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Global tourism industry caught between economic crisis and flu

Chairs lie empty at a beach resort in Cancun, Mexico, on Tuesday as fears of swine flu kept tourists away. Hotel occupancy has sunk across the country because of the crisis. PHOTO: AFP

Volatility unleashed by the global economic crisis and the swine flu epidemic is hitting the travel industry hard, prompting deep concern among participants at a world tourism conference that opened in Brazil on Friday.

International tourism risks sliding heavily if the H1N1 swine flu spread is upgraded to a pandemic, Said John Walker, an economist at the UK’s Oxford Economics firm.

The number of passengers could drop “up to 60 percent,” he said.

“The probability of a full blown pandemic is relatively low, but there might be another outbreak in full force of swine flu in the next winter in the northern hemisphere,” Walker said.

The economic crisis, meanwhile, could be more devastating to the sector in the US and Europe than expected, some participants said.

Latin America, host for the first time to the tourism conference organized by the World Travel and Tourism Council (WTTC), seemed to be sheltered from the worst of the crisis, however.

Over the first two months of this year, the number of travelers in the world has decreased 7.7 percent compared with the same period last year, according to the World Tourism Organization. That was worse than the body’s forecast of a 2 percent drop.

“We are unable to see ahead. If we finish the year with a drop of less than 5 percent we can say we held up OK,” said Geoffrey Lipman, the group’s under secretary-general.

Projections were further clouded by the added impact of swine flu, he said.

“Who can say whether one tourist or another has canceled a trip because of fears of the flu, or because he couldn’t pay household expenses,” Lipman asked.

One point is certain: Mexico has borne the brunt of the effects of the H1N1 virus. Near-empty hotels in the tourist beach resort of Cancun have been forced to offer three years of free vacations to any tourist who might become infected by the disease while staying there.

“Right now it looks like a relatively benign epidemic. There was no very violent spread like happened with SARS” in 2003, WTTC head Jean-Claude Baumgarten said.

But he added that he remained cautious in relation to tourism, because anxieties sparked by the flu virus were dampening travel.

The abandonment of Mexico by tourists could prove a boon to Brazil, however. The nation of samba is the second-biggest tourist destination in Latin America with 5.2 million visitors last year.

“Some tourists used to going to Cancun are now going to Salvador de Bahia on Brazil’s Atlantic coast,” said Gisela Mendonga, communications director for Embratur, Brazil’s tourist promotion agency.

Most of Latin America, like Africa, has mostly been spared the drop in tourism seen elsewhere. Overall, the region saw tourist numbers swell by between 3 percent and 5 percent in January and February, the World Tourism Organization said.

Brazilian President Luiz Inacio Lula da Silva, who inaugurated the world tourism conference late on Thursday, urged tourism chiefs to invest in his country, which he said was a haven of “economic stability” while the rest of the globe was suffering.

But so far, actors in the sector are playing wait-and-see. Financial transactions “have almost stalled — everybody is waiting for the crisis to pass,” complained a banker specializing in mergers and acquisitions in the tourism business.
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