(Bloomberg) -- The economic toll from Hurricane Otis in the Mexican resort of Acapulco could top $20 billion, far beyond what the government has set aside so far to rebuild it. 

Once a playground for Hollywood celebrities and US politicians, the coastal city was already a shadow of its former self when the category-5 storm hit a week ago. Winds in excess of 165 miles (266 kilometers) an hour destroyed homes, smashed shops, wrecked buildings and caused massive flooding. At least 46 people were killed, and communications and basic services remain disrupted.

Most of Acapulco’s biggest hotels now look like skeletons — without walls, windows or balconies — and are full of debris. The bulk are Mexican owned, with a surge in narco-trafficking violence forcing international chains to pull out of the area in recent years. 

Damage from the storm is estimated between $14 billion and $21 billion, according to Chuck Watson, a disaster modeler with Enki Research.

“Of course big hotel damage is dramatic, but they are most likely to have insurance and resources,” Watson said by email. “The smaller hotels, and especially restaurants and vendors who supply both them and the bigger institutions, will suffer for a long time.” 

Mexico’s government said Wednesday it planned to spend about $3.4 billion to rebuild Acapulco. President Andres Manuel Lopez Obrador, speaking at his daily press briefing, also unveiled a host of other relief measures.

Residents affected by the storm won’t pay taxes or electricity bills until February, he said. Zero-interest loans will be offered to small businesses that suffered damage. And the government will pay half of interest payments owed by over 370 hotels.

With about 80% of hotels affected, however, the city’s outlook is grim given its dependence on tourism. The most optimistic forecasts for Acapulco suggest it won’t recover for about a year. 

Even with major government intervention and private investment, the key December-to-March season will likely be a “near total loss,” Watson said. “It will take time to clean up and stage supplies before reconstruction can even start.”

Security concerns could also pose a hurdle, since Acapulco’s reputation was already suffering from a surge in crime, Watson said. “Natural disasters tend to spike crime rates, so that will interfere with its reconstruction unless the government surges police and National Guard into the area.”

Despite the devastation caused by the storm, one observer is optimistic Acapulco can bounce back.

“Although it is a destination that was in a stage of decline, we think that the damage we are seeing could serve to restart in better conditions,” Francisco Madrid, head of the tourism research center at Anahuac University, said by phone. “But that requires a very significant public and private investment.”

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