Mexico - Travel & Tourism: Government initiatives to drive tourism (Strategy, Performance and Risk Analysis)
Mexico has numerous attractive destinations, which coupled with the depreciation of the peso, is driving the influx of inbound tourists. In 2016, international arrivals increased at an annual growth rate of 8.8%, rising from 32.1 million in 2015 to 34.9 million in 2016.
In the passenger airline segment, the number of seats available and volume of seats sold recorded respective review-period (2012-2016) CAGRs of 6.9% and 8.0%. Growth was primarily driven by demand from foreign tourists. Passenger airlines revenue recorded a review-period CAGR of 2.0% due in part to revenue derived from full-service airlines. In the accommodation segment, there was an increase in the number of room nights available at a review-period CAGR of 2.1%; the number of room nights occupied posted a CAGR of 4.9%. Growth was driven by an increase in the volume of tourists.
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Luxury segment to drive revenue per available room
Total revenue per available room recorded a review-period CAGR of 0.1%, from US$76.5 in 2012 to US$76.6 in 2016. It will post a forecast-period CAGR of 3.1% to reach US$89.4 in 2021. Revenue per available room in the luxury segment stood at US$140.7 in 2016. The decline recorded during 2015-2016 was due to the impact of Hurricane Odile in September 2014, which forced luxury resorts at Los Cabos to close for several months. Revenue per available room in the luxury segment is therefore anticipated to post a forecast-period CAGR of 3.9% to reach US$170.7 in 2021.
The fleet size of car rental firms to record growth
The fleet size of car rental firms recorded a CAGR of 1.8%, from 30,801 in 2012 to 33,133 in 2016 and will post a forecast-period CAGR of 1.8% to reach 36,274 in 2021 due to the strengthening of international and domestic tourism volumes. Due to the government’s restriction on vehicular use on account of air pollution concerns, car rental companies are devising alternative business propositions. In 2017, Hertz Mexico introduced a fleet of hybrid Toyota Prius vehicles, exempt from the restriction program.
New middle class population to drive growth
Total tourist volume recorded a CAGR of 5.2%, from 237.4 million in 2012 to 291.2 million in 2016. Tourist volumes are expected to post a forecast-period CAGR of 6.9% to reach 406.7 million. Growth was due to a rise in travel for leisure purposes on account of an emerging middle class population. The situation was supported by the depreciation of the peso, which led to an increase in international arrivals.