Investing in Mexican Tourism

November 11, 2013

Mexicans in the Tower

Mexico’s international tourist roadshow arrived in London this week with a spectacular launch ceremony at the Tower of London. A high-profile delegation was in town to showcase the country’s new tourist campaign. President of the Mexican Tourist Board, Rodolfo Negrete, told a room full of tour industry professionals that the UK is one of Mexico’s most important markets. “UK arrivals are up by 18% and Britain is an important source market for us. The idea of this campaign is to move up the value chain and attract higher-spending tourists. We also hope to challenge British people’s perceptions of the country.”

LatAm INVESTOR caught up with Mexico’s Gerarrdo Llanes at the World Tourism Market to find out why so many British people are travelling to Mexico. “One strong reason for the growth is that British Airlines and Mexican airlines are opening more Mexican flights and destinations to British passengers. Of course these airlines don’t open flights without doing a lot of research, they saw that the demand was there for British people wanting to go to Mexico and they catered for it. For example TUI is opening up another flight next month.”

It’s clear that UK holidaymakers are important for Mexican tourism, but in the longer-term regional visitors could be the real driver of growth.

economist air travelUnstoppable rise of the tourism industry

Tourism and aviation both seem like classic cyclical industries. After all, when people have money they spend it on luxuries like holidays; when they don’t, they don’t. But if you take a step back, and look at both from a global, historical perspective, these industries are far more resilient than you might think. Indeed the story for the last half a century has been one of almost uninterrupted growth.

The UN World Tourism Organisation notes that, “in spite of occasional shocks, international tourist arrivals have shown virtually uninterrupted growth: from 25 million in 1950, to 277 million in 1980, to 435 million in 1990, to 675 million in 2000, and the current 983 million.”

Within those figures, the rise of the aeroplane was particularly noticeable. Air travel now accounts for more than 50% of international arrivals and its share is rising. Indeed, the number of kilometres travelled by fare-paying passengers on aeroplanes has grown by more than 800% since 1970. As The Economist notes, there appears to be “an iron law of aviation: rising numbers of urban middle-class people will mean rising demand for air travel, whatever short-term blips the economy suffers”.

Latin America’s tourism boom

That is particularly true in Latin America, where the region’s rising wealth has made it one of the world’s fastest-growing tourism markets. That’s because tourism is usually regional. The UN World Tourism Organisation estimates that 80% of international arrivals – it counts business or pleasure stays of at least 24 hours – start and end in the same region.

So as Mexico’s neighbours in Latin America enjoy economic growth, they are more likely to start visiting the country’s many tourist attractions. That should create massive opportunities for local airlines and hotel operators.