Analyze This: Swine Scare Hits Travel & Lodging

With the swine flu death toll in Mexico over 100 and the virus spreading, the specter of a possible pandemic sent travel and leisure stocks plunging.

Investors wiped $5 billion off the value of leading U.S. airlines in just 10 minutes of trading, with all of the carriers most heavily exposed to Mexico racking up double-digit losses.

Continental Airlines, which offers more seats than any foreign airline into and out of Mexico, according to data provided exclusively to Reuters by airline schedules consultancy Innovata, saw its stock fall by more than 15 percent.

But it wasn’t just airlines that investors punished. Investors also sent shares of hotels and cruise lines packing with Carnival among the many losers although Carnival said there were no reports of guests showing symptoms of swine flu on its ships.

"There is that perception that illness is easily transmitted on cruise ships," says Sharon Zackfia, an analyst with William Blair & Co. "In the past when there have been outbreaks, it can cause a short-term disruption in demand."

Starwood and Marriott hardly fared much better.

Joseph Greff, JP Morgan gaming, lodging & cruise lines analyst tells Fast Money, “I don’t want to equate this with SARS,” he says, “but I’d imagine in the near term (the pattern will be similar) with hotels experiencing an increase in cancellation rates, especially those s in Mexico.”

Amid all the mayhem on analyst spotted a glimmer of good news.

Howard Wheeldon, senior strategist at BGC Partners in London, says airlines are used to living through boom and bust. "The one thing about airlines is they recover from events like this amazingly quickly. It is damaging and unhelpful, but not the end of the world for them," he says.

What's the trade?

Stifel Nicolaus Airline Analyst Hunter Keay doesn't see any buys. However, it's not due to swine flu fears, it's because of he doesn't feel the airlines can weild any pricing power.

Guy Adami suggests shorting Marriott with a tight stop.

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Trader disclosure: On Apr 27th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (SDS), (WFC), (AAPL), (GE), (AGN); Finerman's Firm Owns (RIG), (UNH), (TBT), (ELX); Finermans Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO); Finerman's Firm Owns (AXP); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (C) Preferred; Finerman's Firm Owns(MSFT) & (MSFT) Put Spread; Najarian Owns (BX) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (MS); Najarian Owns (PALM); Najarian Owns (RHT) Calls; Najarian Owns (RIO) Calls; Najarian Owns (XHB) Cal Spread; Najarian Owns (XLB) Call Spread; Najarian Owns (RF); Najarian Owns (HES) Calls; Najarian Owns (CIEN) Call Spread

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