Economic Importance of Tourism
Tourism is a crucial sector for Mexico, contributing 8.7% to the national GDP and providing employment for 2.3 million people as of 2018. In 2019, Mexico welcomed 44.7 million foreign tourists, generating $24.6 billion in revenue, ranking it 7th globally for international tourist arrivals. 

Tourism’s GDP Contribution (2011-2018)
Tourism accounts for a substantial share of Mexico’s economy, with the sector directly providing 6% of the total employment and playing a significant role in youth and female employment. 

Hotel Industry Overview
Mexico leads Central and South America in the number of hotel rooms, with 808,139 rooms, surpassing Brazil and Colombia. The country saw a 2.4% growth in room supply in 2019, the highest in North America compared to Canada (1.5%) and the United States (2.0%). 

Top Markets for New Rooms (Before COVID-19) 

• Cancun: 4,750 rooms

• Riviera Maya: 2,458 rooms

• Mexico City: 1,814 rooms

• Monterrey: 1,645 rooms 

Key Performance Indicators (2019) 

• Occupancy: -2.6%

• ADR (Average Daily Rate): -2.5%

• RevPAR (Revenue per Available Room): -5.0%

Beach Destinations 

• Los Cabos: Highest ADR at $315.80, Occupancy 55%

• Puerto Vallarta Area: Highest occupancy at 70%, ADR $160.52

• Cancun: ADR $185.70, Occupancy 68% 

Urban Destinations 

• Mexico City: Highest ADR at $120.31, Occupancy 66%

• Tijuana: Highest occupancy at 67%, ADR $75.82 

Impact of COVID-19
The pandemic led to a significant drop in international arrivals, with up to a 78% reduction. Hotels were restricted to 25% occupancy, catering only to essential activities. The recovery is expected to be slow, with a return to 2019 levels anticipated by the end of 2022.  

Year-End Growth (2019) 

• Room Supply: 3.10%

• Room Demand: -0.50%

• Occupancy: -2.60%

• ADR: -2.50%

• RevPAR: -5.00%

Recovery and Strategic Measures
The recovery outlook for Mexico’s hotel industry is contingent upon the resumption of activities in major metropolitan areas, beginning with Mexico City. Marketing campaigns targeting U.S. and Canadian travellers, enhanced health protocols, and digital innovations are critical for recovery. 

Economic Forecast
The Mexican economy is projected to contract by -8.3% in 2020, with a growth forecast of 3.2% in 2021. This V-shaped recession indicates a sharp decline followed by a gradual recovery. 

Key Concerns and Opportunities 

• Fiscal Incentives: The lack of fiscal incentives for the hotel industry remains a major concern. Restarting costs are high, and fiscal support would facilitate faster recovery.

• Currency Fluctuations: The behaviour of the Dollar-Mexican peso parity could impact travel costs, making outbound travel more accessible for U.S. and Canadian tourists. 

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