As if Mexican tourism needed more bad news, a weekend shootout left 18 gunmen and soldiers dead in Acapulco, the iconic if faded beach resort that has been working on a comeback in recent years.
The hours-long gunfight Saturday night took place in a seaside neighborhood of homes and cut-rate hotels that is mainly frequented by Mexicans and sits several miles from the main strip of tourist complexes. Some guests were reportedly evacuated from nearby hotels, but no tourists were known to have been caught in the crossfire.
But the specter of Mexico's drug war spilling into one of the country's best-known resort spots is a fresh blow to a tourism industry that has been hit hard by a swine-flu outbreak and previous worries about escalating drug-related violence.
The area where Saturday's shootout took place is home to budget motels and establishments whose glory peaked decades ago. The zone offers scenic views and was once favored by Hollywood stars such as "Tarzan" actor Johnny Weissmuller, who co-owned Los Flamingos Hotel with John Wayne.
Gunfire could be heard some distance away at the Hotel Paraiso.
"Yes, there was fear on the part of some guests because even though the shooting was not close to our facilities, shots could be heard. And you could see a lot of movement of soldiers," hotel spokesman Ruben Morales said. "That frightened people who live here and tourists, of course."
The gun battle began after army officials received an anonymous tip, according to a military statement. Troops came under fire when they arrived at a house in the western section of the resort city, the statement said.
The army said 16 gunmen and two soldiers died during the gunfight. Some news media reports said the gunmen belonged to the Beltran Leyva drug-trafficking gang, based in the northwestern state of Sinaloa, but they could not be immediately confirmed.
Soldiers later recovered 49 rifles and handguns, 13 grenades and two grenade launchers, the army said. The cache held more than 3,000 rounds of ammunition.
Media accounts said an army colonel escorted reporters to the house after the shootout. Inside were four handcuffed officers from the Guerrero state police who said they had been kidnapped, the Associated Press reported. The colonel, who wore a mask and spoke on condition of anonymity, said the army had not confirmed their account.
The Acapulco area has seen scattered drug-related violence, though it is not a key battleground in the Mexican government's war against drug cartels. But coastal Guerrero state is a well-used route for smuggling illegal drugs from South America toward their main market in the United States and has been the scene of regular clashes between rival drug traffickers.
Tourism has taken a beating after the outbreak in late April of the H1N1 flu virus, which shut down much of the country for weeks and scared off many would-be visitors. Tourism Minister Rodolfo Elizondo said the downturn due to the flu could cost Mexico 100,000 jobs and $4 billion this year.
The flu episode only aggravated damage caused by travelers' concerns over drug-related violence that has killed more than 10,000 people since December 2006, when President Felipe Calderon announced a crackdown on organized crime.
Mexico's tourism promoters have sought to allay fears by contending that despite frequent killings in hot spots along the U.S. border, the county's main resorts are safe. They have also offered discounts on hotels to lure travelers back after the flu outbreak.
ken.ellingwood@latimes.com
Cecilia Sánchez of The Times' Mexico City Bureau contributed to this report.
AK-47 assault rifle similar to the ones use in the battle
A two-hour gun battle which began at 7 p.m. local time between the Mexican Army and drug hitmen ended in 18 fatalities at the Mexican holiday resort of Acapulco on Saturday.

Two soldiers and 16 gunmen were killed in the battle. The army was dispatched to follow up on an anonymous tip and were met by drug hitmen lobbing hand grenades and firing AK-47 type rifles.

"There were grenade and rocket explosions, and weapons like AK-47s. The fight lasted almost two hours," said an observer.

Reinforcements who attempted to join the gunmen in the house were killed by army personnel.

Gunmen attempting to flee from the gun battle were prevented doing so by a military Hummer.

Following the battle, the army seized a huge arsenal of 36 large caliber rifles, 13 small-caliber shotguns, two grenade launchers, 13 hand grenades, 3,525 rounds of ammunition, 180 magazine charges and eight vehicles.

Five people were placed under arrest. Between three and nine soldiers were injured along with three bystanders. 22 people were evacuated from the area following the battle including tourists, a family, the elderly, and a pregnant woman.

Four Guerrero state police were found in the garage of the property who claim they had been kidnapped and held hostage. A colonel reported anonymously that their account was not confirmed.

Local media reported that the gunmen were a part of the Beltran Leyva drug-trafficking gang who belong to the Sinaloa Cartel.

Drug related violence has damaged tourism to the beach front resort city as well as economic investment in the area.  The recent H1N1 flu virus outbreak in Mexico which caused 89 deaths, the wearing of masks, school closures and an airport quarantine cost billions of dollars in lost tourism dollars at the end of April.
Acapulco, Guerrero, Mexico 
Tourism destinations are offering discounted hotel rates to entice visiting tourists. Hotel Los Flamingos once owned by John Wayne and Tarzan's (Johnny Weissmuller) former home were neighboring tourism sites in the neighborhood of Saturday's gun battle.

Acapulco, population over 600,000 is a city of the state of Guerrero on the Pacific coast of Mexico,  southwest from Mexico City. Guerrero provides a main route for drug smugglers between South America and the United States.

Mexico's president, Felipe Calderon, along with American President, Barack Obama, have initiated a crack down on drug gangs. Rival drug gang violence in Mexico has resulted in 2,300 fatalities in the first five months of this year.