And now there’s another potential victim of swine flu: world tourism.
As alerts go out, a world already stunned and reeling from a deeply rooted, rapid-blow financial crisis now faces another sudden potential financial roadblock: fears of income drying up from tourism as frightened tourists warned by their governments about global travel stay home. Two of the key targets to be avoided: Mexico and the United States.
There are roughly 4,000 flights per week between the U.S. and Mexico. The Centers for Disease Control and Prevention is issuing the advisory “out of an abundance of caution,” acting CDC chief Richard Besser said at a press conference today.
The European Union’s health commissioner, meanwhile, appears to have irked U.S. officials by warning Europeans to avoid nonessential travel to both Mexico and the United States.
Besser called the U.S. travel warning “premature.” He said that while 40 swine flu cases have been identified in the United States, there has been only one hospitalization for the disease.
In Mexico, news about the swine flu epidemic that has already taken 149 lives caused the Peso to tumble and there’s news Mexico may need a hefty infusion from the IMF to recover from this latest blow to its once-thriving and lucrative tourism industry:
Mexico is more likely to draw on a $47 billion credit line from the International Monetary Fund after the deadly swine flu outbreak sparked the peso’s biggest tumble in six months, according to Barclays Capital Inc.
The spreading disease “raises the odds of tapping the facility,” Eduardo Levy-Yeyati, head of emerging-market strategy at Barclays in New York and a former economist at the IMF, said in an interview. “The flu increases growth risks and currency pressures.”
The peso sank 5.1 percent yesterday, the biggest decline among all currencies tracked by Bloomberg, and was little changed in London trading today at 14.0363 as of 8:50 a.m. Flu- related deaths climbed to 149 in Mexico, though the number directly connected to swine flue hasn’t been confirmed. The benchmark stock index lost 3.3 percent and bonds dropped.
The sell-off began just as investor confidence in Mexico was starting to recover because of the IMF’s April 17 decision to extend the country a credit line. The currency, which had plunged 32 percent in the six months through March 9 as Latin America’s second-largest economy slipped into a recession and drug violence increased, surged 12 percent in the six weeks before the government first reported the swine flu cases on April 23.
The potential impact on tourism worldwide could be huge:
The Wall Street Journal reports:
The virus threat comes as the world tries to dig itself out of a crippling financial crisis. In the U.S. in recent weeks, signs had started to emerge that the economy’s pace of decline was slowing. But a global flu pandemic would likely impede recovery from the recession, especially for emerging economies dependent on trade and tourism.
But, the Journal notes, airlines haven’t reported any major cancellations yet, and WHO has not issued a general warning.
Still, European Union Health Commissioner Androulla Vassiliou urged Europeans to postpone nonessential travel to Mexico and parts of the U.S., and Russia, Taiwan and Hong Kong said they would quarantine visitors showing symptoms of the virus.
Spooked investors dumped airline shares Monday, fearing a further hit to airline finances. Major U.S. airlines relaxed restrictions for passengers seeking to change existing bookings to or from Mexico.
Preoccupation over the impact on tourism can be seen in New York City, according to the New York Daily News:
New York businesses worried Sunday that scary headlines about swine flu could keep tourists away – and hurt their bottom line.
And they have reason to worry: Italy, Poland, Venezuela and Hong Kong already have advised citizens not to travel to the United States.
“If it spreads, and I think it will, we’ll lose 30% of our revenues,” said Dave Schulter, 49, of Dyker Heights, Brooklyn, who sells handbags on a Times Square streetcorner.
Alirio Gonzalez, manager of the gift shop at the Crowne Plaza Times Square Hotel, predicted tourists will start canceling reservations unless authorities in the U.S. and Mexico can quickly control the spread of the disease.
“This hotel is like a thermometer,” said Gonzalez, 45, of Union City, N.J. “It takes the temperature of tourism.”
Why could world tourism take a big hit? For obvious reasons: heightened mobility due to the popularity of air travel means no part of the world is safe — which is exactly what a WHO official has said:
World health officials stepped up warnings of a possible pandemic of swine flu as governments released millions of antiviral drugs and the number of cases rose, spreading into Europe.
With the likely death toll in Mexico, the epicenter of the outbreak, now standing at 152, the World Health Organization (WHO) raised its flu pandemic alert level from three to four.
While the increase marked a “significant step towards pandemic influenza, it’s also a phase which says we are not there yet,” said Keiji Fukuda, acting WHO assistant-general for health, security and the environment.
Fukuda warned “that in this age of global travel where people move around in airplanes so quickly, there is no region to which this virus could not spread.”
Meanwhile, already battered airline companies are now taking another beating:
Airlines have weathered high oil prices, collapsing financial markets, a recession, slumps in business travel and cargo trade.
And now comes the swine-flu health scare.
Airline stocks took a beating yesterday, down 13 to 17 percent, on investor worry that consumers already staying home because of the economy will have another reason not to travel.
Major carriers with connections to Mexico said they have waived change fees for travel to and from Mexico, allowing passengers to delay flights or buy tickets to a different destination.
At Philadelphia International Airport, only US Airways and USA3000, an affiliate of Apple Vacations, fly to Mexico. Cancun is the only Mexico destination out of Philadelphia.
US Airways has three daily flights to Cancun. USA3000 has four flights a week to Cancun.
“We believe airlines are at risk of suffering reduced traffic because of government-imposed quarantines and travelers’ fears,” said Standard & Poor’s credit analyst Philip Baggaley.
A piece in the New York Times notes that a major epidemic now could threaten global finance. Here are a few parts of it:
The financial crisis in the United States has reverberated around the world. Now the country faces a new challenge to its economic health — fallout from the swine flu crisis. It’s not yet clear, but the repercussions for the global economy could be severe.
…..But with the economy already suffering — and bringing the rest of the globe down with it — the last thing it can withstand is a serious epidemic. The last time the world faced anything similar was the 2003 bout of severe acute respiratory syndrome, or SARS, which spread from China’s Guangdong province to three dozen countries.
The human toll from SARS, about 900 deaths, though tragic, was a pinprick compared with the Spanish influenza at the end of World War I, when as many as 100 million died. But the resulting panic caused many travel-related businesses in the hardest-hit areas to suffer severely. The World Health Organization estimated that international travel to areas like Hong Kong, Beijing and Toronto fell by more than half, and hotel occupancy dropped 60 percent.
AND:
The financial crisis and resultant economic contraction is already taking heavy casualties on the businesses and economies most dependent on trade, transportation, tourism and lodging, which are most susceptible to the flu bug.
Moreover, governments are managerially challenged, with bank bailouts and huge stimulus packages to finance. A severe flu epidemic would open another front. After SARS, much was learned about epidemic control. For the sake of the global economy, this had better be a flu that can be easily contained.
And if Mexican tourism seriously sags could it help anyone? For instance, could it on a short term basis help Hawaii?
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Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.