Fuel prices, weather hurt Mexico's tourism industry

MEXICO CITY (Reuters) - The U.S. economic downturn, high fuel prices and bad weather are all hitting the tourism business in Mexico as Americans stay away from the most popular resorts this summer.

The country's white-sand beaches on its Caribbean and Pacific coasts and quaint Spanish colonial towns that dot the countryside, usually draw thousands of tourists each year, packing high-rise hotels and boutique bungalows.

But hotel occupancy at Mexico's top beach destinations in the first two weeks of July was down 3 percent compared to last year to 63 percent, statistics from the tourism ministry show.

The resort of Los Cabos, popular with U.S. college spring breakers, was hardest hit with a 19 percent drop in visitor arrivals, closely followed by other beach towns like Veracruz.

"In the tourist destination of Los Cabos we have seen a decrease in occupancy for various reasons. One of them is because of the economic recession that our neighboring country is facing," said Ruben Sanchez Lizarraga, who heads the local tourism chamber.

As Americans' pocketbooks are squeezed by rising debt loads and soaring gas costs, they are reconsidering how to spend their disposable income, if they have any.

High fuel prices mean air fares are rising, discouraging travel, even to the U.S' close neighbor to the south.

Heaping on troubles for Mexico's tourism industry -- the country's fourth largest revenue generator -- is a busy tropical storm season that is dumping heavy rains and blowing strong winds along the country's two coastlines.

But Mexicans who depend on revenue from travelers are hoping the problems will blow over.