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Travel News

Mexico’s arrival numbers continue to decline

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Data released by Secretaría de Turismo (Ministry of Tourism, Sectur) indicated that tourist arrivals continued to fall in 2009, totalling 12.6mn in the first seven months of the year, a fall of 6.6

Data released by Secretaría de Turismo (Ministry of Tourism, Sectur) indicated that tourist arrivals continued to fall in 2009, totalling 12.6mn in the first seven months of the year, a fall of 6.6% year-onyear (y-o-y). This was an improvement over H209, however, when arrivals fell by 19.2% y-o-y. This is an encouraging sign, as it indicates that Mexican tourism is beginning to recover slightly from its Q209 downturn. The sharp decline in Q2 was the result of the outbreak of the H1N1 virus (swine flu) in March 2009, when the first and most high profile cases were diagnosed in Mexico City. International concerns about the threat of swine flu led many people to cancel holidays in Mexico.

Although figures appear to be improving, the tourism sector is still under pressure. It is a positive sign that border tourists (those spending only one day or night in Mexico) have even risen on an annual basis, growing by 5.7% y-o-y to 5.5mn. This suggests that day tourists from the US and those working across the border are returning. However, with arrivals of tourists that stay longer remaining subdued, 2009’s tourist revenues are likely to have fallen by an even greater proportion than headline figures of tourist arrivals. Moreover, we are concerned that Sectur has slowed the rate of release of its tourist figures, indicating that the arrivals data remained weak in Q309 and into Q4. As a result, we are pessimistic about Mexico’s tourism prospects in late 2009 and into 2010.

Focus On Quintana Roo

The Mexican state of Quintana Roo is one of the most popular destinations for tourists. The state is in the south of the country, on the eastern side of the Yucatan Peninsula and adjacent to the Caribbean. Despite Quintana Roo’s major tourist attractions, it has suffered heavily during the economic downturn, partly because US tourists used to visit the state’s largest city Cancún for weekends and short breaks, taking advantage of direct flights to the resort. However, with the economic downturn in the US, the number of US tourists has fallen and they are less willing to spend money on weekend breaks away. Although Cancún and Quintana Roo in general remain attractive and relatively inexpensive holiday destinations, we expect the state to continue struggling in 2010, although it will be one of the first states to recover once US tourists start to return.

Low-cost Airlines Suffer In Downturn

The worsening operating environment during the tourist industry slowdown has had particularly negative implications for Mexico’s budget airlines. While the two main national airlines, Mexicana and Aeromexico, are better able to absorb operating losses, several budget airlines closed down in 2009. Of the nine budget operators flying in Mexico in 2008, only four remain in operation: Viva Aerobus, Volaris, Interjet and MexicanaClick. Aladia, Avolar, Alma and AeroCalifornia have all ceased flights, while Aviacsa was grounded in June 2009. In the long term, this will benefit the surviving budget airlines, which can increase their budget share and diversify routes to attract more passengers. As of late 2009, Volaris held 13% of domestic market share; Interjet, 12% and Viva Aerobus/MexicanaClick, 10%; compared to 28% each for Aeromexico and Mexicana.