By Michael O'Boyle and Jason Lange
MEXICO CITY, May 19 (Reuters) - Fears of contracting a new flu virus have emptied the beaches, restaurants and nightclubs of Mexico's main tourist destinations, hobbling a key industry just as a severe recession is gripping the country.
Mexico's tourism sector has weathered fierce hurricanes and raging drug gang battles, but the H1N1 outbreak could spur the biggest collapse in international visits in decades.
Tourism Minister Rodolfo Elizondo says it could take until December for the flow of foreign tourists to recover, wiping out the key summer season when millions of Americans and Europeans traditionally escape to Mexican beaches.
"The summer for foreign tourism is obviously lost," said Miguel Torruco, head of the National Tourism Confederation, or CNT, which represents small- and medium-sized companies.
Travel alerts by countries like the United States, Britain and Canada -- lifted in recent days -- drove many foreigners to cancel vacations to Mexico.
Airlines have reduced flights to beach resorts like Cancun, leaving hotels mostly empty and putting hundreds of thousands of jobs in the hotel and restaurant sectors at risk.
"Travel agencies are only receiving cancellations. It is as if the Bubonic plague was here," said Oscar Amerigo, vice president of the CNET, an umbrella group representing more than a dozen tourism industry associations.
Mexico is considered the epicenter of a flu outbreak that has spread to dozens of countries. Initial cases were linked to visits to Mexico, one of the world's top 10 destinations.
The drop in tourism will be sorely felt as a drop in U.S. demand for Mexican manufactured goods has pushed Mexico into its most severe recession since a 1995 financial crisis.
Tourism is one of Mexico's top sources of foreign currency, accounting for about 8 percent of the economy. The sector employs about 2 million people across the country.
As the government moved to shut down much of public life in late April and early May, foreign tourists rushed to leave and international flights into Mexico arrived almost empty.
Continental Airlines
LOST SUMMER
Desperate to lure back vacationers, hotels in Cancun and down the Caribbean coast have cut rates by up to 70 percent. Some are even offering three years of free vacations to any visitor who catches the new flu from a visit to Mexico.
But tourism woes look set to last long enough to dent an economy already seen shrinking around 5 percent this year.
Elizondo has estimated revenue from foreign tourists could drop by nearly a third this year, costing the industry some $4 billion -- the biggest drop on record, according to government data going back to 1980.
The government has offered more than $2 billion in tax breaks and financing to businesses hit by the flu crisis. But the CNET's Amerigo said that without more drastic support measures, some 300,000 jobs could be lost this year.
The swine flu outbreak has killed at least 70 people in Mexico and is spreading to more countries. But scientists think that unless it mutates into a more dangerous bug, the virus may not be much more lethal than common seasonal flu.
"Tourist destinations are safe in Mexico," Health Minister Jose Angel Cordova said recently. "People can come back with peace of mind because we are monitoring this very intensely."
The CNT's Torruco says Mexico has to put money behind that message. "We have to start preparing a campaign to reposition the tourism sector and the image of Mexico abroad that will require unprecedented resources," he said.
Some in the United States, the origin of most of Mexico's foreign visitors, are more optimistic.
"The good news is most consumers don't have a very long memory, so the first time a good deal comes up in Cancun or Acapulco, they're gone. They're heading south," said Michael Boyd, who heads airline research group Boyd Group International in Evergreen, Colorado. (Editing by Catherine Bremer and Dan Grebler)