MANZANILLO, Mexico -- Hurricane John spared Mexico's Pacific Coast tourism belt but moved northward Thursday toward the Baja California peninsula, where officials prepared to evacuate thousands of residents.

John, which was downgraded Thursday to a Category 2 storm, was expected to make landfall Thursday on the Baja California peninsula before veering northwest into the Pacific.

Officials at the National Hurricane Center in Miami said the storm was expected to diminish in intensity as it passed over cooler waters and would pose no threat to the California coast.

In the Baja resort town of Cabo San Lucas, officials were preparing shelter space for as many as 10,000 people who live in neighborhoods in danger of flooding or wind damage.

"We've already warned the people and they are ready" to evacuate if necessary, Victor Manuel Guluarte Castro, Interior Minister for the state of Baja California South, said in a telephone interview.

Flights from the resort to the U.S. were packed with tourists ending their vacations early, and there were long lines at the airport. Local hotels were taking no new reservations.

Generators were available to provide electricity if power lines were downed, and 97 shelters were being prepared to receive evacuees.

"We're asking people to listen to us and above all not to worry about their property," Guluarte said. "They should worry about protecting their lives first. That's the most important thing."

In Manzanillo, where a "hurricane watch" was in effect Wednesday night and Thursday morning, only a small number of people sought refuge in government shelters.

"I came because my house is made out of asbestos sheets," said Pedro Perez Gallegos, 74. "And since they said this (storm) is going to be a bad one, I decided not to risk it."

Resort cites along a 400-mile stretch of coastline from Acapulco to Puerto Vallarta were placed under a hurricane watch, as John briefly grew to Category 4 strength just off the coastline. But the hurricane weakened and never made landfall, and no serious injuries were reported.

Heavy rains from the hurricane's outter belts caused floods in Acapulco, and made roads to towns in the mountainous interior impassable. Further north in Manzanillo, officials called off mandatory evacuations Wednesday night, upon hearing that John would not only graze the coast.

"We were worried about our rivers flooding," Mayor Alicia Mandujano Cantera said, adding that she was relieved the city had been spared the worst of the storm. "In cases like this, you can't go too far in your precautions."

On the Baja peninsula, many people were expecting a direct hit.

The last big hurricane to sweep across the area was Marty in September 2003. It killed at least three people in Cabo San Lucas before advancing north along the east coast of the peninsula toward La Paz, where it left seven people dead, snapped telephone poles like kindling, sunk boats, and virtually destroyed several marinas. Two years before, Hurricane Juliette damaged or destroyed 1,800 homes and displaced 4,000 residents in Cabo San Lucas.

North of Cabo San Lucas, in the East Cape region on the Gulf of California, an area popular with American anglers and other tourists, many businesses were beginning to shut down Thursday morning.

"Our boats are out of the water, the guests are gone --everything," said John Ireland, owner of Rancho Leonero Resort, a remote thatch-roofed hotel on a bluff next to an arroyo. "This looks like it's going to be a big one."

Precaution -- and lots of sand bags -- seemed to be the watchword from Cabo San Lucas to La Paz.

"I guess everybody is gun shy from Katrina," said Mark Rayor, owner of the East Cape dive company, Vista Sea Sport. "Everybody pulled their boats and we're ahead of the normal panic at the last minute."

But not quite everybody. "We have two guys from England that booked 10 days," said Tracy Ehrenberg, owner of Pisces Sportfishing and Cabo Yacht Charters, said via e-mail Thursday morning. "They are fishing today (Thursday) and plan to fish after the storm too . . . definitely optimists."

Martinez reported from Manzanillo and Thomas from Los Angeles. Times staff writers Hector Tobar and Cecilia Sanchez in Mexico City contributed to this report.