Why tourists no longer go loco in Acapulco

Mexico's vicious drugs war has spilled on to the famous resort's streets

Dressed in a vintage safari suit and standing beneath a mango tree, Adolfo Santiago welcomes new arrivals to The Flamingo, a hotel advertised by the sign on its entrance gates as the, "Hideaway of the Hollywood stars, on the highest cliffs in Acapulco". Above his reception desk are photographs of famous former guests, from Errol Flynn and Red Skelton to Roy Rogers and Cary Grant. Tellingly, almost all of them died several decades ago.

Back in the 1950s, when they were taken, these were black-and-white pictures of the biggest celebrities of the day. That's because Acapulco was the most fashionable holiday resort of the era and The Flamingo was its trendiest hotel. It was co-owned by a consortium of 10 Hollywood actors, led by John Wayne and Johnny Weissmuller, the former Tarzan. Mr Santiago, who was hired as a teenage bellhop and eventually rose to become hotel manager, was their most trusted confidante. "They were very good people, and however famous they were at home, stars would come here and feel like a normal person," he says. "They would lie by the pool, or go to the beach, and stay for weeks at a time."

Faded photos behind Mr Santiago's bar show Wayne and his cronies in high-waisted swimming trunks, smoking fat cigars and sipping coco loco, a cocktail made from coconuts that fall from trees throughout The Flamingo's gardens. Today, you can still lounge by the same pool as the stars of generations past. You can still smoke cigars and quaff coco loco, which contains a lethal quantity of gin, rum, and vodka. If you so desire, you can even wander to nearby cliffs where daredevil divers leap 140ft into a foaming Pacific each evening.

But though some things never change, the halcyon era which Mr Santiago so wistfully speaks of is long gone. It's now almost 50 years since Wayne and his cronies sold out of The Flamingo. That appears to be the last time many of its 40 rooms got a lick of paint. Balcony railings are rusty, and carpets are worn bare. Not a single guest appeared to be in residence last week, when The Independent visited. In fact, you could pick up a room, albeit with faded wallpaper and dripping taps, for a bargain-basement price of $60. The hotel's condition is symptomatic of Acapulco's wider decline. Once, it was a glamorous celebrity playground, immortalised in the Elvis Presley film, Fun in Acapulco and the Four Tops' song "Loco in Acapulco". Today, the city's population has ballooned from 20,000 to more than a million, transforming it into a cheap package metropolis full of "all- you-can-drink" nightclubs, discount shopping malls, and high-rise beachfront resorts.

"I was lucky to be here when Acapulco was a small town," says Robyn Sidney, an expat American, who has lived in the resort for more than 40 years. "We used to walk around barefoot and mingle with the movie stars." At the premiere of Rosemary's Baby in 1968, she saw Roman Polanski with Sharon Tate. Another time, she chanced on John Huston drinking in the Zócalo, the central part of the city. Such encounters were once common; not any more.

But the city's declining celebrity stock is only a minor problem. Lately, the foreign package-holiday crowd, the backbone of the local economy, have also been staying away. A grisly drug war which has gripped the whole of Mexico, killing more than 28,000 people in three years, is to blame. To jumpy westerners, terrified about being caught in the crossfire, much of the country is now a no-go area. Recent events in Acapulco have hardly helped. In April, a daytime shootout between police and gangsters, on the main tourist drag, left six people dead, including two schoolchildren. In July, two headless bodies were hung beneath one of the city's busy road bridges. Then, in August, police found 14 corpses with signs round their necks directing them to "Clean up this trash".

Last month came the arrest of Edgar Valdez Villarreal, a cartel chief known as La Barbie, who had been using Acapulco as his base during a vicious turf war with rival kingpin Hector Beltran Leyva over smuggling routes through the surrounding Guerrero state, an impoverished and eminently bribe-able region which represents priceless real estate for moving cocaine from Colombia, where it is produced, to the US.

After La Barbie's capture, two local policemen were abducted and killed. Two other bodies were left outside a Wal-Mart. Almost every day, newspapers tell of more chaos. In the worst incident, 18 people were killed last June in a daytime gun battle in the middle of Acapulco's hotel zone. In just 15 minutes, 3,000 shots were fired and 50 hand grenades thrown.

Little wonder, then, that tourism has fallen off a cliff. With the US State Department, our Foreign Office and most other western governments issuing travel warnings about Mexico, annual visitor numbers fell last year from 1,100,000 to nearer 800,000. "The travel warning had a big impact," says Mr Santiago, who estimates that The Flamingo's turnover is off about 30 per cent. "Narcos aren't usually a risk; in fact, they tend to leave tourists alone. But it's a matter of reputation." Across the city, hotel room occupancy rates are hovering at about 50 per cent.

Next week, on 15 September, Mexico will celebrate the 200th anniversary of its independence. But while the country should be gearing-up for a massive party, Acapulco's troubles reflect a widespread malaise. The nation's economy shrank by 6 per cent last year, and official unemployment is at 5 per cent, the highest figure for years. The chaos of an expensive drug war is hitting tourism, one of its most lucrative industries, at the worst possible time.

Civic officials, of course, say that, despite the killings, Acapulco is a comparatively benign destination. "Statistically, there is more crime involving tourists in Madrid than in Acapulco, but you never read about it," says Jessica Garcia Rojas, the head of the city's tourist board. But whatever the statistics, you only have to talk to locals to realise that the psychological imprint of the violence is everywhere.

Father Martin Reyna, who meets me outside his church, in the poor neighbourhood of La Garita, is wrestling with demons. A few weeks ago, he arrived at his office to find a terrible present outside: the decapitated head of a murdered gangster. The man's skin had been entirely removed, and was lying in a heap nearby, next to his torso. A total of 22 corpses had been left in highly visible public spots over a single weekend.

"When I see this, I feel pain, sadness, impotence," says Fr Reyna. "I feel unable to do anything to make it better. There's a sense of shock and despair. Organised crime has grown so much. It's easy money, especially for poor kids, who have few options. They are the recruits who end up as cannon fodder."

Today, an estimated seven million young Mexicans are out of work. They are known as ninis because they ni estudian ni trababajan or "don't study and don't work" and make easy recruits for drug gangs. "Those of us born in the 1950s knew there was a chance to get ahead through education," say federal lawmaker Enrique Ibarra Pedroza of the left-wing Labour Party. "If you went through university, after you studied, you were going to have social mobility. Now you don't have that."

Adding to public despair is a widely held feeling that law enforcement is either powerless to stop the killing, or actually complicit in it. The Mexican government recently revealed that 10 per cent of the country's police weres fired during the past year for corruption.

"I see 'narcos' driving around openly, all the time," says Jose Moreno, who owns one of the city's thousands of VW Beetle taxicabs. "It's obvious who they are. They come in a convoy, of new SUVs, with no number plates. The police see them and just get out of the way. It's crazy what they get away with. When you hear about those bodies that were dumped at Wal-Mart, you think, 'How were there no witnesses? It's a 24-hour store?' But of course no one saw anything."

Flush with money, gangs have been known to book entire flights into Acapulco's airport, and rent every room on the upper floors of beachfront hotels. At one such gathering in 2007, the leaders of Mexico's five biggest cartels are said to have met in an (ultimately unsuccessful) effort to peacefully divide up the country's drug routes, which are worth an extraordinary $38bn a year.

To comprehend how it has come to this, you have to understand the crazy economics of the cocaine trade, which, thanks to prohibition and the laws of supply and demand, has turned an easy-to-produce white powder into one of the most valuable substances on earth.

In Medellin, the Colombian city close to where most of the world's supply is grown and manufactured, a gramme of the drug costs about $1.50. Get it to the streets of America, and you can sell if for $60 to $100. If you "cut" the drug with baking powder, or chalk dust, or some other dubious substance, you can multiply your existing profit margins by a factor of five or six. So a kilo of cocaine which originally costs $1,500 can hit the streets of New York as six kilos worth more than half a million.

These potential profits can make people do very bad things, particularly when they are supplied with military-grade weaponry from Texas, which has the most comically relaxed firearms laws in the developed world, and where gun shops have been supplying the five major Mexican organisations, known as the Tijuana, Sinola, Juarez, Gulf and Sonora cartels, for a generation.

For most of the past two decades, these tooled-up groups got on with the business of making money. The leader of the biggest cartel, Joaquin "el Chapo" Guzman, even made it onto the Forbes list of the world's richest men, making a cool $1bn. But in 2006, Mexico's new President, Felipe Calderon declared an unofficial war on the cartels, sending federal police and troops into their stomping grounds. His efforts had some success, resulting in the arrest or killing of some of the most wanted men. Arturo Beltran Leyva, known as the "Boss of bosses" was killed last year. Teodoro "El Teo" Garcia Simental, responsible for much of the recent violence in Tijuana, fell in January.

But taking out a cartel chief, has not eliminated the cartels. Instead, it left underlings to fight for what remain of the spoils. In ensuing disputes, old cartels have fractured, turning border cities such as Ciudad Juarez into virtual no-go zones. In Mexico's north-east, where a gang called the Zetas split from the Gulf cartel, the bodies of 72 murder victims were found at a rural house last month.

Pessimists now believe the death toll will continue to rise as long as huge profits are to be made feeding the US market. Some say the only solution to the chaos is legalisation. But in Mexico, where most of the public for now support President Calderon's crackdown, the picture is not quite so clear. "From Calderon's point of view, we are actually seeing some success," says Bruce Bagley, an expert on drug trafficking from the University of Miami. "The US State Department claims that 90 per cent of the cocaine coming into the country is via Mexico. I would actually estimate that this year, the figure is about 65 per cent. Mexico is just getting too dangerous and too expensive, so smugglers are reverting to traditional routes: through the Carribean, particularly countries such as Jamaica and Haiti, and into the European market via West Africa. That's bad news for those places, but just fine for Mexico."

Others say Mr Calderon is only a step away from being able to declare victory against the cartels. But that would probably require the arrest of "El Chapo," who has a $5m price on his head. "If Calderon gets Chapo that's a massive coup," says Malcolm Beith, author The Last Narco, a biography of Guzman. "He won't be able to say he's won the drug war, but he'll have taken out all the significant players, and can focus on the economy."

Though 28,000 people have died, Beith adds that the figure comes from a national population of 110 million. "That gives Mexico roughly the same homicide rate as Washington DC in the 1980s," he says. That may not reassure you enough to book a holiday there, but on the streets and in the fading hotels of Acapulco, it's exactly the sort of optimism they need.