Mexico’s prime tourist destination faces multiple hurdles to reverse a significant decline in international visitors.
This summer was particularly tough for Cancun. Latin America’s top tourist spot experienced an unexpected slump during a crucial holiday season. International arrivals at Cancun airport dropped nearly 14% in July and August compared to the previous year, continuing a downward trend that began in April. American tourists, who make up the largest group of foreign visitors to Mexico’s beautiful Caribbean beaches, largely chose Europe for their vacations.
Other major Mexican resorts, including Los Cabos and Puerto Vallarta, also saw annual declines, suggesting that the strong peso, which makes Mexico more expensive for international travelers, is a key factor. In March and April, when families typically plan their summer vacations, the Mexican peso reached its highest level against the US dollar in nearly a decade. Coupled with rising Mexico-US airfare costs and numerous new flights from the US to Europe, it’s no surprise that destinations like Paris and Andalusia were more appealing to Americans this year.
However, this isn’t a temporary issue that will be resolved by the peso’s recent depreciation since June. Cancun, the jewel of the Riviera Maya, faces stiff competition from Caribbean rivals like the Dominican Republic and Jamaica, as well as from repeat visitors seeking new experiences. A significant drop in Mexican tourists traveling to Cancun this summer (-15% in July-August compared to last year) indicates that this isn’t just an exchange rate problem.
Authorities need to address several longstanding issues that tarnish Cancun’s image and invest more in promoting Mexico’s diverse tourist attractions. Otherwise, Mexico risks losing market share to major destinations like Turkey. With the Mexican economy slowing, it’s crucial not to let one of its main industries falter.
For starters, Cancun and its neighboring beaches have become much more expensive. Resort rooms that cost around $200 a night before the pandemic can now be double or triple that price. Hotel operators cite significant cost pressures, from labor to construction, and they may have a point, given that Mexico’s headline inflation has risen over 35% in the past six years. The result is that locals are increasingly priced out, increasing reliance on international tourists, particularly those from the north with US dollars or Canadian dollars.
Even if you find cheaper options along the Caribbean coast, additional charges — from large tips to resort fees — can add up quickly, making Mexico less competitive price-wise than it used to be.
Navigating the Challenges of Riviera Maya: What Tourists Need to Know
While Riviera Maya offers stunning turquoise waters, historic ruins, and top-notch recreational activities, the tourist experience can be frustrating if you’re not familiar with local quirks. For instance, a taxi ride from the airport to the hotels can be exorbitantly priced — sometimes even a scam — and that’s before the driver speeds down the highway like a Formula One racer. The ongoing tension with Uber and other ride-hailing platforms has led to protests and clashes, which is the last thing a tourist wants to encounter upon arrival. Renting a car at Cancun airport can also be a hassle, with vendors pushing overpriced insurance that feels unavoidable. Recently, there have been reports of customs officials imposing taxes on tourists carrying more than one electronic device. Additionally, high-profile incidents of violence linked to drug trafficking have been on the rise. While seasoned Cancun visitors might shrug it off, potential newcomers may think twice.
The Mexican government has also made some missteps, such as imposing visas on Brazilians, Ecuadorians, and Peruvians to curb illegal migration to the US. This measure has inadvertently resulted in the loss of about 800,000 South American tourists since late 2021, according to industry expert Francisco Madrid. Madrid, who leads the Sustainable Tourism Advanced Research at Anáhuac University in Cancun, also highlights the minimal federal spending on promoting Mexico’s attractions abroad, with the country investing only about 1% of the budget that its rival Turkey does.
“We had a bad summer, and that can happen,” Madrid said. “What’s more concerning is the uncertainty about whether Mexico truly wants to invest in tourism promotion moving forward.”
The risk of an oversupply of resorts, with an estimated 200 new hotels built in the past three years, combined with the environmental impact of such expansion and fewer available airline seats, adds to the concerns in an area that has changed dramatically. As someone who has been visiting the region since 2001, I remember when Tulum was a quiet fishing village, and you were lucky if your beach shack had electricity.
Cancun was one of the biggest beneficiaries of post-pandemic tourism, thanks to the government’s decision to avoid travel restrictions. This strategy helped protect businesses and jobs, leading to a quicker recovery of tourism flows compared to other destinations. However, it seems inevitable that Cancun and other Mexican hotspots would face a downturn as tourists seek new adventures elsewhere.
In the fiercely competitive tourism industry, resting on past successes can be risky — just ask Acapulco. With Mexico potentially facing a US recession, which would significantly impact international arrivals, ensuring that its tourism strategy remains robust should be a priority for both local and national governments.
Source: Bloomberg
