MOMBASA, Kenya (Reuters) - In 16 years of working at resorts along Kenya's Indian Ocean coast, hotel manager Mohamed Hersi has never seen it this bad.
His $200 a night five-star hotel in Mombasa is devoid of tourists who would normally be crowding its large, ornate dining area and its sunny beaches during the current high season.
"I think that this is the worst ever. The (tourist arrivals) curve is coming down very fast," said Hersi, who has closed down a wing of the 338-room Sarova Whitesands Beach Resort and Spa as room occupation has dropped to 27 percent.
It is a similar story along Kenya's famous coast, from Lamu island to Malindi and Mombasa, which accounts for 65 percent of tourism activities in the industry -- Kenya's top foreign exchange earner and worth $1 billion a year to the economy.
People in the industry say the turmoil since the December 27 election is a disaster for tourism in Kenya, which only recently recovered from the impact of the 1998 and 2002 blasts in Nairobi and Mombasa that were blamed on al Qaeda.
Since President Mwai Kibaki's disputed re-election over opposition leader Raila Odinga, unrest has killed more than 600 people, displaced a quarter of a million and unleashed chaos across the nation, including in the ancient port city of Mombasa.
The Kenya Tourist Board had projected a total of 314,995 tourists would visit the coast in the first quarter. It has now revised that figure down, by more than half, to 134,450. Tourism from the United States grew sharply in 2007 to over five percent of Kenya's total visitors.
Kenya's currency is on course for its largest monthly drop in January in over 10 years, losing 6 percent so far this month. It is one of the worst performing emerging market currencies this year, which has seen investors flocking to such currencies seen to be safer bets.
Finance Minister Amos Kimunya says the economy lost about $1 billion because of the crisis: he expects it to recover the losses within the year, and forecast expansion at 7 percent similar to estimated growth in 2007. The Central bank kept its 8 percent growth forecast.
But many analysts are skeptical and expect growth to slow sharply because of the crisis.
Hotelier Hersi has let go all casual workers and fears he cannot guarantee the jobs of the permanent staff: "I call it the 96 hours of madness," he said of the worst violence after Kibaki's December 30 swearing in.
"We voted peacefully. As soon as the results were announced, just within four days, everything was destroyed."
Many European and American tourists hurriedly left the country, while others who had booked holidays cancelled them as images of ethnic violence and riots were beamed round the world.
Up the road from Whitesands, at the Sun 'n' Sand Beach Resort on the north coast, a handful of hardy European holidaymakers sip drinks at the hotel, modeled on Swahili architecture.
"We were already here when the trouble started," said Sandra Peck from Manchester in Britain. "If our government wanted to take us home, they would have had to carry us out kicking and screaming. We were happy to stay."
But workers at the resort are worried.
"We are shocked. The tourists are very few and we fear for our jobs," said waitress Florence Chao.
The industry is starting to search for solutions, looking to learn lessons from the past.
In 1997, when the Likoni area of the coast was hit by tribal violence which saw the number of tourists plummet, the industry -- in conjunction with the government -- made a push to invite European decision-makers to the coast.
Amid sumptuous seafood dinners and safaris, tourism players sought to reassure the European holiday company managers from companies including Thomas-Cook and Hay Jarvis, who later resumed offering holiday packages at the coast.
They are now considering doing that again, but they are also telling politicians to sort out their act.
"If the two gentlemen in Nairobi can come to their senses, then the industry can be revived," said hotelier Kuldip Sodhi.
Beyond hotels, the unrest has affected many other businesses including the nightspots which attract both visitors and locals.
Sector leaders say not one tourist has been wounded, heightening frustration that the industry is captive to the wider political crisis.
"Mombasa is down on its knees and we are now digging our grave, if something does not change immediately," said Tasneem Adamji, chairwoman of the local coast branch of the Kenya Association of Tour Operators.
with additional reporting by George Obulutsa; editing by Andrew Cawthorne and Sara Ledwith