All-Inclusive Annihilating Puerto Vallarta Economy

Upon arrival, a sign welcomes guests with “The Friendliest City in the World,” but coming into the city it appears the center has run out of “friends” along the malecón and Morelos Street – abandoned store fronts, something unthinkable a few years ago.

One empty restaurant displays a sign, “this restaurant is closed because a lack of people”. Another reads, “No Sales, No People,” the image is repeated over several blocks in centro.

Some attribute the decline in centro tourism on the rerouted traffic along the malecón after a remodel several years ago, but people in the tourism industry say centro is losing its appeal because of the all-inclusive resorts.

“The all-inclusive is a much sought after vacation experience, but it’s also a predatory system in the economy. The attraction of Puerto Vallarta is its center, not the hotels, but walking around downtown is becoming less popular as now the economy is being locked in the all-inclusive resort, because travelers are paying one package for their entire experience with one company,” explains Gabriel Igartua, owner of Las Palmas, who was forced to enter all-inclusive due to market demand.

Igartua says the system is easy to handle, but it comes down to cost control, the first thing you sacrifice is quality and the largest profits are with the operators selling the packages.

“You are not looking to sell, just offset costs. In addition small hotels do not have much of a chance, as there are already 5-start hotels offering all-inclusive for nearly the same price of just a small hotel stay. It is a form of cannibalism,” Igartua added.

In late August, the city reported that compared to 2013 during the summer season tourism had increased 15% with the arrival of 400,000 tourists and hotels were at 90% occupancy.

“Those are deceptive numbers. It’s been a good year for hoteliers, but the money isn’t trickling down to other parts of the economy,” says Igartua, and many restaurateurs in the center seem to agree.

Othniel Espinoza knows the consequences of the system, he has owned crafts shops in centro for many years, he says eight years ago before the all-inclusive boom he had 60 employees, now only eight.

“Before, finding a retail spot in centro was nearly impossible, now empty storefronts are everywhere because there are no more tourists, and rents are very high. Stores are surviving only because of weekends and peak periods.”

In his view, the other factor of the crisis: “The cruise ships arrive and business are promoting to passengers but it costs thousand of dollars for permission to promote at the cruise ships, and it’s the all-inclusive and timeshare that can afford that promotion.”

To illustrate, he says, a decade ago when a cruise ship arrived his store would sell thousand of dollars of merchandise, today a cruise ship visited and he sold $15.

Michael Jacobson arrived in Puerto Vallarta 35 years ago, he has owned restaurants and bars, and says over the last 15 years there has been a decline of 75% in the tourism economy.

The issue is well-known to the Secretary of Tourism of Jalisco, Enrique Ramos, who says this is a market issue and it’s difficult for government authority to intervene. “We cannot prohibit companies from offering all-inclusive experiences.”

He adds that many operators of all-inclusive declare that only 20% of the cost is for housing to avoid paying the 3% tax on lodging.

“To avoid this, the Revenue Act for this year takes all-inclusive into consideration and sets a minimum 40% housing cost for the 3% taxes.”

22 Responses
  1. al bass

    PVR is our favorite vacation location –
    We love going to
    “Old Town” for its many small
    friendly restaurants. We look
    forward to seeing Sol at Café Bohemio, Mike at Hacienda Frankfort, and Juan at Andole, or
    Alice also at the Andole.

    They welcome us as old friends, and therefore we look forward to going back to see them.

    We have restaurants at home that treat us like it is the first time
    there, although we patronize them regularly.

  2. Carol

    I will never stay in an all inclusive again in Puerto Vallarta! I loved it in a way because I was way out by the marina, still I did not eat there every day I went into town but the down side is they sell the room per person, like $198.00 per person per day. I can stay at a beautiful hotel or rent an apartment near los mertos, my fav beach, for much less and eat much better food, hopefully a lot of people will see the up side of staying away from the A.I.’s

  3. Gene Burkard

    I hate the all inclusive “resorts” for all the reasons listed above by folks who love PV
    but still want that cheap way to go–the all-inclusives. You get what you pay for.

    Unfortunately, most people are mostly interested in the price of things rather than
    the quailty of the experience. So the town gradually decliend as a unique experience.
    Yes, we all still love PV but just not as much as in the past. Today there is too much of
    the same ‘ol, same ‘ol. If some business does something original it is knocked off by noon.

    And forget class. It’s become a “laid back” town that lives on the “two-for-one” watered down
    cheap drinks until it’s time for dinner. Then it’s back to the cheap-ass hotels for the evening.
    After all, we paid up front for that crap.

  4. marlene cormack

    I have been to PV 11 times since 2008 and all have been all inclusive for many reasons. The cost of flying to PV from Canada is usually more than the cost of an all inclusive, and for me it is a holiday and getting away from the everyday such as cooking. We however to not spend all our time at the resort getting “drunk”, we are in town more than at the resort, and do not use the resort tour companies. We always use locals such a Kuklacan for tours, such as ATVs, rent boat and men for the day and go scuba diving and exploring the local islands, beaches etc. We always eat at local places, and enjoy all the amenities of the local shops. Going again in November/14, and staying at the Friendly Vallarta, love PV.

  5. I won’t use my time share exchange at any all inclusive resort. I can pay 3 months rent on my PV apartment for the cost of a week at an all inclusive resort. I certainly don’t need the all you can eat/all you can drink package.

  6. Karen

    I really hate that it is hard to find hotels/resorts that are NOT all inclusive. The fun of going to a visit a different city or country is visiting and experiencing the food and culture of the city. Unfortunately now when you visit an all inclusive resort in Puerto Vallarta you might as well be in Las Vegas or any other resort with a swimming pool! Please, please hotels in PV consider both options for visitors.

  7. Kellie

    Let’s be honest I do all-inclusive and I love it I don’t love the food. So I still go to restaurants I still do a little shopping the reason why it’s a being the way it is I feel it’s because of the airlines charging luggage fees nobody wants to buy anything to take home because they have to pay extra for it and it needs to stop.. Tourism has slowed down airlines are charging way to much to vacation. It just makes sence for all inclusive you can’t have it both ways..

  8. Personally not a fan of the All-inclusive . One goes on vacation to experience the local delights and staying permanently in your resort doesn’t allow you to taste the full flavours on offer. The malecon and the landlords need to sit down more with the local tourist board and local gvm’t to sort out this mess as the status quo isn’t meeting the needs of it’s local and foreign market.

    1. What is bollocks? Everything you said is bullshit. All food and drink goes to hotel not spread around. The locals loses when all money spent is in house. Sure they buy goods but if it was tradition hotel they would buy same goods and services duh
      Your argument makes no sence
      But i guess facts do not make any sense either.

    2. OF COURSE WOULD NEVER HAPPEN. IMAGINE A WORLD FREE OF THESE ALL INCLUSIVE RESORTS THAT AGGRESSIVELY TRY AND KEEP THEIR PATRONS INSIDE THEIR FENCED IN COMPOUNDS. I WAS LIVING HERE BEFORE THEY WERE INVENTED. PEOPLE ACTUALLY CAME AND EXPLORED AND SPENT THEIR MONEY IN THE LOCAL BUSINESSES. JOBS ARE JOBS BUT ALSO EFFECTS THE REST OF THE POPULATION NEGATIVELY. THEY WORK WHERE THEIR ARE NO TOWNS NEAR BY. PALLADIUM GOOD EXAMPLE BUT IN VALLARTA ALL THEY DO IS HURT THE LOCALS. I HAVE WATCH IN 25 YEARS I HAVE LIVED HERE THE TOWN SHRINK TO MUCH SMALL VERSION SO MANY BUSINESS GONE.

  9. I think the malecon has been affected by the all inclusive resorts and the fact that as each year passes more and more 4 and 5 and grand turismo hotels are opening in the Riviera Nayarit, the hotels in Puerto Vallarta look shabby and old now compared to Nuevo for example. I don’t agree that all inclusive hotels kill the local economy, the food and drink and supplies for all inclusive is still bought locally and inside the all inclusive hotels local business people have small souvenir shops plus all the thousands of people who work in all the inclusive hotels spend their wages locally.

  10. So true and so sad. People come to PV and sit day and night in the resorts, getting drunk and stuffed missing so much this beautiful vibrant city has to offer: amazing restaurants, theaters, strolls along the gorgeous malecon(boardwalk), botanical gardens and so much more. If you prefer all inclusive, than go to Dominican Republic, Jamaica or any other islands where there is nothing, but the beach, cheap buz and mediocre (at best) food.

  11. And those at all inclusive they miss the best restaurants all around Vallarta… So many. Amore is always good,, blue Shrimp, Daquire dicks, and so many more….. So much entertainment, the beach art, so much… Can’t wait!


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