Mexico’s Travel and Tourism Industry

As the first country in the world to experience an outbreak of the now widespread Swine Flu (H1N1) virus, Mexico has been hit hard in terms of tourism demand over the past three months.

Preliminary estimates from the Mexican government put the impact so far at around US$200-$300 million, but the final toll could well be much greater. More than 2,000 inbound flights were cancelled during the early stages of the crisis.

"Mexico should be applauded for the way it handled the swine flu crisis," said Ufi Ibrahim, Chief Operations Officer of the World Travel & Tourism Council (WTTC), speaking at a recent media breakfast organised by the Mexico Tourism Board. "The Mexican Government and other stakeholders in the local travel and tourism industry have taught us all a lot because they have shown great leadership during their period of crisis, not to mention responsibility, timeliness and effectiveness."

In 2008, international tourist arrivals in Mexico grew by 5.9% to 22.6 million while US dollar travel spending by all visitors rose 3.4% to US$13.3 billion. More significantly, WTTC's research shows that the country's travel and tourism Economy increased its contribution to 13.2% of Mexico's GDP, growing by 3.8% - as against stagnation in travel and tourism Economy GDP posted by the Americas as a whole.

In addition and, even more importantly, given the global economic situation and rising unemployment around the world, an estimated 40,000 additional jobs were created directly last year by Mexico's travel and tourism industry, raising the total number of people directly employed in the sector to 1.7 million.

Despite the intensification of the global recession and continued drug-related violence in Mexico, international tourist arrivals continued to expand (+5.9%) in the first four months of 2009. However, the gains were concentrated in January and February, while April saw just a 0.2% year-on-year rise and the growth is estimated to have come mainly from lower-spending visitors staying near the US border.

Moreover, according to new research conducted by Oxford Economics on behalf of WTTC, the Peso's sharp decline meant that US Dollar spending in the January-April 2009 period was 7.6% below the level of the previous year.

"Given recent negative developments, it's hardly surprising that the situation is forecast to be tough for the remainder of this year," said Jean-Claude Baumgarten, WTTC's President & CEO on releasing the results of the research. "Indeed, we expect Mexico's travel and tourism Economy GDP to contract by 9% this year - more than the 6.5% decline forecast for Mexican GDP as a whole."

"Even allowing for the positive start to this year, arrivals are now expected to decline by a third in 2009, with a similar decline in spending, thereby reducing direct employment by 160,000 jobs to fewer than 1.6 million," Baumgarten added.

Smaller, but nonetheless significant, drops are expected in residents' tourism spending and in investment in tourism facilities, according to the WTTC/Oxford Economics research.

"However, the government is responding really pro-actively to such developments," Baumgarten said, "planning to invest US$90 million in the industry over the coming months, with an extensive marketing campaign being launched in key source markets. In addition, a number of other measures have been introduced to stimulate demand, such as complementary insurance for hotel bookings by foreigners."

As a result of all these efforts, WTTC/Oxford Economics believe that a sharp rebound in activity is likely over the next two years, with travel and tourism economy GDP projected to expand by over 6% in 2010 and 2011.

"More importantly, we are also optimistic for the longer term," Baumgarten said. "We still expect the growth in Mexican travel and tourism economy GDP over the next ten years to average close to 5% per annum, which would mean that direct employment in Mexico's travel and tourism should be in the region of 2 million by 2019."

See other recent news regarding: Airlines, Aviation, Flights, First Class, Business Class, GDS, Miles, Hotels, Promotions, Spas, New Hotels, Visitor Arrivals, Cruises, Free Deals, Performance, Traffic, WTTC, June 2009, July 2009, Mexico