Look to Mexico for a Competitive Investment Opportunity

Positive tourism statistics are always a sound summation of potential returns on real estate investments, and Mexico has those numbers in spades.

According to the United Nations World Tourism Organization (UNWTO) 2017 World Tourism Highlights report, Mexico received a record 35 million international visitors in 2016. The figure moved Mexico up to the eighth spot on the ranking of the world’s most visited countries.

Today, Mexico is a major player in the global tourism arena, and in this first installment of a two-part series, we’ll explore what makes the country attractive for investing in a resort project.

Source Markets

Americans and Canadians still constitute the foundation of Mexico’s international visitation. But travelers from Europe, including Eastern Europe, Asia and South America are increasingly discovering Mexico as a leisure destination.

In fact, visitors from feeder markets outside of North America – notably UK and Europe are more apt to travel at times of the year when traffic from the U.S. and Canada slows.

The number of South America travelers has also increased significantly, thus generating healthy occupancy levels during low and shoulder seasons.

The value of Mexican travelers is also exponential and has been on the rise for several years. Per the WTTC’s Economic Impact study, domestic travel spending accounted for 83.9 percent of direct Travel & Tourism GDP in 2016.

Cashing in on Experiential Travel

Mexico has some inherent attributes that very few nations around the world possess. Whether domestic or international, visitors come for the beaches – and the culture.

Like Egypt and Greece, Mexico has over 3,500 years of history and is also home to one of the world’s few remaining original cultures: the Olmecs, who preceded the Maya and Aztecs. Giving travelers reason to visit – and reason to return – are 27 UNESCO World Heritage sites, including the Pre-Hispanic City of Chichen-Itza in Yucatan and the Sian Ka’an Biosphere Reserve near Tulum.

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Beyond attractions, ancient and otherwise, experiencing long-held traditions like Mariachi music, Day of the Dead customs and Mexican cuisine, all part of UNESCO Intangible Cultural Heritage, also aid in the influx of visitation to the country.

These cultural practices also represent ancillary revenue opportunities to hotels that develop relevant upsell experiences. For example: several AMResorts’ properties in Mexico offer guests the opportunity to experience a Temazcal ceremony, a spiritual and cleansing ritual that dates back to the Aztecs and Mayans.

Connectivity

Mexico is consistently increasing capacity from all of its aforementioned source markets. IATA cites that “around 1.1 million aircrafts land or take off from Mexico annually,” and last year, carriers added more than a million new seats on international direct flights to Mexico from more than 20 countries. Cancun, the country’s second largest airport by passenger numbers after Mexico City, is soon to open a fourth terminal.

Importantly, IATA also names Mexico City’s Benito Juarez International Airport among the top 100 in the world. For international travelers not arriving directly into one of the three major coastal resort destinations, Mexico City is often the point of entry into the country. The airport can also provide domestic travelers with a hub and spoke option for getting to their chosen destination within Mexico.

Los Cabos International Airport is undergoing a $48 million expansion, with five new gates, a new VIP lounge and Terminal 1’s refurbishment slated for completion in 2019. Passenger numbers at the Puerto Vallarta International Airport, which also serves the resort destination of Riviera Nayarit, saw passenger numbers jump nearly 13 percent in 2016, surpassing 4 million.

Gaining Ground

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The Pearl Luxury Residential at 5th Ave

As capacity and visitor numbers grow in tandem, room inventory is also keeping pace as are occupancy rates. The Barometro Turistico Cancun and Riviera Maya assesses more than 45,000 total keys in the area. In both markets, demand for all inclusives has outstripped demand for European Plan properties year over year since 2010.

New inventory in Mexico’s three foremost tourism destinations – Cancun, Los Cabos, and Puerto Vallarta – is absorbing the rising visitation. But Mexico also offers resort development opportunities beyond these three destinations. Ground-up destination developments similar to Cancun and Los Cabos are taking place in locations around the country, like Merida Yucatan which is growing in popularity.

Yucatan Beachfront Living www.lareservaatcelestun.com
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A number of existing destinations are also undergoing a metamorphosis. The colonial city on the Pacific Coast, Mazatlán, recently added new service from Denver, Houston, and Chicago, for example, and in the midst of a real estate construction boom

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A Buoyant Industry

Like any market, Mexico has peaks and troughs. However, the last decade alone has proven the strength of the country’s travel and tourism sector. But Mexico has demonstrated its resilience each time again, surmounting every obstacle to surpass forecasts for continued growth.

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Mazatlan Camino Al Mar Residences www.caminoalmar.mx

Thanks to the country’s connectivity, culture and market resilience, investing in Mexico’s tourism industry will continue to yield high ROI.

If you’re considering investing in Mexico, contact a certified real estate professional at the “Mexican Association of Real Estate Professionals” www.ampi.org

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