LONDON - Southwestern Ontario's tourism industry, already battered by a faltering U.S. economy, faces another summertime threat -- new passport rules for American travellers.

"I think there will be an impact," John Winston, general manager of Tourism London, warned yesterday.

"It is an issue," agreed Ann Swerdfager, media manager for Stratford Shakespeare Festival.

Beginning June 1, just as the tourist season begins to boom, U.S. residents will be required for the first time to show a passport or special ID card to drive home from Mexico or Canada.

The cost alone could make U.S. travellers, especially those on moderate or low incomes, think twice about travelling, Winston said.

A family of four will pay about $350 for passports, he calculated.

"It is just another barrier for people to go through if they want to go back to the U.S."

Especially hard hit could be bus tours, which rely on people on moderate incomes and seniors for business, Winston said.

The London region relies on the U.S. and other countries for about 12% of its tourism business, he added.

"We are certainly better off than a city like Toronto. We are a bit insulated but we do see the effect of the economy on our business."

Last year tourism fell about 9% in London, he said. And, already this year, accommodation rates at local hotels are down about 3% over the same time last year.

Stratford Festival, which relies on the United States for about one-third of its customers, began getting calls last year from Americans confused about the new rules, Swerdfager said.

U.S. traffic fell 15% last summer, but that was likely because of high gas prices and the value of the dollar, she said.

"At least this summer the gas prices are lower and the exchange rate better for Americans."

Unfortunately, the economy has deteriorated rapidly, especially in Michigan, which accounts for half the U.S. visitors to the festival, she said.

The impact of the passport issue and economy is difficult to gauge yet, Swerdfager said.

"I would say things are soft."

So far, Sarnia's Bayfest, which brings about $9 million into the city, has sold about 12% of its tickets to Americans instead of the usual 15%, said organizer Michele Stokley.

"It is not like we are seeing a big dip," she said.

She said she expects the numbers to even out, largely because the festival kept ticket prices low in the midst of a declining U.S. economy.

Meanwhile, the U.S. State Department is urging people to seek passports now to avoid a backlog of applications.

About 25% of Americans hold valid passports.