Sector Overview
The travel and tourism industry is one of the main engines of the Mexican economy, with a total contribution to the country’s GDP of USD 189bn in 2014, according to the World Travel & Tourism Council (WTTC). The sector was also among the major employers in the country with a total of 3.7mn direct employees. Mexico is regarded as one of the most culturally-rich nations in the world, with a variety of archaeological sites and globally renowned beach resorts that contribute to the economic development of the country, and in particular of the less developed southern regions. In addition, tourism is the fourth largest generator of foreign currency in Mexico, only behind the oil & gas sector, the automotive industry and the foreign remittance inflow. In global terms, Mexico was the world’s 10th most visited country in 2014, receiving a record high 29.3mn international visitors, up 21.1% y/y, and ranked 22nd in terms of international tourism receipts with USD 16.2bn, 16.5% up y/y, according to the United Nations World Tourism Organisation (UNWTO).
Safety and Securing
Mexico experienced an unprecedented crime wave following the decision of the former Mexican President Felipe Calderon in December 2006 to take the national army out to the streets to fight organised crime, especially the drug cartels. During the following years, this decision created a very difficult situation for the tourism industry since frequent media reports of violence and safety concerns caused a number of countries (e.g. the United States in May 2015, Australia in October 2015 and Canada in December 2015) to issue warnings to their citizens about the risks of travelling to certain areas of the country, mostly the U.S.-Mexican border and several states with a high risk of criminal activity, including homicide, gun fights, kidnapping, carjacking and highway robbery, such as Tamaulipas, Guerrero and Michoacan. The majority of the countries that issued travel warnings were among the main generators of inbound tourists to Mexico in 2014, especially the United States.
Threats and Opportunities
Besides the multiple travel warnings due to threats to safety and security in the country, there are several structural internal factors that hamper the development of the domestic tourism industry. Among the latter is the underdeveloped transport infrastructure and in particular the poor quality of the road infrastructure, the saturation of the main airports and the absence of passenger railways, which are serious obstacles to the development of the country and its competitiveness. On the other hand, the depreciation of the national currency against the U.S. dollar in the recent years has increased the attractiveness of the domestic tourist product to residents from the main sources of inbound tourists to Mexico. Notably, the Mexican peso depreciated by 21.3% against the U.S. dollar between January 2014 and November 2015.