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Mexico’s Tourism
Forecast: Sunny,
Booming
Mexico’s tourist sector has seen remarkable post-recession growth. And with several planned luxury resorts, a focus on large group bookings, and fewer foreign investment barriers, the industry shows no signs of slowing down.
“The trend for the next three years looks to be in very good shape,” says Enrique Calderón, the COO of Mexican hotel conglomerate Grupo Posadas, about the state of his country’s hospitality industry. “Last
year, growth was in the double digits, and this year, we will maintain the same trend.”
Calderón’s optimistic projections mirror much of the data attesting to the recent success of tourism in Mexico. The nation broke international visitation records in 2016 by welcoming 34.9 million foreign tourists, which marked an 8.7 percent increase from 2015’s total. Plus, a new airport terminal opening in Cancún next year and the completion of México City’s new airport in 2021 will facilitate the arrival of even more global travelers.
Supply is also expanding to meet the increased demand in the Mexican tourism industry. More than 9,200 rooms in 63 different projects were under construction as of February 2017. Experts predict that Mexico’s total hotel room count will see a 6 percent jump by the end of the year.
HEAVY CONSTRUCTION ZONE
The hotel construction boom is clearly illuminated by recent activity in Mexico’s major tourism hubs. In such prime destinations as Puerto Vallarta, México City, Cancún, and Los Cabos, thousands of new rooms are slated to go online by 2018. This new construction is based on stellar statistics in recent years: Puerto Vallarta saw an increase in international visitor arrivals of 12.1 percent in 2016, while cruise ship arrivals went up by 6 percent. México City sees weekday occupancy rates of up to 95 percent, giving rise to high-value construction based on corporate and government demand, as well as the historic sites and upscale shopping within the city. Cancún entertained a record 7.2 million visitors in 2016, and better access via a new airport terminal and a devaluated peso should only continue that growth. And the resorts of Los Cabos, after enduring the devastation of Hurricane Odile in 2014, are undergoing a cycle of renovation and new development that has returned the area to the top spot among Mexican resort destinations.
OF MICE AND WI-FI
Already, Mexico boasts Latin America’s most developed hospitality sector, thanks in large part to the favorable exchange rate of the peso and recent improvements in airline connectivity. That said, there are two main factors underpinning the current expansion in Mexican tourism.
The first element revolves around the meetings, incentives, conferencing, and exhibitions (MICE) sector of the hospitality
ENRIQUE CALDERÓN
COO
Grupo Posadas
industry, which focuses on large groups of people that tend to book months or years in advance of their arrival. Calderón notes that hoteliers across Mexico have become more flexible in catering to these types of clients, and as a result, “We have seen a significant growth in the MICE business that we have right now on the books for the next three years.” It is this surge in demand for meetings accommodations across North America that will help push hotel rates up between 1 percent and 3 percent across Mexico.
The other competitive advantage enjoyed by Mexico’s tourism industry is the mature infrastructure in place across the country, especially when compared to Caribbean or other Latin American destinations. Calderón points out that in recent years, hotel properties in Mexico made a concerted effort to improve their Wi-Fi bandwidth and internet connectivity in order to appeal to business travelers who view such conveniences as a necessity rather than a luxury. These upgrades include more outlets in hotel rooms for guests who use multiple devices. A byproduct of this emphasis on infrastructure is the development of mobile apps and other technological services which expedite check- in processes, room service orders, and even onsite amenity bookings (like spa treatments and entertainment) for tech- savvy guests who are accustomed to this level of immediacy and accessibility.
Despite the well-documented uncertainty created by the Trump administration regarding trade with the United States, the tourism industry in Mexico is still poised to be a cornerstone of the Mexican economy, whose prospects of 4 percent annual GDP growth for the rest of the decade exceed those of its northern neighbor. That’s music to the ears of hotel executives like Calderón and to tourism-dependent business owners and entrepreneurs from Cabo San Lucas to México City to Cozumel.
Despite being ravaged by Hurricane Odile in September 2014, the Los Cabos region still posted revenue per available room of $239 in 2016, a drop of less than 10 percent from pre-hurricane levels.
INTERVIEW: GRUPO POSADAS
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