As swine flu threat eases, government focuses on recovery

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*logoThe Mexican government has vowed to provide $2.1 billion in aid to help the country recover from the economic impact of the H1N1 swine flu.

Tourism, which has been devastated as the U.S. and other countries advised against most travel to Mexico following the outbreak, will get a big cut of the total aid pie: roughly $450 million in tax breaks to sectors like airlines, hotels, cruise lines and restaurants.

Specifically, the government announced a 50% reduction in airlines' operating rights from April to June; a 50% reduction in docking fees and other charges for cruise ships in May, June and July; and a plan to pay 25% of lost tax revenue to state governments that grant tax exemptions to hotels and other tourism businesses.

The Mexican government is also setting aside $15 million for a tourism marketing campaign that will be rolled out once the flu is officially contained and the current travel alerts are lifted.

With average hotel occupancy in Mexico down by as much as 50% compared to where it stood at this time last year, hotels have slashed rates in an effort to lure back visitors. 

One resort company, AMResorts, is going a step further by offering a Flu-Free Guarantee to any guest who happens to contract the virus. Under its policy, a guest who books between May 8 and June 30 and contracts the flu while staying at an affiliated property anytime through Dec. 20 will receive three free vacations. The guest must provide proof of the diagnosis.

The economic-stimulus package, announced last week, came as Mexico ended a five-day suspension of nonessential business and reopened tourist sites and schools that were closed in an effort to stem the spread of the flu virus.

It is still unclear how much damage the flu scare will inflict on Mexico's tourism industry, but Minister of Tourism Rodolfo Elizondo said in an interview on Mexican radio that tourism revenue could fall by as much as $5 billion this year.

Last year, tourism generated more than $13 billion for Mexico's economy. Mexico's finance minister, Agustin Carstens, estimated that Mexico had lost more than $2 billion due to the flu outbreak.

The emphasis on getting tourists to come back to Mexico does not mean that the virus has stopped spreading in Mexico: Over the weekend, Mexican health officials raised the number of confirmed cases to more than 1,600 and elevated the flu's death toll to 48.

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