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Mexico Tourism Report Q4 2009

Published by: Business Monitor International

Published: Sep. 28, 2009 - 45 Pages


Table of Contents


Executive Summary
SWOT Analysis
Mexico Tourism SWOT
Mexico Political SWOT
Mexico Economic SWOT
Mexico Business Environment SWOT
Industry Forecast Scenario
Table: Mexico’s Travel Industry, 2003-2013 (‘000 people, unless otherwise stated)
Table: Mexico’s Tourism Industry, 2005-2013
Market Overview - Travel
Commercial Airlines
Low-Cost Airlines
Cruises
H1N1 Update
Global Oil Products Market Review
Table: Global Oil Prices, 2003-2013 (US$ per barrel)
Market Overview - Hospitality
Accommodation
Table: Mexico’s Accommodation Sector, 2005-2013
Business Environment Ratings
BMI’s Security Ratings
Table: Latin America Security Ratings
Table: Latin America State Vulnerability To Terrorism Index
Mexico’s Security Risk Rating
Regional Security: Latin America
Currency Forecast
Table: Mexico - Monetary Policy, 2006-2013
Global Assumptions
Table: BMI’s Global Assumptions, 2007-2013
Table: Global And Regional Real GDP Growth, 2008-2011
Table: Developed Market Exchange Rates, 2008-2011 (average)
Table: Key Emerging Market Exchange Rates, 2008-2011 (average against US dollar)
Company Profiles
Mexicana de Aviación
Aeroméxico
Grupo Posadas
Sol Melia
Methodology
How We Generate Our Industry Forecasts
Tourism Industry
Tourism Ratings - Methodology
Table: Tourism Business Environment Indicators
Table: Weighting of Components
Sources

Abstract

H102 Tourist Arrivals Fall Sharply

Data released by the Secretaría de Turismo (Ministry of Tourism, Sectur) shows that tourist arrivals fell inH109, slumping by 6.0% year-on-year (y-o-y), to 10.7mn. However, this was largely the result of a sharpdrop in Q209, with arrivals actually having risen by 7.5% y-o-y in Q109. Tourist arrivals fell by 19.2% yo-y in Q209, one of the sharpest drops ever experienced in Mexico.

This unexpected decline was not a result of the economic slowdown affecting tourism - in fact, theMexican tourism industry had been relatively resilient during the downturn. Instead, the main factorbehind the decline was the outbreak of the influenza H1N1 swine flu virus in Mexico in April. The virusspread rapidly and the government shut down public services in Mexico City. This immediately affectedtourism, with individuals and tour operators cancelling planned holidays. However, the impact hascontinued to be felt, largely due to the ongoing rate of infection. By August 2009, there had been 179deaths and 20,681 confirmed cases in Mexico. Such a high rate of infection is continues to be a majordeterrent to tourism, and this negative reputation is likely to linger for some months after the outbreaksubsides. As a result, we have downgraded our forecast for 2009 and now expect arrivals to reach only19.8mn.

Violence Prompts US Travel Alert

In another blow to Mexico’s suffering tourist industry, the US State Department released a travel alert inAugust warning US tourists of increased violence in Mexico. In particular, the alert warns tourists againsttravelling to the states of Michoacán and Chihuahua at all, and to take particular care in other parts ofMexico by not travelling at night and keeping to tourist areas.

There were 4,400 murders in the 12 months to August, an average of 20 per day. Much of this violence islinked to turf warfare between rival drug cartels, which are struggling for control of lucrative drug routes.

Much of the violence is in states near the US border, such as Chihuahua and Michoacán, which is thepower base of an emerging cartel called La Familia. Michoacán’s major tourist attractions are the colonialera monuments in the state capital Morelia and the Monarch Butterfly Biosphere Reserve, both of whichare likely to suffer during the travel ban. The US is the primary source of tourists to Mexico, often in theform of ‘fronterizados’, or tourists who cross the border for just one day or night. The wave of violenceon Mexican/US border states is likely to deter these short-stay visitors.

Cruise Sector Suffers Disproportionately

The cruise sector has traditionally been one of the most resilient sectors of the Mexican tourism industry.The sector mostly located in the south, near the Yucatán Peninsula, so is isolated from the violenceoccurring in the north. Also, cruise operators can change itineraries to reflect any security concerns in theregion. Mexico is usually visited as part of highly popular Caribbean cruises, so benefits from associationwith the Caribbean rather than Central America. However, in 2009, the cruise sector has been sufferingparticularly badly. In H109, cruise arrivals fell by 24.8% y-o-y, to 2.7mn. Cruise arrivals started todecline even before swine flu hit, falling by 9.5% y-o-y during a period when arrivals in general wererising, They then fell by a shocking 46.5% y-o-y in Q209. It comes as little surprise that cruise arrivalsare declining, given that cruises cater to the high-end, luxury tourist market and are therefore likely toreceive less custom during an economic downturn. However, the sheer scale of the decline wasunexpected. The fall in Q209 reflects the negative perception of Mexico created by the swine fluoutbreak. Many cruise operators cancelled stops in Mexico altogether and have yet to reinstate them. Assuch, Mexico’s cruise industry is set to suffer disproportionately in 2009.

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