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US tourists cancel trips to Dominican Republic following mysterious deaths

Key Points
  • So far nine Americans have died in the Dominican Republic in the last year and dozens more have reported illnesses, raising concerns about the safety and security of travelers.
  • According to a new survey conducted by the American Society of Travel Advisors, nearly 60% of travel advisors have canceled trips for U.S. clients to the Dominican Republic in the last week.
  • Analysts at SunTrust expect the decline in tourism to have a negative impact on companies like Playa Hotels and Resorts, which has roughly 20% exposure to the island.
Tourists rest at Bavaro beach, in Punta Cana, Dominican Republic, on January 16, 2012.
Erika Santelices | AFP | Getty Images

Over 2 million Americans travel to the Dominican Republic every year, but following a number of mysterious deaths on the island, tourists are rethinking whether they want to travel there.

So far nine Americans have died in the Dominican Republic in the last year and dozens more have reported illnesses, raising concerns about the safety and security of travelers.

Tourism officials on the island say as of now the cases are isolated events, but reports suggest tainted alcohol could be the culprit.

The FBI in conjunction with local authorities are investigating the deaths, but results are not expected for weeks.

With so many unanswered questions, travelers are thinking twice about their summer getaway to the Caribbean nation.

"We have a survey out in the field … the early signs are that demand has been curtailed somewhat … how long it lasts is really going to be up to the Dominican Republic government and the result of the FBI investigation," Zane Kerby, president of the American Society of Travel Advisors, told CNBC.

According to a new survey conducted by group, nearly 60% of travel advisors have canceled trips for U.S. clients to the Dominican Republic in the last week.

Data from Forward Keys, which analyzes over 17 million flight bookings a day, paints a similar picture, with flight cancellations up 45% in the first half of June compared with the same period last year.

Analysts at SunTrust expect the decline in tourism to have a negative impact on companies like Playa Hotels and Resorts, which has roughly 20% exposure to the island. It operates five resorts and is planning to open two new properties on the island.

"It is difficult to precisely quantify the financial impact on PLYA [Playa Hotels] but we have high certainty it will negatively impact visitation to the DR," Patrick Scholes, managing director, lodging and leisure equity research at SunTrust Robinson Humphrey, said in a note to clients.

As hotels await the results of the investigation, some are making changes to assure guests they are taking a proactive approach. Hard Rock Hotels said it is removing liquor dispensers from guest rooms. Alcoholic beverages will still be available 24 hours a day, the company said.

"All of the alcohol on property will continue to be brand name and sourced from the U.S., with the exception of a Dominican Republic specialty, Mama Juana, and local beer, Presidente, that we carry to support our community," the company said.

Cruise operators Carnival and Royal Caribbean, both of which have stops in the Dominican Republic, told CNBC they are monitoring the recent events and reviewing the information from the State Department.

The State Department has the Dominican Republic at a level 2 out of 4 in its travel advisory system.

On Thursday, Rep. Frank Pallone, D-N.J., sent a letter to Secretary of State Mike Pompeo and FBI Director Christopher Wray urging the State Department to reassess its travel advisory.

"I'm extremely saddened by the deaths of 9 Americans in the Dominican Republic. One of the victims was from my district in New Jersey," Pallone tweeted to his followers.

Online travel platform BookIt.com said while it has seen an increase in cancellations to the Dominican Republic, many of its customers have rebooked trips to other Caribbean islands and Mexico.

"For our travelers that have decided to change their vacation plans, we are seeing an uptick into Jamaica, Aruba, Turks and Caicos, and other smaller Caribbean islands. In addition, Cancun has increased its share of our all-inclusive business," said Bud Finlaw, CEO of BookIt.com, told CNBC via email.

Experts say this trend is likely to continue.

"When incidents arise such as this they do tend to ask more questions and be more cautious about where they travel," Kerby said. "So we have seen some cancellation and rebooking to islands in the Caribbean, particularly Puerto Rico and other destinations that might have a safer reputation than the Dominican is experiencing right now."

Correction: This story was revised to correct the spelling of Zane Kerby's last name.

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