Glory days of Mexico tourism over?

1 in a series of 3

Two days ago, Miguel Torruco Marquez, President of the National Confederation of Tourism pointed out, while speaking at a hotel industry event, that in the last 15 years Mexico has fallen in the list of countries that receive the most foreign currency from tourism; now putting Mexico behind Belgium, Sweden, and Russia.  In 1994 Mexico was in 7th place on the list, and at the end of 2009 it is expected that Mexico will be in 21st place.

Granted, Mexico was hit extremely hard  by the global financial crisis ripple effect in 2009, and just when Mexico could have proclaimed that its banking sector was healthier that the United States'; the Swine Flu hit and the world blamed Mexico. The hope is that 2009 will be known as a statistical outlier.

But almost more importantly, Turruco mentions that another cause may be that the business model of this sector  could be showing signs of "being exhausted".  That's a nice way of saying that aging hotel rooms, cheap beer and food and mariachis may  not be enough in an ever more fragmented market place. Its a nice way of saying that its time to re-think business as usual, and be prepared to reposition and re-execute.

 According to the Secretariat of Tourism in the first 6 months of 2009, direct tourism related investment fell 54.6%  from the same period in 2008.

Ouch!

But rather than using the "financial crises" or "swine flu" (boo - hoo) excuse; Turruco more pointedly sited barrier to entry as  well; He states:  "Mexico requires approximately 100 fillings for permits and approvals to open a hotel, while the US and Canada require about 10."

The following  quote came to mind from Sam Zell (the Real Estate Billionaire) speaking earlier this  year at the Wharton Emerging Markets Forum: "Who wants to take their money where they aren't wanted?" Zell asked. "I don't see any reason to invest [in a market] unless I see sufficient premium to reflect the complexity and effort."

source: www.confederacion.org.mx