Flu Fears Hit Travel Stocks

Updated from 11:08 a.m. EST

As if the travel industry didn't already have enough to contend with, along comes swine flu. Stocks throughout the airline, cruise line and hotel sectors were all down on Monday, on the fear that consumers will be even less eager to travel if the disease continues to spread.

The European Union health commissioner has advised Europeans to avoid nonessential travel to Mexico and the United States.

Marriott International(MAR) was downgraded by UBS to neutral from buy, and its full-year earnings outlook was lowered to 94 cents a share from 97 cents. The news sent shares down 3% to $21.73 in morning trading.

Royal Caribbean(RCL) was also downgraded by Credit Suisse to neutral from outperform. Shares of the company plummeted 14% in morning trading to $12.40. On Sunday, Royal Caribbean spokesman Michael Sheehan said the company is "closely monitoring the situation," but has not changed any of its cruise itineraries.

Rival Carnival(CCL)plunged 11% on Monday to $25.23.

Airlines including American(AMR), United(UAUA), Continental(CAL), US Airways(LCC), Mexicana and Air Canada said they were waiving penalties for changing reservations to, from or through Mexico, but have not canceled flights.

Among U.S. airlines, Continental has the greatest potential exposure, according Standard & Poor's credit analyst Philip Baggaley.

"Following the experience with SARS and subsequent fears related to avian flu, governments appear to be readier to act quickly against communicable disease outbreaks," Baggaley wrote. "While this may be positive for containing disease, we believe it means that airlines could start to see lost traffic immediately, even when a communicable disease is fairly localized."

JetBlue Airways(JBLU) was down 9% to $5.03, while US Airways fell 17% to $4.04.

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