National CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
Mexico’s Lodging Sector Checks In with Upside Surprise
Concerns that Mexico’s economy, and therefore its travel and tourism industry, would underperform last year proved to be overstated, JLL reported. Already the world’s eighth most-visited country according to the World Tourism Organization, Mexico is continuing to see robust growth in its lodging market.
“The travel and tourism industry plays a vital role in Mexico’s overall economy, so when protectionist rhetoric about US-Mexico trade policy occurred last year it spurred concerns over Mexico’s ability to achieve meaningful economic growth,” said Mauricio Campos, SVP for JLL in Mexico. ”However, what we’ve seen is quite the contrary.”
The country’s economy fared better than expected in 2017, Campos added, with real GDP growth at 2.3% year-over-year, “and we expect similar growth this year. This is giving way to more robust hotel operating profit margins.”
JLL has shortlisted four key Mexican tourist destinations to watch in its Hotel Destinations Mexico report, to be launched Tuesday at the CHRIS/HOLA conference in Miami. What all four have in common is the continuing favorable exchange rate between the Mexican peso and the U.S. dollar, supporting record international visitation levels.
Additionally, three of the four have been re-classified as low-risk travel destinations by the U.S. State Department. That the fourth city on JLL’s shortlist still raises a caution flag, doesn’t negate its positive economic fundamentals.
Potential headwinds exist for Mexico’s lodging sector, said Clay Dickinson, managing director for JLL’s Hotels & Hospitality Group. “While we view the Mexico lodging sector through a more optimistic lens relative to last year, we are mindful of the detrimental implications that an exit of the U.S. from NAFTA could potentially have on the country,” he said.
Arguably cause for greater immediate concern are domestic issues, “such as the upcoming presidential election in Mexico in July, and the potential for resumed drug-related violence in key tourist destinations,” said Dickinson. “Both of these will influence the country’s economic outlook, as well as its prospects for growth in leisure tourism.”
For comments, questions or concerns, please contact Paul Bubny
- ◦Economy
