PART 2:Glory days of Mexico Tourism over?

Part 2 of 3

The Mexican Government, historically quite tourism savvy,  is not sitting idly by however.


According to the  Mexico Tourism Board:
 
"Tourism is one of the most important and dynamic economic sectors in the world today, both for its level of investment, job creation and earnings potential, and for its contribution to regional development. It accounts for some 11 percent of world production and generates one job in 11. It has been estimated that over the next 20 years, 1.6 million tourists will travel the world, spending two trillion dollars.

Tourism’s importance to the Mexican economy is unquestionable. Its benefits are reflected not only as an industry that generates employment and spurs regional development, but also because of its role in spreading information about the country’s cultural and natural attractions.

Mexico offers a broad range of tourist attractions. These include the heritage of pre-Columbian civilizations and development of archaeological sites as symbols of national identity, the incomparable beauty of its beaches, the combination of vestiges of millenary cultures with major cities, extensive areas of natural beauty with historical elements that make them unique, and world-class tourism infrastructure.

Tourism accounts for more than 8 percent of Mexico’s Gross Domestic Product and more than 9 percent of direct and indirect employment. The number of tourists who visited Mexico so far in 2008 is estimated to have been 16.844 million, a 5.2 percent increase on the previous year, and international visitors spent 10.3 billion dollars, a 6.3 percent increase on the 2007 period.

Mexico ranks as number 10 in the world for visits by foreign tourists and number 17 in terms of earnings from tourism.

Promotion of tourism plays an important role in maintaining and consolidating Mexico as a world power by generating ever-increasing demand for the country’s destinations and attractions."

In June 2009 the National Tourism Law was past giving the National Secretariat of Tourism (SECTUR) broad based control over anything that is remotely tourism related, with a mandate to initiate stream-lining and promoting investment.  Of particular interest to the Real Estate Development sector will be the co-ordination of local, state and federal processes for entitlements; as well as credit programs and general stimulus to tourism related real estate development.


FONATUR, the National Fund for the Promotion of Tourism, A.K.A the Mexican Federal government resort development corportation, is also part of the SECTUR tourism Secretariat and develops integrally planned resorts, and has Cancun and Los Cabos to its credit.  FONATUR's new role will be shifting from a  Government funded developer to a more financially independent master-developer available to partner up with land owners to offer planning, packaging, and marketing for Master-planned resorts in Mexico. At last count, FONATUR is involved in at least 12 Integrally Planned  Resorts of various sizes throughout Mexico and will be certifying and guaranteeing certain aspects of development such as entitlements, infrastructure, and related value-added elements.




Basically in the near future, SECTUR through its sub-secretariats and broad reaching new scope of powers could be able to be a market-maker in record time and with minimal risk. 

For major world class tourism destination; just add...CAPITAL; 
water already included - no extra charge. 

But if FONATUR builds it (with the help of investors and developers), will the tourists come?

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

RealEstateInfo.MX

Welcome to the maiden voyage of  RealEstateInfo.MX! In as much as possible we will be dedicated to being a multi-national voice for good business decisions, responsible development, and best practices - within the realm of  the Mexico Real Estate industry, particularly (but not exclusively) in tourism oriented developments in the very important beach resorts areas of Mexico. Undoubtedly, (I hope often) we will be posting strong educated opinions on the true state of the industry, issues and opportunities.

We promise you a thoughtful and concise critique of the issues; with no-sugar-coating.

We invite you to be part of the free flowing dialog of progress...En Ingles o Español.

Sincerely,
Richard Bilanceri
Playa del Carmen, Quintana Roo
Mexico

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