Swine flu fears may hammer travel industry

For an ailing global travel industry, swine flu couldn't have erupted at a worse time.

"It has the potential to paralyze travel," says Roger Dow, president and CEO of the U.S. Travel Association, which represents all segments of the U.S. travel and tourism industry. "Certainly if it gets out of hand," it will be catastrophic.

There are signs the situation is speedily getting out of hand. The U.S. government Monday urged Americans to cancel travel to Mexico if not essential, began setting up border checks and said a travel advisory would stay in effect as long as flu was detected. The European Union's top health official cautioned people not to travel to areas where the flu has hit. Other nations began taking precautions, such as checking passengers for signs of fever.

"This is kind of the one-two-three-four-five punch," says Jan Freitag, a vice president at the hotel-tracking firm Smith Travel Research. "You have a global recession; business travel has been severely curtailed; leisure travel is curtailed because people are not sure they're going to have jobs; you have a lot of new hotel supply in the pipeline; and oops, now we have the European Union suggesting that travel to the United States is a mistake."

Androulla Vassiliou, the European Union's health commissioner, initially suggested avoiding all non-essential travel to Mexico and the United States. She later softened her warning, stressing she was speaking only for herself, not the entire 27-nation EU, and that it was an advisory, not a ban, that applied only to hot spots.

Still, her comments added to fears that the outbreak would hit an ailing industry on the verge of the summer travel season.

They also revived memories of the 2002-03 outbreak of the severe acute respiratory syndrome epidemic in Asia. SARS prompted a plunge in air travel and cost the global economy $33 billion in 2003, the International Air Transport Association estimated then.

Airline stocks slid Monday, with shares of Continental cal falling $2.17, or 16.4%, to close at $11.08. Continental does much business with Mexico. Shares of AMR amr, parent of American, fell 72 cents, or 13.3%, to $4.70.

Hotels had a bad day, too. Marriott mar fell $1.13 (5.1%) to $21.17. American depositary receipts of InterContinental Hotels Group ihg fell 55 cents, or 5.6%, to $9.35. Both have big investments in Mexico.

European airlines also traded lower on reports of the flu's spread. British Airways and Lufthansa were off 8% to 9%, investment bank Avondale Partners said. Ryanair and EasyJet fell 3% to 4%.

Vassiliou's comments were "uncalled for, and (they) could have a dramatic effect on our summer tourism season.," says Joe McInerney, president and CEO of the American Hotel & Lodging Association. "We're expecting a good share of (international) summer travelers."

The travel industry already is reeling under the weight of worldwide recession.

Before flu broke out, the global airline industry was on track to lose $4.7 billion this year, the IATA projected. In the USA, hotel occupancy was down 10.9% from a year ago, and rates were down 7.7%, Smith Travel Research's Freitag says.

Watching for infected travelers

Across the globe, people were on the lookout for flu-like signs among travelers who could spread the virus. Countries — including the U.S. — were taking precautions.

John Kennedy, a spokesman for Hartsfield-Jackson Atlanta International Airport, says it's prepared for sick passengers, though the government hasn't directed airports to take special precautions yet.

The CDC maintains a permanent office with a quarantine room where sick passengers can be kept away from the public, he said.

The government already is briefing the travel industry on precautions it is taking, says Robert Baylor, a spokesman for the American Hotel & Lodging Association. Among them: "passive screening" of passengers at select U.S. airports — pulling aside travelers who look ill.

On the Arizona border, Customs and Border Protection agents can detain anyone who looks ill with the virus, says spokeswoman Teresa Small.

Airports in Singapore, Tokyo and Sofia, Bulgaria, are among those more actively checking, down to using devices to take temperatures.

In Russia, air crews are on the lookout for passengers flying from North America with flu symptoms. Passengers may be examined by medics. Russia, Hong Kong and Taiwan said they would quarantine those showing signs of swine flu.

Later this week, the European Union will meet to suggest proposals that member countries can take to counter the spread of the flu, which causes fever, aches, pains and nasal congestion.

Meanwhile, some companies who put their people on the road are taking precautions of their own, especially in coming in contact with Mexico.

Bloomberg News reported that Daimler, Royal Philips Electronics, Sony and Nokia are among those that have restricted travel to Mexico. Daimler, which makes Mercedes-Benz vehicles, asked its nearly 4,000 workers in Mexico not to shake hands or hug, spokeswoman Ute Wüest von Vellberg told the news service. Panasonic and Samsung Electronics have also limited travel to Mexico.

Corey Caldwell, spokeswoman for the Association of Flight Attendants, the USA's largest flight attendant union, says it is directing members to keep an eye out for flu-like symptoms, especially on trips to Mexico. "We're also pushing airlines to supply gloves and masks."

If a flight attendant observes a passenger with flu-like symptoms, the procedure is to isolate that person as much as possible, Caldwell says.

So far, the travel industry is trying to accommodate travelers' fears. Nearly every U.S. airline with routes to Mexico is waiving cancellation fees or rebooking flights.

The giant InterContinental Hotel Group is starting to see a rise in cancellations, "and we are not charging a cancellation fee at this time," spokeswoman Francie Schulwolf says.

So are major travel wholesalers, such as Apple Vacations and Funjet Vacations. They're allowing clients due to travel through May 6 to reschedule free; air or hotel cancellation fees may apply.

Industry watches and waits

Word on the flu's potential dangers has spread faster than the virus so far, and travel agents, hotels and travel providers say they're getting calls.

At online travel agency Travelocity, spokesman Dan Toporek says customer calls have been "relatively low," which indicates that people aren't panicking and trying to cancel. Still, Travelocity has sent an alert to customers booked for Mexico, and it's temporarily waiving change fees for travel to or through Mexico in coming weeks.

"I book a lot of high-end clients to Mexico, and had three call me yesterday to change their plans," says Stacy Small, owner of Elite Travel International in Brentwood, Calif. When drug violence in Mexico made headlines recently, that wasn't a big issue with clients, but, "The swine flu has everyone freaked out."

Meanwhile, major cruise lines said Monday they would continue stops in Mexico. Travelers such as Derek Brookmeyer, 26, of San Francisco, decided to press on with a Friday trip to Playa del Carmen, Mexico, "though I'm waiting for Mom to give me a call and start freaking out," he says.

In Cancun Monday, "I was at Costco, and they were handing out sanitary hand wipes as you came through the door," real estate broker Jason Pidgeon said. "But other than that, it seems to be business is as normal. My girlfriend works for one of the resorts, and they were receiving people as usual." He has seen only two people with face masks, both wearing them around their necks.

"I don't know anyone who is sick; I don't know of anyone who is panicking," he says. "I feel safer here than I would in any major city in the U.S. If my grandparents were coming tomorrow, I would say, 'I look forward to seeing you.' "

Says travel agent Small: "This is the last thing we need right now. People have been holding back; now, they were starting to make summer plans. Now I think everyone is going to be looking more carefully."

The U.S. Travel Commission's Dow hopes people won't overreact: "We want to be prepared, but not panic."

Contributing: Marilyn Adams, Chris Gray, Barbara De Lollis, Gene Sloan, Dennis Wagner, Roger Yu and wire reports