Hotel growth in Mexico hinges on trade, infrastructure
 
Hotel growth in Mexico hinges on trade, infrastructure
16 MARCH 2018 9:03 AM

Experts speaking at the recent Mexico Hotel & Tourism Investment Conference shared some of their top priorities for spurring further growth in the hotel sector, including the need for infrastructure investments and a favorable outcome in the renegotiation of the North American Free Trade Agreement.

Editor’s note: Quotes in this story were derived from a Mexico Hotel & Tourism Investment Conference panel that was conducted in Spanish and was translated by event staffers in real time at the event.

MEXICO CITY—The growth of the hotel industry in Mexico is important for the country’s continued economic maturation, according to sources speaking at HVS’ recent Mexico Hotel & Tourism Investment Conference.

Speaking during the “Industry priorities—Action plan” session, panelists said Mexico is in a good position to have a thriving tourism industry, but the country needs to overcome its short-term uncertainties and make investments to spur further growth.

Francisco González, director general for Mexico’s state-owned bank and credit agency Bancomext, said he is bullish on the hotel industry.

“It’s very, very attractive,” he said. “It’s not just amusement parks and golf courses. There’s ecotourism as well.”

González said the width and breadth of what Mexico has to offer in various destinations is sometimes underestimated outside the country’s borders, noting that geographically it’s comparable in size to Canada and features a great diversity. He said his bank’s lending supports that thesis.

“We have projects in regions that are ready to support new concepts, not just ones that are going to be added in Baja California,” he said.

Jaime Fasja, co-CEO of Thor Urbana, said he agrees there is room for different kinds of projects in different areas, even within major markets like Mexico City.

“It’s very difficult to generalize in Mexico City,” he said. “It already has 38,000 rooms and remains a very interesting city to continue building hotel rooms. It’s now one of the most interesting cities on an international level.”

Infrastructure and politics
But panelists agreed that Mexico needs the political will to invest in infrastructure to make the country more of a go-to global destination.

González noted the country has seen significant international investment in recent years, and continued infrastructure investments in things like roads and airports will help.

Salomón Kamkhaji, president of Pulso Inmobiliario, noted airport investment is a top political topic, which he hopes will garner the attention of candidates in Mexico’s ongoing presidential election.

For example, he said, Mexico City’s airport lags well behind the status of the city it sits in.

“You know what, this is the image of our country,” Kamkhaji said, referring to the airport. “And if you arrive in terminal 2 and have to use the restroom, you only see three spaces in that tiny bathroom. What’s your impression (of Mexico)?”

He noted there’s significant opportunity for greater airlift from the country, especially as deals with Asia/Pacific countries are established and expanded.

Kamkhaji said he’d also like to see interest from politicians at the state and local levels in growing tourism.

“We’re facing big problems in states and counties,” he said.

In addition to infrastructure, he noted that one of the keys for tourism growth in Mexico will be investments in security.

“We need to tell people that (they) can come here and feel safe during their stay,” Kamkhaji said. “There is huge potential.”

Fasja said that working with governmental bodies on various levels can often be difficult in the country.

“For instance, it’s so difficult to deliver in the state of Mexico,” he said. “The bureaucracy takes a long time compared to other states.”

Vicente Naves, CEO of Grupo Frel, said politicians have to understand issues around tourism can’t be ignored, especially when it comes to safety.

“We need to address these issues and work with authorities,” he said. “They need to see the importance of these issues.”

NAFTA looms large
Ongoing renegotiations of the North American Free Trade Agreement with the U.S. and Canada loom large as an issue for Mexico, and panelists said a positive result from negotiations would go a long way in establishing the country’s long-term growth prospects.

While the negotiations were sparked by U.S. President Donald Trump, who has been hawkish on trade with Mexico, González said he believes this could be a chance to update the deal for Mexico’s benefit.

“We made this agreement in the 20th century,” he said. “That’s the previous century. … Now we’re dealing with the investors of the 21st century. We need to get the balance right.”

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