Flu? What Flu?

From the New York Times

May 9, 2009
Flu? What Flu?

By ELISABETH MALKIN
MEXICO CITY — If you are looking for a cheap travel destination, try Mexico.

Short of war, Mexico has endured about the worst calamity that can befall a country’s tourism industry over the last few weeks. A few people who had traveled here came down with what looked, initially, like a potentially highly contagious flu. Within days, pictures of civilians clad in surgical masks, like scenes from some science fiction disaster movie, were leading newspaper and television reports around the world.

It will take a long time for would-be vacationers to forget those images, but the Mexican government is trying to help them, with a multimillion-dollar campaign to restore Mexico’s brand, as hotels cut rates 50 to 70 percent.

Some are not even waiting for the World Health Organization pandemic warning to be lifted. AM Resorts, a hotel chain, announced a “flu-free guarantee” at 10 of its 11 Mexico hotels beginning Friday. The company will give three free vacations over the next three years to any customer unfortunate enough to pick up the H1N1 flu virus at one of its Mexico resorts.

The company is also offering discounts of 37 to 55 percent, as well as credits worth as much as $250 for food and other items.

“During the last few weeks, we have continuously encouraged travel to Mexico based on the real facts about the H1N1 virus,” Alex Zozaya, AM Resorts president, said.

When Mexican officials announced almost $2.1 billion in tax breaks and loans to help the Mexican economy recover from the residual effects of the flu, the tourism industry received special attention — loans for hotels and airlines, cuts in airport and port fees, and tax write-offs for businesses — worth, all told, $450 million.

The reason is clear. Foreign tourism earned Mexico $13.3 billion last year. Tourism employs more than two million people and accounts for about 8 percent of the economy.

The number of foreign visitors had already plunged since the beginning of the year because of the sinking global economy. And graphic press reports from Mexico describing gruesome drug violence were no help. Then, came H1N1.

Though it is impossible to know how much damage the flu will inflict in the end, Mexican officials have said that in the worst case, the revenue from foreign tourists could fall $5 billion this year. The finance minister, Agustín Carstens, has estimated that the outbreak will eventually shave 0.3 percent to 0.5 percent from the gross domestic product.

There are a number of worrying signs that pessimism is hurting the tourist trade, at least right now. Although the normal pace of life is returning here, the State Department still advises Americans against all but essential travel to Mexico.

Continental Airlines cut capacity on its Mexico routes in half beginning on Monday, noting that demand was already soft before the flu outbreak and dropped sharply on the news. Hotels in Cancún and south along the Mayan Riviera reported that guests did not bother to cancel; they simply did not show up. Cruise ships have canceled all ports of call in Mexico.

“It is not necessarily the risk” to the passengers, Cynthia Martinez, a spokesperson for Royal Caribbean Cruises, said. “It’s more about whether our guests feel comfortable visiting Mexico.”

Hotel occupancy in Cancún dropped from 77 percent the day the alert began on April 24 to 42 percent by the end of the month. By the end of last week, it was down to about 23 percent, said Marisa Setien, the executive director of the Cancún Hotel Association.

“We did not think it would be that bad, but it was a chain reaction,” she said.

Health authorities have confirmed about 1,360 cases of the new influenza virus and 45 deaths in Mexico. The vast majority of the cases have been concentrated in Mexico City and the surrounding suburbs, far from tourist resorts on the Caribbean and Pacific coasts.

Hotel occupancy in Mexico City fell to about 10 percent as the city shut down. The city’s tourism secretary, Alejandro Rojas-Díaz, estimates that the city is losing $10 million a day.

But he argues that the tough line the city took against the illness, closing restaurants for a week and most other entertainment, including bars and soccer stadiums, for even longer, will ultimately pay off in credibility.

“We have told the truth and when we tell the truth that the city is safe again, the world will believe us,” Mr. Rojas-Diaz said. “It will be squeaky clean.”

That may be true, but travel agents in the United States say bargains will help.

Hotels, hoping to restore their occupancy rates, have dropped their prices sharply and that is reducing the prices of packages to Mexico, said Tim Mullen, senior president of Apple Vacations, a large agency near Philadelphia.

Compared with four weeks ago, packages are 70 percent cheaper for May and 50 percent cheaper for June, he said. There will be “a bonanza of good deals this summer.”

Mr. Mullen said the first rush of concern among vacationers had slowed.

“This week, all of a sudden it became less ominous than what was reported,” he said. “Hopefully, it’s a short-term blip on trips to Mexico.”

The Cancún Hotel Association plans to work first with travel agents in Mexico to bring back Mexican tourists. When the global flu warnings are lifted, the association will begin working with tour operators in the United States and elsewhere.

Oscar Fitch, the executive director of the Mexico Tourism Board, said that once the United States and other countries lift travel advisories to Mexico, Mexico will start a broad campaign to bring visitors back. “The country is closed right now, not by us, but by everybody else,” he said.

“In a couple of weeks people are going to want to go back to Mexico,” said Mike Trujillo, a travel agent in Santa Rosa, Calif. “There were some great deals before this and there will be better deals now.”

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