Market Report

Mexico Hospitality Market Update 2021

Mexico’s strategic location and rich cultural heritage position it as a world-class tourist destination. Despite the challenges posed by the COVID-19 pandemic, the country has maintained its attractiveness to international tourists, particularly from the United States.

The pandemic, however, has significantly impacted the hotel industry, with historic lows in occupancy rates and a sharp decline in tourism's contribution to GDP.

Tourism and Economic Impact
In 2020, the tourism GDP in Mexico fell by 27.8%, a significantly higher drop compared to the national GDP’s 8.5% decrease. This disproportionate impact highlights the vulnerability of the tourism sector. The pandemic led to a 15-20% reduction in employment within the tourism industry, equating to approximately 840,000 job losses. 

Travel restrictions from major source markets like the USA and Canada further exacerbated the situation. Despite these challenges, Mexico adopted an “Open Skies” policy, becoming the third most visited country globally in 2020, with nearly 24 million international tourists—a 46.2% decrease from 2019. 

Hotel Market Performance
The Mexican hotel market experienced a severe downturn, with urban hotels recording an average occupancy rate of just 10% during the peak of the pandemic. However, five-star beach destinations like Los Cabos, Riviera Maya, and Riviera Nayarit fared relatively better, operating at approximately 40% occupancy. National tourism gravitated towards nearby beach destinations, buoyed by rigorous sanitation protocols. 

Air Connectivity and Cruise Industry
The airline industry in Mexico saw a 16% drop in routes, with a 30% reduction in aircraft operations and a 41% decline in passenger numbers. The exit of Interjet, which held 20% of the national market share, further strained air connectivity. The cruise industry also suffered, with a 70.7% drop in cruise ship arrivals and a 74.3% decrease in cruise passengers in 2020. 

Recovery Strategies
A collaborative approach between government, businesses, and NGOs has been pivotal in reactivating tourism. Initiatives included special rates for domestic tourists and leveraging remote work and study opportunities to encourage longer stays at beach destinations. Financial support plans, including credit schemes for tourism SMEs, have also been implemented to provide liquidity and support recovery. 

Future Outlook
The speed and effectiveness of vaccination efforts will be crucial in defining the pace of recovery for Mexico’s tourism sector. Leisure travel and beach destinations are expected to rebound first, driven by pent-up demand from consumers eager to travel after prolonged lockdowns. Business tourism faces greater challenges, necessitating strategies to ensure safe and attractive environments for corporate travelers. 

 Key recommendations for the tourism industry include: 

  • Flexible reservation policies. 
  • Robust sanitation protocols. 
  • Enhanced communication strategies to convey safety. 
  • Utilization of outdoor spaces for meetings and events. 
  • Adoption of health passports and advanced technology at contact points. 

 


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Mexico

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Mexico Hospitality Market Update 2021
Hospitality
Tourism
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