Mexico Tourism Report Q4 2012

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 examines 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 August 2012 show that tourist arrivals to Mexico fell unexpectedly over the first five months of the year. Total tourist arrivals totalled 9.7mn, a fall of 0.2% year-on-year (y-o-y). However, this appears to be largely the result of a below par performance in May, with tourist arrivals dipping by 6.4% y-o-y. Between January and April 2012, tourist arrivals grew by a healthy 5.3% y-o-y. Minister of Tourism Gloria Guevara remains confident about Mexico’s prospects for full-year arrivals, noting in July that the tourism ministry was forecasting arrivals of 24.6mn in 2012.

Guevara’s optimism is borne out by positive revenue in the first five months of the year, totalling US$4.5bn, representing growth of 6.5% y-o-y. Notably, stay-over tourists contributed US$4.5bn to this figure, indicating that Mexico’s strategy of targeting tourism from countries beyond the US has been successful so far. Indeed, border tourists (defined as tourists crossing the border who do not stay a night in Mexico) were the main driver behind the decline in overall tourist arrivals in May. Border tourism fell by 15.2% y-o-y in May, while stay-over tourism rose by 2.4%. This suggests security concerns among US citizens may have played a part in the May decline, perhaps ahead of Mexico’s elections in early July. As such, Mexico will increasingly look to diversify its tourism base, as demonstrated by marketing campaigns in Europe in 2012.

The election of Enrique Peña Nieto in July 2012 marked the return of the Partido Revolucionario Institucional (Party of the Institutional Revolution, or PRI) to the presidency after 12 years. Although the runner-up, Andres Manuel López Obrador, alleged that there had been voting irregularities during the elections and cast doubt on the legitimacy of Peña Nieto’s election, calls by López Obrador for popular protests against the elections failed to achieve the high levels of turn-out seen in 2006. Disruption therefore appears set to be minimal during the run-up to Peña Nieto’s inauguration in December 2012. With a centre-right stance, Peña Nieto’s administration looks set to continue the tourist policy established under the Felipe Calderón government, focusing on bolstering Mexico’s appeal beyond the US and assuaging tourist concerns about security.

Key Changes

• BMI assesses arrivals over the first five months of the year, including the unexpected decline in May, and analyses the Mexican tourism ministry’s goal of 24.6mn arrivals in 2012.
• BMI examines M&A activity in the airline sector, with the US’ Delta Airlines taking a 4% stake in leading Mexican airline Aéromexico. At the same time, Spanish firm Med Atlantica has bought grounded airline Mexicana, with the aim of resolving its bankruptcy proceedings and preparing the ground for a relaunch.
• With leading Mexican hotel chain Grupo Posadas selling its South American operations to France’s Accor, BMI analyses the group’s ability to pay down its debt and expand its Mexican operations.