Mexico Tourism Report Q1 2013

Includes 3 FREE quarterly updates

The Mexico Tourism Report examines the enormous long-term potential of the market, given its proximity to the US, but flags up short-term concerns about rising levels of insecurity and the negative image this is sending to potential tourists.

We examine how best to maximise returns in the Mexican tourism market, capitalising on the country's considerable attractions and benefiting from its well established position in the region. The report also assesses the impact of the slow recovery in the US, which is feeding through to affect demand in Mexico. The report also analyses the key domestic and foreign players in the Mexican market and the development strategies they are employing to maximise returns during the economic slowdown.

KEY FINDINGS

Official figures released by the Ministry of Tourism (Sectur) in October 2012 showed that tourist arrivals to Mexico continued to decline in the year to August. Total tourist arrivals totalled 15.5mn in the first eight months of the year, representing a fall of 1.5% year-on-year (y-o-y). August itself saw a particularly sharp drop, with tourist arrivals falling 7.2% y-o-y to only 1.7mn. However, revenues have continued to hold up well, with January to August tourist revenues totalling US$7.2bn, growing by 6.3% y-o-y.

A key factor behind the decline has been lower arrivals from the US, partly because of economic concerns north of the border and also because of fears of violence in the US-Mexico border areas. Tourism arrivals from the US dropped by 1% in the first half of the year. However, Mexico is making strong efforts to market itself to other destinations, which appears to be paying off. Between January and June, tourist arrivals from Russia grew by 77%, those from Brazil by 66% and Venezuelan arrivals by 38%. These should help to compensate for slowing arrivals from the US. Arrivals in general should pick up towards the end of the year as Mexico enters its traditional high season. BMI therefore expects arrivals to post overall growth for 2012, despite the subdued figures in the first eight months.

Mexico's outgoing secretary of tourism Gloria Guevara released a report in October 2012 showing that investment in the tourism industry grew by an impressive 53% between 2006 and 2012, her party's term in government. The report stated that investment rose to MXN20.2bn in 2012, from MXN12.8bn in 2006. The sector's five key targets continue to be: tourism growth within Mexico; international tourism growth; investment in tourism from the public sector; investment in tourism from the private sector, and diversification away from a reliance on the US as the major source of tourism.

KEY CHANGES

• BMI analyses the implications of the drop in tourist arrivals in the first eight months of the year and prospects for a recovery in the final quarter.
• BMI assesses the growing competitiveness in the airline sector, with low-cost carrier Volaris making a strong bid to increase its share of the domestic market, while rival Interjet concentrates on opening up routes into the US.