By Gabriel Stargardter
ACAPULCO, Mexico, Oct 17 (Reuters) - Gangland violence andlooming bankruptcy had already all but obliterated the glitterof Acapulco before catastrophic flooding last month drovecrocodiles onto the streets of the Mexican beach resort andturned much of it into a mud bath.
Once a playground for the rich and famous, by 2012 Acapulcohad become the murder capital of Mexico, mired in a cycle ofbrutal slayings, kidnappings and extortion as drug gangs foughtfor control of the former pirate cove.
Acapulco was still battling to contain the violence when inSeptember it was hit hard by the worst storm damage ever inMexico. The rains swamped the city's airport, strandingthousands of tourists who are crucual to the health of the localeconomy.
Roads to Acapulco closed, and the average hotel occupancyrate fell to under 20 percent in the weeks after the disaster.The road is open again and much of the mess has been cleaned up,but that rates has yet to recover. Last week it hovered at lessthan half the 2012 average of 49 percent - a record low.
Weeks later, Acapulco's hotels have bought up ads innational newspapers offering two-for-one deals. The message issimple: Even more than sending food parcels, the best way tohelp is to come spend money.
Tourism makes up more than two-thirds of the surroundingstate of Guerrero's income, and with many hotel rooms empty, thecity's finances in tatters and drug violence widespread, theresort faces a hard slog to recover its reputation.
During the rains, hotels served as emergency shelters. Twoweeks later, when Reuters paid a midweek visit, water was stilloff or rationed at many landmark establishments. At the 180-roomHotel El Cano, only about 20 rooms were occupied.
"Let's hope this is as bad as it gets," said El Cano'smanager, Pedro Haces. "We've never had occupation rates likethese." It relies now on national tourism and still getsvisitors because it's the closest beach resort to the capital, afour-hour drive instead of an expensive flight to others spotslike Cancun.
The rains brought by tropical storms Manuel and Ingrid havepole-axed Guerrero's economy, with Governor Angel Aguirre sayingtotal damages would exceed 18 billion pesos ($1.4 billion) -equivalent to 9 percent of the state's annual economic output.
That huge bill has dug a bigger hole for the city, whichMayor Luis Walton declared bankrupt last year.
"The city of Acapulco doesn't have the economic means tosort this out," Walton said of the devastation. "We can't."
Acapulco's misfortune has now become so commonplace thatsigns dotting the highway out of town read "No hables mal deAca," or "don't speak badly of here," a play on the Spanish word"aca" (here) and the first three letters of the city's name.
When the rains began on the night of Sept. 15, many inMiramar II, an estate of small second homes near some of themost expensive hotels in the city, were settling down to watchMexican boxing hero Saul Alvarez take on world champion FloydMayweather.
By dawn, Alvarez's hopes had been crushed and Miramar II wasunderwater, with dozens of residents including 43-year-oldbiologist Arturo Sanchez forced to escape the flooding byperching on neighbors' roofs as the waters below swept awaytheir cars.
Lying next to a diverted river, Miramar II sprouted in anarea many had warned was at risk of flooding.
Residents like Sanchez lost everything, and angry localshave accused developers of having colluded with public officialsto make a fast buck by putting up dream getaways without properplanning.
President Enrique Pena Nieto has promised to investigateallegations of building permits issued illegally in areas likeMiramar II, which have become a symbol of Acapulco's graft.
When Mayor Walton took over the resort in late 2012, heannounced Acapulco was bust, unable to pay debts of $170 millionowing to a crippling legacy of mismanagement and cronyism.
Walton, a leftist, claims the situation is improving - butsays the city of around 800,000 still has 3,000 more unionizedemployees on its payroll than it requires.
Catapulted to fame by guests such as President John F.Kennedy and Marilyn Monroe, Acapulco urbanized rapidly from the1960s with ramshackle settlements known as colonias cropping upin the steep hills behind the beach front.
Demand from tourists and the port's handy location for smugglers moving cocaine from South America into Mexico and onto the United States helped turn the city into a lucrative hubfor drug cartels.
When the local gangs began to fragment during the militaryoffensive launched by former President Felipe Calderon, chaosdescended as rival groups fought for control.
The demise of the Beltran Leyva cartel in 2009 was a turningpoint. Within three years a wave of violence had given the citythe highest murder rate in Mexico.
In 2012, there were some 1,063 murders. That gave it ahomicide rate of 135 per 100,000 people - over 50 percent higherthan Honduras, the world's most murderous country.
"Acapulco looked like Chicago in a 1930s gangster film,"said Javier Morlet, the head of a national group called Dialoguefor Peace, whose daughter was kidnapped and murdered in 2010."The city was almost abandoned. There was terror."
EXTORTION UP, CRUISE SHIPS DOWN
The government sent hundreds of marines and federal policeinto the city to try to curb the violence. It appears to haveyielded some results, in line with moderate improvements acrossMexico.
Since Pena Nieto took office in December, the number ofmurders has fallen. But with roughly 1,000 drug-related killingstaking place across Mexico a month, gangland violence stillremains a fact of life. Acapulco is no exception.
In the first nine months of 2013, there were 536 murders inAcapulco, official data show. That is a third lower than thesame period last year but still very high, and other crimes areon the rise.
With 150 reported cases, there have already been morekidnappings in Guerrero in the first eight months of this yearthan in any year since current records began in 1997. Extortionin the state is also on track to reach a record level in 2013.
Morlet estimated 80 percent of Acapulco's small businessesnow pay protection payments ranging from about 5,000 pesos($380) to 80,000 pesos ($6,000) a month.
Acapulco's newly installed police chief, Jesus Cortes, whoused to run the antidrug assault team for the federal police,said he inherited a bloated force, aging and poorly trained.
"When I was a federal police officer, I didn't trust localpolice. Now I'm head of the local police and I'm working on it,but I still don't have 100 percent faith in them," he said.
The violence also spoiled a once-lucrative cruise industry.
An average of 140, 1,800-passenger cruise ships used toarrive in Acapulco annually in the years preceding 2011, portdirector Octavio Gonzalez told Reuters. By the end of this year,he expects just 13, 600-passenger boats to have stopped off.
"Acapulco was where the jet-set was, but that's no more,"said Mayor Walton. "Of course I'm worried there are no cruiseships. Of course I'm worried there are no tourists."
With international tourism dwindling, the city has becomeever more reliant on visitors from Mexico City. Many of thenewcomers used a government mortgage credit to snap up secondhomes, such as those in Miramar II.
Wading through the ankle-high waters that sloshed throughtheir sludge-coated home, 44-year-old Mexico City carpenterVictor Garcia and his wife, Maria Luisa, came to see what hadbecome of their 360,000 peso dream getaway.
"It was really lovely here," the 45-year-old Maria Luisasaid with tears in her eyes. "It was great."
Nearby, soldiers carved thick slabs of clay from caked cars.
Despite the flooding, the crime and the setbacks to tourism,hoteliers insist business will pick up again. A stoic resiliencein the sun-soaked Pacific haven is widespread.
"They say they're going to relocate us 30 km away," saidbiologist Sanchez. "No. This is my only home."
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