The following was inspired by an article in the Wall St. Journal on February 10, 2012. Graph of growth in tourism is from that article.
Tourism and Hotels Chains growing in Mexico
If Mexico’s drug violence is so relentless and gruesome, then why are Marriott, Hilton, InterContinental and other hotel chains piling into the market?
Largely because the Mexico is a very large country and the incidents of violence are isolated in areas near to the US border, and far from tourist centers. Numerous areas of Mexico, like Playa del Carmen in the Riviera Maya, are experiencing double digit growth in visitors as tourists, business travelers, and new hotels pour in. Tourism and Hotels chains growing in Mexico are going to set new records for 2012.
The globe’s new nouveau riche are going to Mexico to vacation, taking vodka to Veracruz and kung pao to Cancun. And international companies continue to build factories in the country.
Mexico is reaping the benefits of globalization, and it’s about time. Companies have finally figured that out, and they are making a bet: Long term, the benefits Mexico has to offer will financially be more beneficial to its citizens than drugs.
And that’s likely a good bet to make.
The last five years have been rough for some areas in Mexico. More than 50,000 people have been killed in the last 5 years due to the country’s warring drug cartels. The headlines have captured the savagery. “Fifteen Beheaded in Acapulco”; “Deaths Raise New Concerns Over Mexico’s Drug War”; and “Bodies Found in Juarez.”
U.S. officials have wondered aloud about the stability of Mexico. Tthe State Department expanded its travel warning for parts of the country. Newspapers print stories regarding each incident.
But despite all those troubles, here come the hotels and the tourists. What do they know that the State Department doesn’t?
“Mexico is an important strategic location for IHG, and the company works with franchisees to develop hotels for the long term,” says Stephen Boggs of InterContinental Hotels Group, whose brands include the world famous InterContinental Hotels. IHG expects to launch 46 new hotels in Mexico by the end of 2014. It has 120 in Mexico now.
Marriott has 19 properties in Mexico, with nine more scheduled to open by 2016. Famous Marriott brands include the Ritz Carlton Hotels, Renaissance, and Bulgari Hotels and Resorts.
Hillton Worldwide has 23 hotels and resorts in Mexico. It is planning a 35% expansion. Hilton’s brands include the Waldorph Astoria, Conrad Hotels and Resorts, and Hilton Hotels and Resorts
The list goes on.
Mexico is the World’s 10th most popular destination
Mexico is banking on tourists filling those rooms, especially new ones from developing economies such as Brazil, China and Russia. The country is still ranked 10th globally in the number of visitors it receives, and it is still the most popular destination for Americans, who account for the vast majority of tourism visits, and Canadians.
The Riviera Maya has shown the greatest population growth in the Mexico in the last five years, at average rates of 18%.
In the last two decades, Playa del Carmen, the main location on the Riviera Maya, has become the place to stay, turning into a city that offers hotels and restaurants in every category.
This has led to a strong inflow of foreign visitors, mainly from Europe, the US, and Canada.
For these reasons – as well as its spectacular natural and cultural assets – the Mayan Riviera is appealing to national and foreign investors, and has become one of the main poles for tourist development. Factors such as the creation of a new airport, the train to Tulum, the improvement of highways, and growth in tourism infrastructure - new hotels, golf courses, and tourist super projects – have and will continue to be essential in order to keep attracting foreign investment to the area.
The government believes 2012 will be a record for the sector, which accounts for 9% of GDP. The Riviera Maya is also drawing more and more visitors from Eastern Europe and other places.
Expedia says it has seen a surge in travelers to Mexico from emerging markets. They are travelers who like to spend. The average Russian will stay nine nights compared with an American’s three and a half.
And whereas the American might spend $1,000 a week, the Russian will drop that in a day on spa treatments at Le Blanc and the wine cellars of Cancun, says Gloria Guevara, Mexico’s tourism secretary.
Mexico is chasing that new business. It has opened or is planning to open tourism promotion offices in Beijing, Seoul, Moscow and Brussels. It has simplified its visa-approval process. And it has counseled hotels and tour operators on what this new global audience wants in a Mexico vacation (Chinese: archeology. Brazilians: shopping. Russians: bling.)
Mexico’s focus on tourism is bearing fruit, a reflection of the broader engagement the country has with the global economy. That engagement is the backbone of Mexico’s economic growth, particularly in manufacturing.
In addition to its trade pact with the U.S. and Canada, Mexico has dozens more trade and investment treaties with other countries. Corporate investment continues to flow in—$18 billion of foreign direct investment in 2010 alone, a large chunk of that from the U.S.
Many of those international companies operate behind security fences in the region bordering the U.S.—the thousands of maquiladoras that employ hundreds of thousands of Mexicans.
And like the hotel chains, they all contend daily with the array of problems vexing developing markets like Mexico. But they have nonetheless taken a stake in Mexico’s future because the country is a cheap place to make things, with easy access to the U.S. market, not to mention archeological treasures, numerous historical places, great climate, breathtaking beaches, and more. South of Cancun International Airport to Punta Allen are 75 miles of white-sand beaches and the world’s second largest barrier reef system. This area, once home to the ancient and mysterious Mayan population, holds many of Mexico’s most significant archaeological sites.
That’s a big, stabilizing counterweight to the chaos of the drug wars.