Mexico’s tourism outlook for 2023 maintains concern for slowdown in US economy and violence at home

Puerto Vallarta (PVDN) – The wave of travelers to Mexico continues to grow. The renewed enthusiasm of international tourists to visit the country’s destinations benefits the industry, and this year holds the promise of continuing the recovery of the economy after the covid-19 pandemic.

“We are still being benefited from the US economy, which has doubts, but which has positive signs, such as the containment of inflation in recent weeks and a good performance in terms of employment, but there is a scenario where there would be a slowdown in the economy and it would be necessary to see if it becomes a recession”, explains Francisco Madrid Flores, director of the Center for Research and Tourism Competitiveness (Cicotur) of the Anahuac University.

The second half of the year will be decisive to see if the economic outlook has an effect on the behavior of tourists in Mexico and the world. However, it is not the only latent risk to continue the current boom in the industry.

In December 2018, Miguel Torruco Marqués, head of the Ministry of Tourism (Sectur), announced the closure of the Tourism Promotion Council of Mexico (CPTM), a decision made by President Andrés Manuel López Obrador.

Mexico’s ability to promote itself internationally as a travel destination will be one of the additional challenges, despite the fact that regions such as Los Cabos or Puerto Vallarta, to name a few, have launched promotional initiatives. This is not a widespread plan across the country.

In the United States, the estimated marketing spending on tourism is 1.8 billion dollars this year, which includes companies and tourist destinations; while in Mexico investment in tourism promotion by the Federal Government is almost non-existent. “We do not have specialized crisis response mechanisms and they are always there,” says the director of Cicotur.

Despite everything, Mexican tourism remains enthusiastic about what 2023 can represent.

“The industry, historically, has been an engine for the Mexican economy, and it did suffer during the pandemic compared to other countries, but we are in this recovery and we want to turn this page and continue investing, growing, and trying to put this industry as a national priority”, says Braulio Arsuaga Losada, President of the National Tourist Business Council (CNET).

2022 “has been a year of recovery,” says Arsuaga, who places special emphasis on the fact that income from international travelers grew 13%, compared to 2019.

However, economic factors, such as the slowdown of the US economy and high levels of inflation rates, or geopolitical factors, mainly the war between Russia and Ukraine, are reasons for warning for the growth of tourism this year, warns Francisco Madrid when talking about the impact on international travel.

Travelers would look for geographically closer destinations in the face of the challenges imposed by the international market.

Regarding tourism in the Latin American region, it is clear that the political conflicts in Peru, Brazil, and Argentina could put a stop to the good performance that the tourism industry would have had in the last two years, after the height of the coronavirus pandemic.

In the national market, significant increases in tourist activity would not be expected, while, in the best of cases, the levels of 2019 could be reached. The border market would still remain at low levels, with a decrease in border tourists of around 40%, which impacts the bulk of travelers arriving in the country.

This year, tourist currencies will maintain positive behavior due to international tourism. “That will eventually bring tourism GDP back to levels prior to what it was before the pandemic,” says Madrid.

Today, air tourism represents 85% of revenue and has performed well in 2022, but could slow down as the year progresses. Francisco Madrid explains that there is a kind of “psychological bubble” that continues to drive the arrival of tourists from the United States to Mexico.

“That is the part that seems to me to be a weakness that the country is facing today and that could impact the markets as of the second half of the current year.”

On the other hand, the domestic market reaches 80% of tourist consumption, but an extraordinary increase would not be expected.

Sun and beach destinations will continue to be the favorites for tourists, but the objective that the industry must set is to look for new segments that may be attractive to the new generations.

The truth is that both Braulio Arsuaga and Francisco Madrid recognize that investors continue to have their eyes set on Mexico and, above all, during 2023, as is the hotel segment.

Nicólas Martínez, Vice President of Development for Mexico, Central America, and the Caribbean at Accor, believes that the country offers opportunities to continue growing and attracting tourists.

From Tijuana to Cancun, Accor has 35 hotels distributed throughout the Mexican Republic.

The Accor executive acknowledges that in the north of the country, interest is beginning to be experienced by tourists who are attracted by the so-called nearshoring, which translates into the arrival of productive chains from Asia to Mexico.

In addition, the company observes that metropolises such as Mexico City are beginning to have new developments to expand tourism infrastructure and reach pre-pandemic levels.

Mexico lives different tourist panoramas. Sun and beach destinations have benefited, but cities still face the challenges that arose after the appearance of the pandemic in 2020.

In the case of Accor, the hotel group had a growth in the number of new rooms of 9.5% in the country. And it is that the company has opened new hotels in Mexico City, to expand its capacity and serve national and international tourists.

With locations in Santa Fe, Insurgentes, and the La Condesa neighborhood, the firm wants to lay the seed of what will be its growth, through a lifestyle proposal focused on cities, such as the country’s capital.

“We design hotels for the community and not for the traveler. We believe that there is a very important difference there”, says Nicolás, when betting on new, more attractive concepts within the communities where they are located. “In Mexico City, we see a lot of potential due to its mix of businesses, groups, and tourism, such as Formula 1,” says the Accor executive, the firm that owns the Sofitel, located on Paseo de la Reforma.

The company also sees potential to continue growing in Riviera Maya destinations, such as Tulum; and also in Baja California, Riviera Nayarit, Puerto Vallarta, and Mazatlán, to name a few.

“Today we have a portfolio of 24%, that is, what we have signed and in the construction process to open in the next three years is 24% of our portfolio. In other words, we are adding a quarter of our portfolio”, says Accor’s Vice President of Development, who knows that the specter of the recession in the United States is also a symbol of prudence for tourism.

“We believe that it will be a good year for tourism,” says Braulio Arsuaga, referring to 2023, but Mexico and the tourism industry must create new products, since people want to travel differently, since the younger generations, millennials and centennials, have become decisive among travelers.

By 2025, millennials and centennials will represent 50% of travelers in the world, and “that means traveling differently, paying attention to sustainability. Ultimately, we need to create different products that can be made for these people”, says the Mexican businessman.

The world is experiencing a change of face. 48% of Latin American travelers want nature destinations and 78% of millennials prefer to spend their money on experiences.

Opportunities in Mexican tourism are also found in learning to travel outside of the holiday season and the arrival of the so-called “digital nomads”, who do not have a physical workplace due to the nature of their remote work in technology companies.

“If investors are betting on the country’s tourist destinations, that is because they see potential,” says the Anahuac University academic.

The investment is focused on the Mexican Caribbean, translated into the construction of rooms, but in Mexico City, more investments are needed, for example.

“By 2023 and 2024, all the priority works of the current administration in tourism will be completed: trains, airports, highways, and ‘anchor’ attractions, among others. International events will be consolidated, and the 47 Tianguis Turístico México, to be held for the first time in Mexico City, which will be a milestone in its history. We will establish ourselves as a tourist power”, said Torruco Marqués last January.

However, insecurity “is a time bomb, and at any moment it can explode and derail the good results,” explains Francisco Madrid, who believes that it is an issue that must be addressed.

Arsuaga is enthusiastic about opportunities, but also wary of challenges. “It is an important year, of recovery and reflection,” says the president of CNET.