May 19, 2009

Swine Flu Makes Cancun Struggle

A recent phone call from a good friend of mine – an owner of a night club in Cancun, Mexico - made me aware of the following situation and post this blog:

The announcement of the swine flu in Mexico has brought panic and uncertainty to several countries. The disease has greatly affected Mexico City and generated a huge uncertainty about this country and the disease itself. Furthermore, Mexico's main airport is located here and many flights to Mexican cities have layovers in Mexico City.

Therefore, Cancun - a city based on tourism – has experienced a great loss of its customer base. As soon as the swine flu had been announced, the tourists have cancelled their vacations, the streets have become empty and the city has resembled a ghost town.

The fear of an infection has decreased the demand in tourism dramatically and the prices have declined. The supply has also changed as a response to the decrease in demand and the night clubs and some hotels have closed for a certain period. Lacking the critical amount of customers, they have been forced to this decision, since the production costs such as personnel expenses cannot be offset. (The decrease in supply prevents the prices from falling to zero, so there is still at least little supply and demand for hotel rooms).

Even though the swine flu is not as dangerous as predicted and there have not been any cases in Cancun yet, tourists would rather choose different locations for their vacation. The downturn of the tourism still goes on making Cancun struggle by the fear of the swine flu.

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