism, and measures taken to revive the industry following the epidemic, can be researched using the Leisuretourism.com database. A search for 'SARS' currently finds over 100 bibliographic records, a selection of which are listed below. Of particular interest, Kuo et al. (2008) assess both the impact of SARS and the potential impact of an influenza pandemic. Tew et al. (2008) look at the lessons from SARS for how to prepare for and manage crises, while Gu and Wall (2007) report on action taken by China to revive tourism after the epidemic. McKercher and Chon suggest that much of the impact of SARS on tourism was due to over-reaction by governments to perceived threat from the disease.

China has created a diplomatic dispute with Mexico by quarantining Mexican citizens with no symptoms of influenza. Mexican Foreign Minister Patricia Espinosa Cantellano has complained this treatment is discriminatory and short of scientific evidence. He has advised Mexican citizens not to travel to China until it corrected the discriminatory measures.

China has sent a chartered plane to Mexico to pick up around 200 Chinese nationals there. The 17-strong crew have been trained on precautions against the flu and dealing with any health emergencies, reports the Xinhua news agency.

Article details

  • Author(s)
  • David Simpson
  • Date
  • 05 May 2009
  • Subject(s)
  • Hospitality Sector
  • Tourism
  • Travel and Technology