Mexico lures tourists

Wednesday, 02 October 2013
BY NADJA BRANDT
Bloomberg News


Mexico’s oceanside resorts and Maya ruins are luring more visitors from abroad even as drug violence plagues parts of the country. The resurgence is spurring a wave of new investment by the hotel industry.

Hoteliers and investors are counting on a continued surge in tourism across Mexico, where gains in hotel room rates outpaced increases in the rest of Latin America even as the economy slowed this year. Travel growth is being driven by a rising middle class, expansion by business and visitors undeterred by the violent crime gripping northern Mexico.

“Security issues — perceived or real — travelers pay attention to, and they can impact travel,” Ricardo Suárez, a vice president of acquisitions at Stamford, Connecticut-based Starwood Hotels, said in a telephone interview. “But there is such strong economic growth in the country, it’s driving domestic travel and demand from the U.S. and, more recently, also from places like Europe, Russia and Asia.”

Hotel-room bookings for this year jumped 11 percent in July, compared with a 6 percent increase a year earlier, according to travel-services company Orbitz Worldwide Inc. Growth in bookings in the Caribbean, Central America and South America, meanwhile, is slowing, Chicago-based Orbitz said.

Hotel demand in Mexico is increasingly coming from places not traditionally associated with travel to the country. Tourists from China are almost as numerous at Starwood’s Latin America properties as those with a longer history of visiting the region, including Germans, Italians and the French, Suárez said.

International visitors arriving in Mexico by plane rose 8.4 percent in the first seven months of 2013 from the year-earlier period, according to data from Mexico’s tourism ministry.

Arrivals from China jumped 29 percent, while visitors from Russia increased 56 percent during the same period, according to the data. U.S. visitors made up 56 percent of total arrivals by air.

As travel demand has slowed in many parts of Latin America this year, “Mexico is helping mitigate some of this as it grows from increasing business activity as well as the return of the U.S. vacationer,” Starwood Hotels Chief Executive Officer Frits van Paasschen said on a July 25 conference call.

In July, Hyatt announced plans to spend $325 million in partnership with Fairfax, Va.-based Playa Hotels y Resorts on properties in Mexico, the Dominican Republic and Jamaica. The first two Hyatt-branded resorts in the partnership will open in Mexico later this year after a “multimillion-dollar” investment.

Mexico’s economy has slowed and is expected to expand 2 percent this year, the slowest growth in four years. Hotels are getting a boost from a bigger, more affluent middle class and manufacturing expansion by foreign companies.