Economics: Tourism adds to its economic impact

MEXICO - Report 16 Dec 2019 by Mauricio González and Francisco González

At a time when Mexico can do with additional sources of foreign currency inflows, the latest tourism data offers some encouraging news, although it is hard to get that impression at first glance. During the first ten months of 2019 the number of international visitors slipped 1.5% below levels of a year earlier. However, that weakness was concentrated in an 11.3% drop in the number of cross-border visitors who just spend the day, a result that should come as little surprise considering the extent to which border controls have tightened, thus leading to long waits during peak hours. That effect was also visible in a rise in the number of people visiting border regions but who now opt to remain in the country for at least one night, and an even more pronounced reduction in the number of people in Mexico spending a day in neighboring country’s border regions.

The industry’s importance to, and potential for the Mexican economy should not be underestimated. In recent years the sector has directly accounted for roughly 8.5% of GDP and almost 6% of formal sector employment, so its development is crucial to the economy. While Mexico placed seventh during 2018 in the number of international tourists received, it was only sixteenth in the amount of foreign currency it took in.

The country could benefit considerably from more of a strategic policy approach to tourism development, and more robust implementation efforts, something that continuing public sector spending cuts make both harder and more necessary. But in the meantime, there have been some encouraging developments, such as this year’s 8.8% increase in the daily expenditures of long-stay international tourists, and even gains of 4% in the amount spent by overnight border tourists, and almost ten percent by same-day border visitors. Overall, international visitors contributed more than 20 billion dollars to the Mexican economy during the first ten months of 2019, a rise of 10.4%.

Even as international tourism increased, hotel occupancy declined 0.9% in both urban and beach destinations, possibly in part due to the proliferation of hospitality service platforms.

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