Hoteliers: Mexico is ‘full of opportunities’

By Nicholas Gill
HotelNewsNow.com

MEXICO CITY— In 2008 and 2009, the global economic downturn hit Mexico hard. The H1N1 Virus and countless stories of drug violence that followed didn’t help either. Some hotel chains continued to expand, while many others paid down debts and put developments on hold. Now investors see opportunity.

Developers, investors and representative from major hotel brands gathered Wednesday at the 2012 Mexico Hotel and Tourism Investment Conference, presented in Mexico City on behalf of HVS, to network and find paths for future hotel and resort growth in Mexico and Central America.

“Mexico is full of opportunities,” said Mónica Artigas, the director of franchise development in Mexico and Latin America for La Quinta Inn & Suites. “It has enormous potential.”

The rising level of exports in late 2009 and 2010 helped Mexico’s recovery gain steam, which is being bolstered by strong foreign direct investment. The economy grew 5.5% in 2010 and 3.9% in 2011. Foreign investment is now stronger than in the 1980s and 1990s, and the country is becoming increasingly competitive, according to the World Economic Forum.

Demand for hotels in Mexico continues to grow. Last year, more than 22 million travelers came to Mexico, breaking a record that was set in 2008. While hotel representatives overwhelmingly agree that Mexico is still a U.S.-driven market, they are trying to diversify and the government is helping.

Now Russians—who previously would have to wait up to six weeks for a visa to the country—can have one in five minutes. There are similar stories for other countries. In 2011, there were 50% to 60% more travelers from Russia and Brazil, while other emerging nations such as China are only beginning to discover Mexico.

Fonatur, Mexico’s sustainable development institute, has 12 master plan projects, including the one at Mayakoba on the Riviera Maya, already in development on the Pacific and Caribbean coast, explained Javier Enrique González Rudo, Fonatur’s investment director.

The Marina Cozumel, a $30 million project, is set to open next week. Other multimillion dollar mixed-use developments, such as Costa Capoma (71 kilometers, or approximately 44 miles, north of Puerto Vallarta) and Playa Espiritu (53 kilometers, or approximately 33 miles, from Mazatlan on the Pacific Coast), are negotiating with potential developers. In Huatulco, a new highway from Oaxaca also is attracting investment.

Demand drivers
By 2018, Fonatur is aiming to make Mexico one of the world’s five most visited destinations, up from its current ranking at No. 10. They hope the country’s 30,000 archeological sites, 11,000 kilometers (6835 miles) of coastline, and the world’s largest amount of natural protected areas will help drive this growth.

While demand in the business and luxury markets is strengthening and interest in the Mayan calendar is attracting more archeological tourists, there is a particularly high demand for all-inclusive properties, which show no signs of slowing down.

“This is just the tip of the iceberg in terms of all-inclusive in Mexico,” said Jesús Cortázar Sierra, the director of expansion at AMResorts.

Panelists agreed that there is room to diversify into more niche segments of the market, such as all-inclusive properties targeting families or couples.

AMResorts, which has 22 properties in Mexico under the Zoëtry Wellness & Spa Resorts, Dreams Resorts & Spas, Now Resorts & Spas, Secrets Resorts & Spas and Sunscape Resorts and Spas brands, recently launched a loyalty club, giving return visitors discounts on published prices. “It has become an entirely new form of revenue,” said Cortázar Sierra.

Challenges
One common frustration throughout the conference was Mexico’s image problem, which many agreed was caused by sensationalized stories in the media. The U.S. state department issued a travel warning on 8 February and last month 22 tourists were robbed outside of Puerto Vallarta. Most incidents have occurred near border areas; beaches and resorts are overwhelmingly safe areas.

Keynote speaker Peter Greenberg, travel editor of CBS News, offered some blunt advice.

“It’s not a news bulletin that Mexico has an image problem,” he said. “The worst four letter word you can hear is fear. If an American tears a fingernail in Peru, the government issues a warning,” he said. “You have to move from being reactive to being proactive about what the story is going to be. Americans don’t distinguish between Ciudad Juarez and Cozumel. In the war between perception and reality you are losing because you are not getting the story out there.”

“The answer is not to promote a destination,” Greenberg said. “Don’t promote, but present. Get rid of the brochure language. Let travelers discover the wonderful mess of Mexico through its people.”