Two musicians walk on an empty beach in Acapulco

Guns, Germs and Recession, the Curse on Mexican Tourism

MEXICO CITY (By Ioan Grillo, Time) June 18, 2009 — It was the last image the Mexican government wanted from one of its sunny seaside resorts. In the heart of Acapulco, soldiers fought a blazing battle against drug-cartel thugs who sprayed bullets from Kalashnikov rifles and hurled more than 50 grenades. After hours of the warlike scenario, 13 gunmen, two bystanders and two soldiers lay dead on the concrete. Worst of all, the shoot-out happened in the middle of a sweltering Saturday night less than 100 yards from Los Flamingos Hotel, which in its heyday saw Hollywood stars such as John Wayne and Johnny "Tarzan" Weissmuller party until dawn.

Last weekend's Acapulco firefight was the latest episode of close urban combat in Mexico as cartel militias fight one another and the government for the bounty of the drug trade. But its time and place could not have been more unfortunate. After tourism was shattered by the swine flu scare, Mexico just two weeks ago launched a campaign to try to lure holidaymakers back to its paradise beaches. Under the slogan "Vive México" (Long Live Mexico), the $90 million effort is using such stars as Spanish tenor Placido Domingo and soccer ace Rafael Márquez to show off the golden sands. But while Vive México has yet to have much international impact, the wild seaside shoot-out grabbed the attention of TV stations from Long Beach to London.

Until early 2009, it was difficult to gauge exactly how many foreigners were scared away by the drug war and its piles of headless corpses. The global economic crisis may have done just as good a job of keeping potential visitors at home. In any case, while tourism was hit in the first months of 2009, it was not devastated; for example, the Riviera Nayarit on the Pacific coast reported hotel occupancy of 83% in February, compared with 90% in the same month of 2008.

But then came disease. While the drug war may have given a few people the jitters, the swine flu sent many more running for their lives. As news of Mexicans sputtering to death on hospital beds shot round the world, tourists fled resorts in packed planes while many more upcoming holidays were canceled. At the Riviera Nayarit, hotel occupancy in May plummeted to 33%, compared with 70% in the same month of 2008. In some other resorts, it was down to single figures. And most of the visitors who came were Mexicans, not foreigners. "It was like first getting a cough and then getting hit over the head with a shovel," says Marc Murphy, director of the Riviera Nayarit tourism board.

Like most tourism officials in Mexico, Murphy complains the media showed the country in an unfairly bad light. He is quick to point out there have been no documented cases of any holidaymakers being directly affected by the Mexican drug war. "Somewhere like Los Angeles has many more gang members and killings than the places the tourists visit here," Murphy says. "But Mexico has got more negative coverage than most countries. There has also been some irresponsible and incompetent reporting."

President Felipe Calderón is also critical of the media spotlight shining on Mexico. He was particularly incensed when Forbes magazine included Mexican drug trafficker Joaquin (El Chapo) Guzmán on its richest list — he was put at No. 701, with an estimated net worth of $1 billion. "Magazines are not only attacking and lying about the situation in Mexico but are also praising criminals," he said in March, following the Forbes choice.

Calderón is particularly concerned about the nation's image because of the bottom line. In 2008, foreign tourists spent $13.3 billion in Mexico, the third biggest source of foreign income after remittances and oil exports. This year all three of these moneymakers are being clobbered. While the price of petroleum nose-dived with the crisis, the recession north of the border pushed Mexican remittances down 18.6% in April compared with the same time last year. To add to these woes, Mexico's manufacturing sector has been battered by a drop in spending in the U.S. In total, the Mexican government predicts the economy will shrink 5.5% this year. But some private analysts speculate the decline might be more than 8%, the worst dive since the Great Depression.

Calderón argues the ability of Mexicans to deal with this challenge will be crucial to luring tourists back. Personally launching the Vive México campaign in his presidential palace, the President focused on selling Mexican character.