Industry sources report a sharp reduction in tourism during July in wake of a series of suicide bombings in Casablanca. The sources said Europeans have stayed away from Moroccan tourist areas amid a heightened security alert.

"The summer boom in tourism has not materialized because of the terror threats," an industry source said.

Morocco, which experienced a sharp increase in the first half of 2007, has sought to expand its tourism sector in wake of civil aviation agreements with the European Union. The government has sought to increase the number of annual visitors to 10 million by 2010.

In July, Morocco increased its security alert to the maximum level. Western diplomats said the move reflected concern that Al Qaida was planning imminent attacks against tourist sites and government installations.