Uncertain Outlook for Tourism, Travel Industry in New Orleans

The tourism business is worth $5 billion a year to New Orleans, and as the evacuation of the city gets underway the travel impact in the Big Easy is just starting to be felt, as airlines cancel flights and figure out whether to offer refunds to ticket holders. And the city´s bustling convention business has, quite literally, been drowned.

Southwest Airlines has cancelled 640 New Orleans-bound flights and counting and is offering customers refunds through the end of September. The airline has also removed New Orleans from the list of cities on its Web site.

Other carriers are offering customers refunds, even for non-refundable tickets, or they´re allowing flyers to change their travel plans at no extra cost — American Airlines and Delta are allowing that through the end of October.

When it comes to lodging, Marriott International hopes to open for business in New Orleans maybe next week, but it´s also sending out e-mails to customers canceling all reservations. Hotels may get some business from government relief workers and people flying into the city to look for loved ones.

The city´s number-one festival is Mardi Gras and it´s scheduled for Feb. 28. Some people book their travel for the event a year in advance, but right now it´s not certain how the hurricane and flooding with impact the event, or if it will take place at all one official tells CNBC.

New Orleans is also the seventh-largest destination for conventions, but every one of them through Dec. 1 has been cancelled. More than 100 events are now called off, and it´s right in the height of convention season.

And there could be a broader impact on the tourism business. One of the nation´s largest passport processing centers is located in New Orleans, and plenty of U.S. passport applications are now likely sitting under water. In fact, yours may be there and you don´t even know it.