Mexican Tourism UNCOVERED

As a new corporate entity that aims to become the leading integrated destination

management & marketing agency in Europe, TOPOSOPHY offers a full range of

specialized, end-to-end solutions in destination management & marketing. With

a broad network of experts around the world, the company is well-equipped to

work with a diverse clientele base within the travel and tourism industry using

an innovative approach, flexible operations and fully committed partners at all

levels.

TOPOSOPHY is the totally reengineered and rebranded entity derived from

ABOUTOURISM Destination Consultants. Founded in 2010, ABOUTOURISM has

already received several distinctions in the consultancy arena. In just over four

years, the company’s portfolio has boasted high-level projects and a global net-

work of associates from some of the industry’s leading brands.

TOPOSOPHY’s top digital applications and marketing offering is powered by the

ATCOM Group of Companies, the leading web agency in the Greek market, with

an extensive project portfolio and unrivalled experience on the creation of por-

tals, e-Shops and web and mobile applications. As a Business Unit of ATCOM,

TOPOSOPHY will share resources with the whole group of ATCOM Companies

& Business Units (ATCOM/Mindworks/UXLab) in web development and digital

marketing services, enabling brands to obtain the visibility they need with a fo-

cus on delivering perfect integrated digital experiences.

TOPOSOPHY INFO

MEXICO TOURISM UNCOVERED 2014

To build a tourism strategy that lasts and that works for all, you have

to be realistic in analysing what works and what doesn’t. In the sec-

ond of this ‘‘Uncovered’’ series of reports, experts at TOPOSOPHY

lift the lid on tourism trends in Mexico and make an honest, frank

assessment of the top priorities for government and business in the

country today.

Domestic and international tourism in Mexico is continuously grow-

ing. The tourism industry growth continues to ride higher than the

average national GDP growth and investment in the tourism sector

is pouring into the country as the main source market, the United

States, recovers from the global financial crisis. Nevertheless image

remains the main concern as incidents relating to organised crime

continue to affect parts of the country and Mexican citizens have

mobilized to demand more security as mid-term elections approach

(Summer 2015).

As this report will explain, the media often reports a distorted view

of the reality of daily life in Mexico. Furthermore, Mexicans’ views of

their own country can often be subject to an inferiority complex or

over-influenced by current events. Discover TOPOSOPHY’s take on

the current state of Mexican Tourism in this candid report that aims

to provide an external view and an independent perspective on how

a tourism industry with high potential can deliver for the country in

the future.

Dr. César Castañeda Vázquez del Mercado |

Senior Research Analyst, Chief Editor

Manolis Psarros | Destination Marketing Specialist

Peter Jordan | Senior Tourism Analyst

Dr. Pantazis Pastras | Senior Research Analyst

TEAM OF CONTRIBUTORS

INTRODUCTION

ONE OF THE LARGEST TOURISM MARKETS IN CONSTANT GROWTH IN SPITE OF RECENT IMAGE PROBLEMS.

This report presents a country that offers growth in its tourism industry even

through hard times like the international financial crisis or the actual image cri-

sis that the country is experiencing. One of the reasons for such a good per-

formance is the fact of being neighbours to one of the world´s largest tourism

source markets. Mexico is the first international destination for US citizens and

the second destination for Canadians1 though this advantage is not necessarily

known to international investors. As a result, and the tourism industry is mainly

steered by investments from Mexican, US, Canadian and Spanish tourism com-

panies and investors. Very few investments from Asia, Middle East or Eastern

Europe are present in the Mexican tourism industry.

Even when growth is a constant and given the size of the domestic market that

makes the Mexican tourism industry rather resilient, much better results could

be achieved if Mexican tourism destinations implemented the use of new tech-

nology, improved their promotional strategies and specialized in catering to al-

ternative niche markets.

1

Major investments in infrastructure and tourism business are pouring in from the

public and the private sector, national programs to increase both domestic and

international tourism demand are being implemented and perspectives for the

sector are promising.

In spite of this, the political and social scenarios concerning violence, drug traf-

ficking and the weakness of municipal authorities are putting pressure on the

image and perception of the country. These situations require extremely urgent

attention from the national and local authorities which will need great creativity

and clear messaging in order to clarify the difference between tourism destina-

tions and social conflict areas.

To counteract the many misconceptions about Mexico today, the country has an

urgent need of country branding. In some areas city branding is also needed,

and not just from a tourism point of view. Many Mexican municipalities are in

need of a global strategy that covers all areas; public service, universities and re-

search, industry, services, cultural scene. The country boasts talented individu-

als and institutions in all of these areas, however little news of this rarely travels

outside of Mexico, leaving the media space to concentrate on bad news.

Experts at Toposophy believe that the full potential of Mexico’s tourism has not

yet been achieved and that with the right policy changes and the support of all

tourism related sectors, this can boost Mexico’s economy as well as improving

social conditions for Mexican citizens.

Hence, this report is focused on scrutinising the current strategies and possible

actions that the country could implement in the short and long term from a busi-

ness perspective to foster growth while preserving the natural environment for

future generations.

MANOLIS PSARROS

Managing Director

2

FACTS AND FIGURES

- Large infrastructure investments and reforms: Boosting growth with a capital ‘B’.

- What’s behind Mexico’s recent tourism growth?

- An industry with high potential

- Mexico in the international tourism context

- Giving tourism the political importance it deserves

THE TOURISM INDUSTRY AS A KEY PLAYERIN MEXICO’S ECONOMIC DEVELOPMENT

- Overcoming geographical limitations

- The DMO: an unknown formula in many Mexican destinations

- Self-esteem problems

- What about business travel, congresses and conventions?

- Tourism and culture: lacking the ability to support each other

- How unsafe is Mexico?

MEXICAN TOURISM

AND GLOBAL TRENDS TO TAKE ON BOARD

- Market Segments and Consumption Trends

- The Evolving Nature of the Tourist Experience

SIX STEPS TO BOOSTING MEXICAN TOURISM

- Alternative promotional strategies

- Make congress and conventions tourism a key element of the national strategy

- Bridge the digital divide

- Investment in Human Capital

- Finding new niche markets

- Make tourism the cleanest industry in Mexico

CHAPTER 1

CHAPTER 2

CHAPTER 3

CHAPTER 4

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34

8

24

56

44

14

25

57

16

26

58

17

28

59

29

60

CONTENT

FACTS AND

FIGURES

Tourism has proved to be one of the most resilient industries in Mex-

ico, even when we take into account tough international conditions

such as the worldwide slowdown during the 2008-09 financial crises.

The domestic market in particular has helped the tourism industry to

preserve jobs and pass through hard times.

Mexico is the world’s 14th largest economy and the second in Latin

America2. Representing 8.4% of the country’s GDP3, tourism entails

a significant share of business activity. Growth perspectives are ex-

tremely positive given that in 2013 the number of foreign tourists

broke a new record with 23.7 million international arrivals. In 2014 the

number of international tourists traveling to Mexico surpassed 19.3

million in the first eight months of the year, marking new record high

for any January-August period. Furthermore, international visitors to

Mexico from January to August spent a record totalling $11,131 mil-

lion USD, an amount not previously reached during any eight-month

period in a year4.

Nevertheless these encouraging numbers have been overshadowed

by a strong negative image surrounding some Mexican destinations

and the general perception among many international markets that

the country is going through difficult times in terms of security and

social conflicts.

CHAPTER 1 | FACTS AND FIGURES

5


On these grounds, understanding the present and future of Mexican

tourism means:

• Summingupthefactsandfiguresofrecentgrowth(1stChapter)

• Sheddinglightonthemesandissuesthatwillshape

theevolutionofthesectorintheyearstocome(2ndChapter)

•Askingwhatnationalstrategieswilladdressthepresenttrends

atalocalandgloballevel(3rdChapter)

• Discussingtheneedforactionsbythepublicandprivatesector

atallstagesoftourismplanningthatcanreinforceMexican

tourism’scurrentgrowthandpotentiallyleadtohigher

developmentifthecountryisabletoconfrontpressing

challengessuchasitsimagecrisis,preparingforclimate

change,increasingthequalityofservicesandimprovingtourist

averageexpenditure,amongstotherdifficulties(4thChapter)

6


Mexico is going through a process of large scale re-

forms where almost every sector is being revised and

improved. These major reforms include opening up

strategic sectors such as telecom, energy, and trans-

ports to foster competition seeking better prices for

users.

For example, announcements have been made con-

cerning the new international airport in Mexico City5.

With phase one (of two) costing an estimated 13 bil-

lion USD, the airport is aiming to position itself as the

largest airport in Latin-America and the most state of

the art in the world.

LARGE INFRASTRUCTURE INVESTMENTS AND REFORMS:

BOOSTING GROWTH WITH A CAPITAL ‘B’.

THE FIRST COUNTRY TO INTRODUCE A

HIGH SPEED TRAIN NETWORK IN THE

AMERICAS

Mexico has also announced that it will be the first country in the American continent (ahead of Canada and the

US) to build a high speed train network6 , with the first route connecting Mexico City and the city of Queretaro, a

world heritage colonial city and the main hub of aircraft and automobile industrial development in the country

and the nearby city of Toluca. Construction is subject to delays because of the negative effect of the falling inter-

national oil prices upon a major oil producer such as Mexico, but the initial plan is that more cities will be linked by

the network in coming years, namely: Gujadalajara, Monterrey and Leon.

These large investments in infrastructure have been accompanied with major investments in tourism advertising

and the creation of an ambitious social tourism policy that will lead to a further strengthening

of domestic demand.

MEXICO

7


INTERNATIONAL TOURIST ARRIVALS (MILLIONS)

WHAT’S BEHIND MEXICO’S RECENT TOURISM GROWTH?

International arrivals have experienced constant growth over time except for the year 2009 when the financial

crisis had an impact. The situation recovered by 2010. In 2013 Mexico received 23.7 million tourists.

MEXICO IS THE SECOND MOST POPULAR

COUNTRY DESTINATION IN THE AMERICAS

Constantgrowth.Mexico is experiencing constant growth both in arrivals of domestic and international

tourists and is ranked as the second largest tourism market in the Americas after the United States. It is

also second in number of visitors in the continent and third in terms of revenue generated by tourism after

the US and Canada7.

This growth has largely been characterised by the following factors:

8


Higher revenue. International receipts increased dramatically in 2013

reaching 8.5% growth compared to the previous year, the largest growth

in the last 10 years and a historical record level of revenue from both visi-

tors (defined as those who do not spend one night) and tourists (spend-

ing one night or more). International tourist expenditure alone grew 8.8%

in the same year 2013 compared to 2012. This year the market has shown

even better promise, with the influx of foreign currency from the arrival

of international visitors increasing 18.1% during the first eight months of

2014 compared to the same period of the previous year. While spend-

ing by international tourists increased 22.2% during the same period,

exceeding 9,833 million USD. For the January-August 2014 period, the

average expenditure of international visitors (not spending a night) in-

creased 14.6% compared to the same period of the previous year, while

the average expenditure of international tourists increased 2.7% com-

pared to the same period of 2013

TOURISM INTERNATIONAL RECEIPTS (MILLION USD)

9

BigneighboursThe US is by far Mexico’s leading inbound market accounting for 57.3% of the total in-

ternational tourists, followed by Canada 13.1%, United Kingdom, 3.4%, Brazil 2.2% and Argentina 1.9%8 .

Other important source countries are France, Spain and Germany. Compared to past years some

European countries are becoming relatively less important as source markets while South-American

countries like Brazil or Argentina raise their stakes as important source markets.

10


Dominationofthedomesticmarket.

During January-August, 2014, the arrival of domestic tourists to hotel rooms was over 33.7 million

tourists (75.4%), the remaining 24.6% was foreign tourists. This is significant because domestic tour-

ists are the main driver of the tourism industry and are not so affected by bad news relating to

security, given that they live in the same country and are able to recognise the difference between

sensationalist reports and genuine threats to their security.

Domesticgrowth.The domestic tourism market increased almost 1% from 2012 to 2013

accounting for a total of 68.8 million people spending at least one night in hotels.

11


Airlift.The number of air passengers arriving at Mexican airports increased 8.2% in 2013, compared to 2012.

For the first time the country had more than 46 million passengers in a year. Domestic passengers totaled

more than 30 million people while international passengers accounted for more than 15.7 million.

A less expensive destination. Since October 2014 the exchange rate made Mexico slightly cheaper

compared to some destinations in the US or Europe. The Peso-Dollar exchange rate moved from

12.90 to 14.70 pesos per dollar in line with international markets and falling oil prices. This has given a

comparative advantage to the country both in terms of tourism investment and travel. This trend has

continued into early 2015 in light of falling oil prices.

Sources: planetalkinglive.com

12

Increasinghoteloccupation.

The occupation rate of a group of the top 70 resort destinations during January-August of 2014

was 1.32% higher in comparison to the same period of the previous year.

Cruisetourismrecovery.Previously the world’s number one cruise destination, Mexico is today un-

derground a rapid recovery of its market-leading position. The ports that received the highest num-

ber of cruise passengers from January-August 2014 were: Cozumel (2,263,719), Ensenada (452,294)

and Majahual (273,271); Ensenada showed particularly strong growth with a 59.8% increase in pas-

senger arrivals in comparison to the January-August period of 2013. On the other hand, total arrivals

increased 29.3% during the same period. Other destinations growing in the January-August, period of

2014, are Puerto Vallarta (81.2%) and Huatulco (4.6%) compared to the same period of 2013. Still during

January-August, 2014, the main ports for cruise passengers remained to be: Cozumel, Ensenada and

Majahual representing 83.6% of all cruise arrivals in the country. In spite of these promising figures,

according to Mexico´s Central Bank spending by cruise ship visitors still only accounted for 2.5 % of all

foreign tourism receipts during the first eight months of the year.

13

AN INDUSTRY WITH HIGH POTENTIAL


Aside from its advantageous geographic situation (with mountain snow, desert, forest, rain forest cultural cities,

large cities, magical towns and all year long warm beaches) Mexico has an extremely diverse range of tourism

products including archaeology (Mayan, Aztec, Toltec, Zapotec and Olmec), the largest number of heritage sites

in the American Continent, numerous colonial cities, several beach destinations with warm water all-year long,

food that is considered world heritage cuisine9, enormous biodiversity, and estimated home of 12% of all animal

species, as well as major cosmopolitan and cultural centres such as Mexico City, Monterrey and Guadalajara. All

these elements are enough to strengthen Mexico’s position in the international tourism arena.

Tourism accounts for 8.4% of the national GDP and almost 6% of all the jobs in the country, totalling 2,279,170 jobs

in 201210 . Large investments in ports, airports and railroads will further improve the attractiveness of the country

and more investments in hotels, restaurants, attractions, national parks, museum, and other tourism facilities are

therefore expected.

TOURISM ACCOUNTS FOR

8.4% OF THE NATIONAL GDP

AND ALMOST 6% OF ALL

JOBS IN MEXICO

Stone big pyramid in Uxmal, Mexico

14


The real results of all the reforms carried out by

the current government (including telecom, en-

ergy, education, fiscal system and security) should

start showing their benefits from 2015, with the

creation of more and better paid jobs, the increase

of resources invested in education and social care,

safety and easing social unrest, hopefully leading

to an increase in tourism visitors and spending.

The present growth in arrivals and the present re-

forms spell good news for the Mexican tourism

industry. However it does not tell the whole story.

In addition to promoting this growth and reform,

Mexico also needs to focus on the revenue gen-

erated from tourism in particular by improving the

quality of hotel and attraction infrastructure and

thereby upgrading the tourism experience both for

national and international tourists.

This growth would arguably be much stronger if it was not for the climate of social unrest and

insecurity which has arisen as a result of violent crime, particularly linked to the activity of drug

cartels. Many public protests have sprung up in response to violence and inequality, occasion-

ally leading to clashes with police and thus further concern to investors and visitors alike about

violence. Concerning these two points, in late November 2014 the national government an-

nounced major reforms concerning security and national police which will bring more invest-

ment in security, professionalization of the police force and investment in equipment.

Ancient Mayan temples in the ruined city of Palenque

15


MEXICO IN THE INTERNATIONAL TOURISM CONTEXT

The growth in international arrivals and hotel occupancy in Mexico is taking place in the context of more wide-

spread growth in global tourism. In a period of consistent growth for global tourism from 2010 onwards, arrivals

in the Americas grew an average of 3.2% in 2013 and North-America, (Mexico´s region) grew 3.5% in 2013 com-

pared to 2012. The 1.4% growth shown in Mexico is less than half of the overall growth experienced in the North-

American region. As for revenue from tourist spending, Mexico did performed better than the North American

region with an 8.5% increase in 2013 compared to the average of the region for that year of 7.8% and way above

the 3.2% experienced by Central and South American countries11 .

MEXICO’S IMAGE DOES NOT YET APPEAL TO

TOURISTS BEYOND TRADITIONAL SOURCE MARKETS

While Mexico has shared some of the characteristics

of tourism growth occurring elsewhere, some of the

challenges that restrain that growth from reach its

potential are unique to Mexico. For example, some

of the main challenges experienced by the country

are related to its image, which is also the case for the

challenge of finding new visitors beyond its tradition-

al source markets. Efforts have been made to attract

larger groups from China, Japan, Russia and Australia

but distance and reputation make it hard to attract

new markets for the time being.

To offset these challenges, it is fortunate that North

American tourists are continuing to arrive in great

numbers, due to improved air connectivity, the com-

paratively high quality of destinations such as Can-

cun or Los Cabos, concerns about terrorism and

war in some Middle East countries and the relatively

higher cost for US, Canadian and Mexican travellers

of reaching destinations in Europe or the Far East.

The marina of Cabo San Lucas

16


GIVING TOURISM THE POLITICAL IMPORTANCE IT DESERVES

The Mexican government is concerned by the impact

of its major reforms in particular the fierce opposi-

tion from parties of the left and some social groups.

Teachers for example, reacted to education reforms

by blocking roads and affecting tourism while left-

wing activists opposed to energy reforms have also

organised high-profile marches and gatherings in dif-

ferent cities to protest against this.

With so many pressing economic and social reforms

on the agenda, tourism is definitively not the main

concern of public policy or investment; nevertheless,

the large infrastructure investments are expected to

indirectly benefit the tourism industry, despite the

fact that it is not the main reason for those invest-

ments.

17

THE «COUNTRY BRAND INDEX» PLACES MEX-

ICO IN POSITION 55 WORLDWIDE, WITH FAR

MORE POSITIVE PROSPECTS FOR THE FUTURE

Also in Mexico, as in many other countries, decision makers at local levels rarely understand tourism and all its

implications. Many local governments at the state and municipality levels consider tourism a secondary portfolio

and, in many cases, resources that should be dedicated to tourism are used in other areas.

Considering that tourism activities are mainly influenced by local infrastructure and local policy, Mexico faces a

situation where, to say the least, there is room for improvement.

The «Country Brand Index» places Mexico in posi-

tion 55 worldwide12, but in their analysis of the future

top 15 country brands Mexico is at a very acceptable

number 8 with the report stating that in spite of grow-

ing pains, “experts are predicting a positive turn for

the country’s political, economic and social systems

in coming years. If these predictions hold true, Mexi-

co could well become a global heavyweight”13.

Mexican authorities should give further impulse to

the tourism agenda, promoting this sector as a gen-

erator of employment and an important beneficiary

of the telecom, energy, labour, competition and fi-

nancial reforms. Since the best way to counter unsat-

isfied social groups is by giving them results, tourism

can give fast long lasting results if the right support is

given by national and local authorities.


18

THE TOURISM INDUSTRY AS KEY

PLAYER IN MEXICO’S ECONOMIC

DEVELOPMENT

19

Mexico has played home to many firsts in the international tourism devel-

opment arena. Mexico pioneered archaeological tourism in the American

continent, Teotihuacan, just kilometres northeast of Mexico City, became

the first archaeological site to be specifically promoted for tourism pur-

poses since the first decade of the XX century. In the 1940 and 50s Aca-

pulco was the first resort to welcome wealthy jet-setters from the US,

the Canadian Giant Air Transat made its inaugural flight on November

14, 1987, travelling from Montreal to Acapulco. Mexico City was also the

birthplace of the World Tourism Organization (WTO) during the Extraordi-

nary General Assembly of IUOTO in September 1970.

Since those times, Mexico has led tourism in Latin America and the Car-

ibbean. Pioneering different models of development improving its the

public tourism policy from a high end beach resort strategy to a more

mass and middle class beach resort system in the 80´s and 90´s. Lately

some members of the industry have moved towards upgrading the tour-

ism experience by including the important cultural heritage and natural

attractions offered throughout the country. Destinations like Guanajuato,

Mérida, Morelia and Puebla as well as the ambitious program Pueblos

Mágicos14 target a visitor more interested in culture and nature. Even

when these strategies are on the right track important efforts should be

made to attract more North American visitors to cultural destinations.

CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT

Cathedral of San Cristobal de las Casas

20

Indeed the Mexican tourism industry is now playing catch-up due to the

fact that for too many years planners and businesses alike concentrated

on building its profile in the market for sea & sun at the expense of pro-

moting cultural destinations, adventure and nature discovery along with

other segments. Fortunately this is starting to change, however in the

mind of consumers in the main international markets (Canada and US)

Mexico is still a sea & sun destination. For Europeans the main reasons

to travel are archaeology and history, but their market share is less sig-

nificant and therefore these clients do not yet promise sufficient yields to

foster a high-end cultural tourism agenda.

Asian markets are still hard to attract and Mexico is not currently benefit-

ing from the important growth of Asia as an outbound market, mainly be-

cause the country is still pretty unknown to Asian consumers in general.

Experts at Toposophy believe that if Mexico were to successfully mar-

ket its cultural assets to new audiences, it is highly likely that sustainable

growth in visitor arrivals would follow consolidating the country as a com-

plete destination offering sun & beach as well as culture and nature.

Mexico is still far from reaching its most favourable scenario in

tourism; hence the following section raises several points of inter-

est and discusses the various ways in which people inside and

outside the sector need to engage in institutional and manage-

rial innovation in order to make tourism a real tool for economic

development.


SEA & SUN ELEMENTS DOMINATE

PERCEPTIONS OF MEXICO

AS A TOURISM DESTINATION

21

OVERCOMING GEOGRAPHICAL LIMITATIONS

Mexico is the 12th largest country

in the world with 1,972,550 km2

and is traversed by two mountain

chains and one volcanic axis. This

makes travel by land long and

complicated, and while the country

has invested over time in improv-

ing the highway network, there is

still much room for improvement.

Crossing the country by land can

take up to 4 days, travelling from

Mexico City (in central Mexico) to

Cancun (in eastern Mexico) by car

without stops can take 19 hours

travelling for 1668 km.

Rather than investing larger amounts of money in tunnels and highways, the government has opted to invest in

high-speed trains and improve flight connections. In 2013 the country had a total of 85 commercial airports; 59 of

these are international and 26 for domestic traffic only. In 2013 the airports that processed the most passengers

were Mexico City with 31.5 million passengers, Cancun 15.9, Guadalajara 8.1, Monterrey 6.4, Tijuana 4.2, San José

del Cabo 3.2 and Puerto Vallarta 2.7 million passengers15. Still, connectivity is restrictive and many destinations

are expensive to reach.


22


Since the bankruptcy of one of the two main Mexican airlines, Mexicana de Aviacion, the market has seen slow

growth with benefits for both Aeromexico (the other main airline) and a series of new airlines that increased their

operations, namely: Interjet, Volaris, Magnicharters and Viva Aerobus. High fuel costs make it still difficult to im-

prove connectivity more rapidly but the energy sector reforms that were passed in 2014 should start giving re-

sults from 2016 onwards, opening the door for better connectivity conditions, along with the construction of the

new Mexico City Airport that will position Mexico as regional hub for North-Central America and the Caribbean.

The National Communications Minister announced in November 2014 a new connectivity treaty that would open

the possibility to any Mexican or US airline to fly from any airport in Mexico to the US and vice-versa16.

Plans to increase the use of passenger trains tradi-

tionally used since the beginning of the 20th century

were definitively cancelled in 1997 in the whole coun-

try after several union problems and different periods

of private and public efforts to operate them1. The

present administration has sought to turn this around

and has announced the construction of terminals,

railroads and trains to support a high speed train

network the first such network in the whole Ameri-

can continent. Two main construction projects will be

pushed during this administration will be: Mexico City

– Queretaro and Mexico City - Toluca.

THE NEW MEXICO CITY AIRPORT WILL POSITION

MEXICO AS REGIONAL HUB FOR NORTH-CENTRAL

AMERICA AND THE CARIBBEAN

1 The only exceptions are the touristic train of Copper Canyon in Chihuahua and the touristic train “Expreso Tequila” in the Tequila region. These trains offer circuits but do not work as regular transport means, only as a recreational tour.

23

Many important destinations in the country still work

on a governmental tourism office model (where the

local government takes all decisions relating to tour-

ism management and promotion and uses public

funding), in some cases it is just the local hotel asso-

ciation that makes decisions concerning promotion

and marketing. In fact the only two destinations that

have a destination management organisation (DMO)

in the European sense (where tourism companies

and government decide together and invest togeth-

er) are the Mayan Riviera and the Nayarit Riviera that

clearly experienced constant growth and success.

Several destinations grow and decline according to

the market fluctuations with no organised interven-

tion by public authorities or private companies to

help. In some places, where no integrated destina-

tion management occurs, many of these destinations

experience lack of water, infrastructure or hospitals,

while large resorts and tourism investments demand

municipal services.

Across Mexico, municipal authorities change every

three years, creating regular upheaval in tourism

planning. Besides, and tourism authorities at the lo-

cal level are not always experts in the field. As a re-

sult, many major destinations have their website only

in Spanish or very poor English and not always fully

translated. Other languages are simply not taken into

account2. Just as with online promotion, many other

projects concerning environmentally friendly poli-

cies, investment attractions or strategic planning are

also hard to achieve given the lack of follow-up gen-

erated by such a short mandate for local authorities.

THE DMO: AN UNKNOWN FORMULA IN MANY MEXICAN DESTINATIONS


To ensure that destinations have the tools to improve their competitiveness, there is a pressing need for

a large scale initiative to create DMOs throughout the country that can bring public and private partners

together to decide how destination management should be organized, which infrastructure priorities

should be addressed and which kind of research, marketing and promotion should be carried out.

Self-awareness of strengths and weaknesses in competition along with thorough market knowledge are the

most important assets for DMOs. This way, they can focus on selling exactly what their destinations have and on

building a brand which resonates with consumers. The advantage of this approach is that DMOs see themselves

and their cities as exceptional cases of unique product offerings using a marketing perspective rather than a

political one, which appeal to both domestic and international tourists, while ambition together with realism un-

derlie their marketing efforts.

2 Oaxaca´s website is an example of poor translation, the main page is in English when one clicks on a menu it appears in Spanish http://www.oaxaca.travel/index.php?option=com_content&view=category&id=71&Itemid=370&lang=en

24

Mexico´s own collective perception is a complex one.

Although the country has many assets that overseas

visitors dream of seeing, local residents don’t always

understand this perception and consequently under-

value what their country has to offer. For example, it

is not widely known that Mexico City has more mu-

seums than any other city in the world, with over 150

museums17. Mexico City also has one of the largest

ranges of cuisine available in the world, and Cirque

de Soleil valued the country so highly that they re-

cently opened their only fixed theatre in the world

for the show ‘Joya in Riviera Maya’18. Furthermore

the second largest coral reef and the only one in the

northern hemisphere is in the Mexican Caribbean,

while the best kept underwater biosphere reserve is

in de Sea of Cortés. Mexico also boasts more UN-

ESCO heritage sites than any other in the Americas.

The problem is that these few facts, amongst many

others that could help Mexico to position itself as one

of the top 10 most popular countries for tourism in

the world are only known to Mexicans and rarely by

foreigners. Most of the media attention that the coun-

try has received overseas has been linked to drug

cartels, social unrest and safety problems.

Prestige is like wealth; it can grow or diminish accord-

ing to the owners strategy. Perception can change

and in many cases it is wrongly correlated to reality.

City branding is a group of images and associations

that reside in peoples´ mind and “branding” means to

take delivery actions to alter or improve that image.

Mexico needs to establish a strategy to identify the

resources they want to promote and the weaknesses

they want to amend19.

To date there has been no specific strategy to pro-

mote the good things that happen in Mexico such as

the extraordinary number of artists, authors and ce-

lebrities that live in or have a house in the country.

Awell-plannedstrategyof internationalposition-

ing,countrybrandingandcitymarketingforsever-

aldestinationsthatarecurrentlyunderperforming

isnotjustnecessary,itisabsolutelyurgent.

NationalMuseumofArt&StatueofCharlesIV

HistoricalTheatreinGuadalajara

CoralreefintheMexicanCaribbean


SELF-ESTEEM PROBLEMS

25

WHAT ABOUT BUSINESS TRAVEL, CONGRESSES AND CONVENTIONS?


The top ten congress and con-

ventions destinations in the

country are Cancun, Mexico City,

Guadalajara, Leon, Los Cabos,

Monterrey, Puebla, Puerto Val-

larta, Riviera Maya and Riviera

Nayarit 22.

The country is equipped with

first class congress centres in

several destinations, specialized

event management companies,

Professional Conference Organ-

izers (PCO), Destination Manage-

ment Companies (DMCs) etc., all

international organizations have

offices in Mexico, several global

companies have set up in Mex-

ico as an entrance to the Latin

American market, yet destina-

tions themselves focus mainly on

leisure, and even national admin-

istrations lack interest and essen-

tial support for the congress and

convention sector.

For the last 14 years, congress

and conventions were consid-

ered only a part of the larger

Mexico Tourism Board’s (MTB)

promotion strategy, organized

by a small unit of 5 people within

the MTB structure. This summer

the General Director of the MTB

announced the decision to shut

down the Congress and Conven-

tion office and leave its promo-

tional efforts to the MTB’s exist-

ing overseas leisure sales offices

thus reducing further the govern-

ment’s ability to stimulate this lu-

crative sector within the country.

Mexico is the world´s 14th economy and Mexico City the world´s eighth largest urban economy20. Busi-

ness travel between Mexico and its neighbours is frequent and high-value yet the country is far from

being a leader in the congress and conventions sector. In a study published in 2011 by the Mexican

Tourism Ministry one can find that the country organized 197,400 meetings where, 131 thousand were

corporate, 28 thousand congresses and conventions, 6,300 incentive trips, 4,400 consumer trade-

shows and the rest, other types of events. 159,900 events took place in hotels and 25,700 in Conven-

tions Centres distributed throughout the country. The rest used museums, sports infrastructure or

universities. Meetings accounted total revenue of 32.5 billion USD in 201021.

26


Mexico urgently needs a comprehensive strategy based on the creation of a Mexican Convention Bureau

in a similar manner to other Congress and Conventions destinations around the world, arranging bids for

large international events on a regular basis with an experienced and organised team of experts.

Throughout the years Mexico has proven to the world its capacity to hold major events (Eg. Two FIFA world Cups

(1970 and 1986), Olympic Games (1968), G20 meetings (2012), to mention a few).

MEXICO URGENTLY

NEEDS A COMPREHENSIVE

STRATEGY BASED ON THE

CREATION OF A MEXICAN

CONVENTION BUREAU

Auditorio Nacional Mexico city

27

TOURISM AND CULTURE: LACKING THE ABILITY

TO SUPPORT EACH OTHER

Mexico’s culture is without doubt one of the main reasons for visiting the country because of Its unique blend of

colonial and pre-Hispanic history, (in particular world heritage archaeological sites like Teotihuacan, Chichen-Itza

or Calakmul or Palenque). Mexico has 18723 hundred archaeological sites open to the public. The colonial period

left 10 world heritage cities24 and several baroque towns spread around the territory. In total the country offers

3225 heritage sites which attract millions of visitors from around the world every year.

To overcome these challenges, tourism and cultural strategies should be planned together involving the Tour-

ism Secretary, Conaculta (National Culture Commission), INAH (National Anthropology and History Institute) and

local provincial authorities.

Nonetheless the country’s cultural

strategy is not planned jointly with

that of tourism. In many cases the

aims of projects and programs are

even opposing and usually both

ministries have different opinions

concerning the cultural elements

that influence tourism and vice

versa. For example, when adver-

tisements or documentaries are

filmed in archaeological sites or

museums, the cultural authorities

often make it hard to obtain au-

thorizations, indeed active oppo-

sition to tourism is found in some

sectors of the cultural scene.

INTEGRATION IN PLANNING IS NECESSARY

BETWEEN TOURISM AND MEXICO’S UNIQUE BLEND

OF COLONIAL AND PRE-HISPANIC HISTORY.


The Fine Arts Palace

28

HOW UNSAFE IS MEXICO?Mexico´s media coverage has being dramatically negative for, at least, the last 5 years. Few good articles or news

items appear in the international media and those that do are quickly overwhelmed by bad news concerning

drug trafficking, confrontations with the police and crime. There is no doubt that the situation in the country is

not good, despite a consistently falling death toll from violent crime over the past two years. The problems sur-

rounding drug trafficking and associated crime make it difficult to convince those who don’t know the country to

visit it for a first time. On the other hand those who already know Mexico, tend to become loyal customers since

they realise that the chances of being affected by the events the media cover are extremely low.


MEXICO’S REAL PROBLEM

IS PERCEPTION AND BRANDING

RATHER THAN REAL DANGER.

It is very important to stress the fact that Mexico, as a

country, and the Capital Mexico City have a low crime

rate compared to popular U.S. destinations26 . México

City registered 9 homicides per 100,000 inhabitants,

a low rate when compared to many large cities in

the US that attract high numbers of visitors. For ex-

ample, Washington´s rate is 21, Miami 15.4, Chicago

15.2, Dallas and Boston 11.3, New Orleans 49.1. While

some cities have double or even five times the crime

rate of Mexico City, their appearance in many strands

of popular culture (news, films, music, TV…) around

the world helps to engender a sense of familiarity

and thus safety among potential visitors, something

which tourism planners in Mexico would do well to

understand. Thus, Mexico’s real problem is percep-

tion and branding rather than real danger.

29

Violence is not widespread over

the country. Rather, it is con-

centrated mainly in rural areas

where cartels escape from fed-

eral control and in specific areas

such as the state of Tamaulipas

(that is not touristic) or the ru-

ral, mountain areas of Guerrero

and Michoacán. Compared to

other competitor countries the

situation is quite similar. In fact,

homicide rates in places like

the Bahamas, Brazil, Jamaica,

Honduras, Guatemala, Ecuador

or the Dominican Republic are

much higher than those in Mex-

ico. However news from those

countries rarely features such in-

depth coverage of these figures.

.


POPULAR VACATION DESTINATIONS

30


Fortunately,theeffectiveuseofsocialmediacanbypassthetraditionalmediachannelsthathave

anarrowerfocusonMexico’sproblems,offeringameanstoreachconsumersdirectlywithpositive

messagesaboutthecountry.

From these countries mentioned, Brazil for example

has even managed to turn the extremely dangerous

Favelas into an internationally renowned brand and

even a tourism attraction. Lately films like Hulk, or the

World Cup Promotions used Favelas as part of the at-

tractiveness of the country combined with many other

things like the jungle, the beach, samba, Bossa Nova,

Football and other typical national elements.

Greater press freedom in Mexico has allowed stories to

reach the outside world faster than would be the case

elsewhere in the region. Some destinations are imple-

menting inventive campaigns, like Colombia’s use of

the slogan ‘the only danger is you’ll want to stay’ which

is a clever way of addressing the country’s declining

violence while assuring visitors that they will have a

good time.

As a first step towards gaining some degree of con-

trol of the country’s perceptions from abroad, Mexico

needs a strategy to generate positive content. To date

there have been no major epic films about the con-

quest of the Aztecs or life in contemporary Mexico. No

TV series present the good part of living in the country

while concerts, exhibitions and other cultural events

make millions of dollars in the country but no consist-

ent strategy gives the follow up that lets the world

know about it.

Many countries have already learned to use other

promotion channels aside from traditional advertis-

ing. Indeed advertising rarely works when a country or

brand’s reputation is bad because it is simply not cred-

ible. In the end it becomes a waste of financial resourc-

es. Mexico should therefore cut down its spending on

traditional advertising and channel it into alternative,

creative ways of promoting the country differently,

through art, music, movies, videos, books, celebrities,

and attractive international events.

MEXICO SHOULD CUT DOWN

ITS SPENDING ON TRADITIONAL

ADVERTISING AND FOCUS

ON CONTEMPORARY

MARKETING PRACTICES.

31

MEXICAN TOURISM

AND GLOBAL TRENDS TO TAKE

ON BOARD

32

Although the issues discussed in Chapter 2 tell a lot about the pros-

pect of strengthening the competitiveness of the Mexican tourism

sector, both public authorities and the private sector must at the

same time take into account the consequences of a series of wider

global trends occurring in travel and tourism. These trends are af-

fecting supply and demand in a manner which shows their capacity

to set new standards for service delivery in tourism industry.

Toposophy’s team of analysts around the world continually monitor

trends in the tourism industry and the ways in which destinations are

adapting to them. Here we present a range of trends that are relevant

to Mexico’s emergence as a leading tourism destination.

CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD

Paseo de la Reforma at El Angel

33

MARKET SEGMENTS AND CONSUMPTION TRENDS

The range of challenges

and opportunities

associated with

new competitive

destinations.

The need to use

new alternative

promotional channels

given country’s current

reputation.

A key point is that Mexican tourism stakeholders

need to continuously assess different drivers of

consumer behaviour from a micro to a macro level

of analysis and identify clever ways that will help

them upgrade and tailor their products and services

to meet the demands of both individuals and large

groups of travellers.

The travel habits

and attitudes

of younger generations

of travellers.

The need

to concentrate

on niche markets

The need to recognise

and react to the power

of congress

and convention tourism

The central role

the internet plays

in travellers’ daily

routines and habits.

The economic

recovery

of the United States.


The first group of ongoing trends focuses on the behaviour of tourists and identifies patterns of transformation

influenced by of political events, growing spending patterns, changing demographics, and the widespread use

of ICT. They can be grouped as follows:

3 The Economist. “America’s economy How strong is it?” November 2014.

Clearly the economic growth of the main source

market will have an impact on the Mexican tour-

ism industry. According to new data the US econ-

omy grew at a 3.9% annual pace in the third quar-

ter of 2014. That was an upward revision from the

advance estimate, of 3.5%3.

34

Mexico´s tourism stakeholders, mainly those that belong to older generations, developed their businesses in a

completely different social and economic environment to that of today. For decades Mexico was the main des-

tination for a large proportion of US and Canadian travellers. During the last 20 years many destinations in the

region have emerged with strong strategies to capture increasing market shares.

For example Caribbean countries such as Cuba or the Dominican Republic have been attracting visitors as well

as investment, creating major competition for Mexican beach destinations, and forcing prices down in the region.

As for nature and adventure tourism, Costa Rica has managed to position itself well in European and North

American markets, while their range of tourism products is similar to that of Mexico´s southern states and per-

haps less varied than what Mexico has to offer.

A ‘BUSINESS AS USUAL’

APPROACH HAS BEEN

RESPONSIBLE FOR REDUCED

GROWTH IN MEXICAN TOURISM

Meanwhile Panama has made major efforts to become

the air transport hub in Central America and an impor-

tant business destination. Furthermore the cruise indus-

try there has evolved from the times of the “Love Boat”

(The famous 80´s TV series) offering dynamic multina-

tional cruise experiences. At the same time Mexican Pa-

cific cruises lost much of their competitive appeal offer-

ing little variation in experiences between the six ports

that were used by most cruise lines.

While these countries found niche markets or com-

peted directly with products offered by Mexico, many

Mexican destinations continued with a ‘business as

usual’ approach, often failing to see what was occurring,

leading to the obvious results of reduced growth or loss

of some market segments.

Clients used to come flooding to these Mexican des-

tinations and when they stopped doing so, companies

took too long to react and attract them with more inter-

esting offers, better websites, new hotels and facilities

or new products.

NEW AND AGGRESSIVE COMPETITORS


35

In short, major and detailed strategic planning is needed to create thriving, attractive and distinctive tourism

experiences that can offer effective competition to competing destinations both near and far by using the great

cultural, natural and social assets that the country has.

36

HEY BIG CHINESE SPENDER!


As a general trend, international experience shows

that shopping is an attraction in itself for Chinese

tourists, who not only cherish products purchased

in another country as symbols of their travel experi-

ence but also often enjoy lower prices and greater

assurances on product quality compared to back

home28. Quartz29 underlined in February 2014 the

positive effect of Chinese tourist spending to the

French economy due to their pursuit of expensive

purchases and luxury designer brands. Likewise,

Hotels.com30 reported in July 2014 that the mean

average spend per day of Chinese tourists when

travelling abroad is nearly $US 1.090 excluding ac-

commodation expenses.

Many destinations have sought to design strate-

gies to attract the Chinese tourism even when their

product is not ready to receive them, and these are

not necessarily a priority for the Chinese travellers.

For the time being at least, this has been character-

istic of Mexico’s approach to the Chinese outbound

market.

MEXICO HAS BENEFITTED

FROM THE CHINESE

GOVERNMENT’S APPROVED

DESTINATION STATUS

SINCE 2005

Chinese outbound tourism epitomises the value of building and sustaining a solid relationship with markets from

emerging economies. Since the announcement of massive spending totalizing US$ 102 billion in international

tourism in 201227 , Chinese tourists have rapidly emerged with an unquestionable lead in global tourism expendi-

ture and drawn the attention of destinations around the globe, as they comprise a vibrant mix of big shopping

spenders, cultural explorers, and tech-savvy consumers. Fortunately for Mexico, the number of destinations on

the radar for Chinese travellers has also been rapidly expanding. Mexico’s preparedness to receive them will be

discussed further below.

37

For several years now, Mexico has been in the com-

petitive international arena, fighting to attract Chinese

tourists without really understanding the market and

its implications. However, Mexico has benefitted from

the Chinese government’s Approved Destination Sta-

tus since 200531.

Aeromexico began operating a flight from Tijuana

(Mexico) to Shangai in 200832 with relative success

from Tijuana (carrying passangers that might have

taken a flight from L.A.). The Mexican Tourism Board

opened an office in China and several official trips,

fam trips, advertising campaigns and other initiatives

have taken place with little analysis on the return on

investment since in 2012 only 47,810 Chinese tourists

visited Mexico33 . At the same time, there appears to

have been little analysis of whether there are other

potential markets closer and with specific needs that

might bring better results and greater ROI. Sugges-

tions would include Brazil, South-Korea, and markets

in the Middle East countries, Australia or Russia.

The fact is that for first time long haul travellers from

China, Mexico is a relatively unknown destination.

While economic growth in both China and Mexico has

favoured business travel between the two countries,

there is a significant cultural and geographical divide

between them that inhibits the growth of the lucra-

tive Chinese leisure traveller. Besides, those Chinese

travellers that have the time and financial resources

to travel outside of Asia have shown an overwhelming

preference for visiting destinations in Europe and the

US.

France, Germany and the UK have all witnessed inbound growth in visits from Chinese travellers in excess of 10%

per year for the past years, while the US alone (with similar distance from China as Mexico) saw a 23% increase

in 2013 in arrivals from China34 . Finally the language barrier remains an important challenge for new inbound

markets to Mexico (and not just from China). Traditionally English helps when travelling in Mexico, but in many

important Mexican destinations it is still hard to find many English speaking services . Visitors from sources

such as the US are used to communicating a little in Spanish but when it comes to the Chinese market it is a

completely different story. Most Chinese travellers (particularly those who haven’t studied abroad or have much

communication with overseas clients) find it difficult to communicate in English, let alone Spanish, which isn’t

widely taught in China.


ENGLISH HELPS WHEN TRAVELLING IN

MEXICO, BUT IN MANY IMPORTANT MEXICAN

DESTINATIONS IT IS STILL HARD TO FIND

MANY ENGLISH SPEAKING SERVICES

As a basic approach, authorities should therefore work with Chinese-Mexican communities, prepare

information printed and online in Chinese and prepare at least some stakeholders in all areas (trans-

port, hotels, restaurants, attractions) to be able to properly take care of these clients before thinking on

investing in those markets.

38

MILLENNIALS ARE SETTING THE AGENDA


In the forthcoming months, affluent Millennials will be

the market group that is most likely to engage in aug-

mented reality and test wearable technology devic-

es. Their predisposition to create and adopt disrup-

tive business models makes it highly probable that

other new formats will emerge from this generation

that will seriously test the status quo for the industry.

For the time being, the great shift of travel products

and services online (an environment in which Millen-

nials are the most comfortable) has also given the

consumer freedom to search and choose, and in

making that choice, it is now the opinions of friends,

relatives and other consumers that matter the most.

By far the chosen medium for doing this is via social

media which allows for the exchange of opinions on

travel experiences from trusted sources.

As we enter 2015, it is evident that Millennials (those born between 1980 and 1999 and currently aged around

15-34) are just warming up in their travel quest saga. Making the most of information and communication tech-

nologies, Millennials question the way things are done and are rapidly changing the world as we know it. For the

tourism and hospitality industry, their self-assurance has brought with it a storm of new consumer expectations

creating a system in which successful destinations and businesses will be those which explore and respond

positively to the broad spectrum of economic, societal and environmental changes that are taking place, espe-

cially those driven by the Millennial generation.

39

For the Millennial generation in particular, social media has become the key resource for news, gossip, inspira-

tion and advice for matters as diverse as holidays, consumer goods, music, fashion, politics or relationships. The

internet and social media have encouraged this generation to share their opinions freely, fuelling the popularity

of review sites such as TripAdvisor,

In fact, it is traveller review sites that have quickly become the first stop for consumers looking for an honest first-

hand opinion about their proposed destination, hotel, restaurant and more. With 280 million unique visitors per

month in 2013, TripAdvisor is the world’s largest travel review site and owner of an array of travel media brands

offering specialist reviews on cruises, family holidays and airline services.

The result of this for destinations such as Mexico is

that the traditional one-way flow of information from

the supplier to the customer is rapidly going out of

date. Instead, the rapid spread of social networks has

given rise to the direct customer-supplier ‘conversa-

tion’, bypassing the traditional media sources such as

TV, magazines, newspaper adverts or even a compa-

ny’s own web pages. Social media and travel review

sites have given consumers the role of both brand

ambassadors and consumer activists, allowing users

to recommend their best experiences and denounce

their worst in real-time.

Wi-Fi is widely available throughout the country but

software, apps, web pages, presence on social me-

dia, blogs, and other information, promotion and web

presence tools are far behind those of other com-

peting destinations. Thus, Mexican authorities and

private companies have considerable room to grow

and deepen their web profile, alternative media and

in general communications strategies.

MILLENNIALS BRING

A STORM OF NEW

CONSUMER EXPECTATIONS

40

THE SILENT TRAVELLER


Mobile devices such as tablets and smartphones are rapidly becoming the principal device through which peo-

ple manage their lives online. For young, independent travellers in particular, the smartphone or tablet is the first

port of call to resolve the types of challenges that customer service staff used to deal with. Skift has labelled

this kind of traveller the ‘silent traveller’35 in light of his or her self-reliance and low levels of interaction with staff

through traditional channels such as the reception desk of the call centre.

SILENT TRAVELLERS

HAVE SELF-RELIANCE

AND LOW LEVELS

OF INTERACTION

WITH STAFF

41


Globally, it has been observed that travellers have been slow to move from information gathering (done on

smartphone or tablet) to booking with the same device, particularly for big-ticket items such as flights or ac-

commodation. According to IPK International36 , mobile bookings remain at only 2% of overall bookings globally,

however there is evidence to suggest that this is changing rapidly. Nevertheless, smartphones and tablets are

consolidating their position at all the other stages of the customer journey; for becoming inspired, for research-

ing, for experiencing, sharing and reflecting on journeys made – all through social media. The real-time conver-

sation between customers, their online community and brands is having profound consequences for providers

throughout the tourism value chain; those who fail to innovate and keep up with these trends may rapidly be-

come obsolete.

Against this backdrop, it is especially important to consider that younger travellers from the main emerging out-

bound markets (as identified above), have never accessed internet through a PC, instead using smartphones as

the first and only tool with which they are familiar, to manage their professional and personal lives37 .

Some countries have armies of young internet experts working on the web to attract attention to their destina-

tions; in Mexico some local officials don’t even use social media. The generational gap needs to be filled in order

to attend the growing number of web buyers and clients. Having a strategy for mobile marketing and customer

engagement is also essential, since so many consumers are skipping the desktop and moving straight to using

hand-held devices.

Given the integral position of the smartphone as a key tool of interaction for researching, planning, booking

and recording travel experiences, it is absolutely vital for Mexican tourism businesses and destinations to

have at the most basic level a presence online and in all the major social networks for their particular target

markets.

MANY CONSUMERS ARE SKIPPING THE

DESKTOP AND MOVING STRAIGHT

TO USING HAND-HELD DEVICES

42

GETTING THE NUMBERS RIGHT MAKES FOR BETTER

LOCAL DECISION MAKING


A local system of surveys and data collection is also one of the pressing tasks to be addressed by DMOs.

As mentioned above, the country needs to install a national DMO network in order to make sure that local

policy issues that are not currently being addressed can be solved, and by doing so strengthen the capacity

of local tourism authorities and stakeholders to act in a professional and coherent way.

Mexico was one the first countries to have established

a tourism satellite account, therefore on the national

level, information and statistics are recognised as im-

portant elements for decision making. When it comes

to the local level the scenario is completely different.

Many states don’t have a reliable basis for analysing

tourism flows and most observatories are still at a de-

velopment stage.

The problem of lacking reliable local data should be

addressed immediately in those states which are lag-

ging behind. Knowing the volume and the economic

value of tourism is an essential prerequisite for devel-

oping effective policies for managing tourism within

local areas.

Tourism economic impact studies also play an in-

valuable role in supporting tourism services. Further-

more, the evidence they provide the justification and

rationale for local authorities to invest in initiatives to

support tourism industry.

Aqua Azul waterfall, Chiapas, Mexico

43

THE EVOLVING NATURE OF THE TOURIST EXPERIENCE


As discussed throughout this document the tour-

ism sector in Mexico is strong and the attributes

the country has to offer are wide-ranging. The in-

frastructure is there, or on its way; there are many

hotels and restaurants and transport infrastructure

is in the pipeline. However what tourists anticipate

before their trip and expect when in the destination

adds up to more than these attributes.

Today, the notion of ‘the tourist experience’ is what

drives successful marketing campaigns and en-

sures that tourists leave satisfied, having got the

most out of their visit. Mexico therefore needs to

focus closely on the tourist experience. Many tour-

ism destinations in the country have set up the ba-

sic infrastructure but too easily neglect to develop

and market complementary services. Sometimes

the reverse can be true; several promotions for one

destination feature a magnificent lake, people surf-

ing or paragliding while in the destination itself, few

companies or none offer these services, access is

difficult or infrastructure is not adequate.

THE ‘TOURIST EXPERIENCE’ NOTION

IS WHAT DRIVES TODAY SUCCESSFUL

MARKETING CAMPAIGNS

44

Almost all the coastal Pacific destinations such as

Mazatlán, Los Cabos, Manzanillo, Ixtapa or Huatulco

show surfers but outsiders may find it very hard to find

a company that offers courses, rents a board and pro-

vides the equipment to ensure that even visitors can

leave having enjoyed a complete experience. The

same thing happens when it comes to observing jag-

uars in the Mayan region, paragliding in the mountains

or simply hiking in the national parks; there is an ab-

sence of joined-up planning when it comes to inform-

ing visitors about and providing these services.

Some marketers appear to consider that the aspira-

tional component of advertising these experiences

will be forgotten when the client spends two days at

the beach, eats in a good restaurant and has a nice

hotel room. In reality, the client might leave with a bad

image of not fully experiencing what he had in mind

before taking the plane.


There is still much room for improvement in training, quality assurance and marketing for those

who offer supplementary visitor services and authorities have a role to play in creating strategies

to help them grow and deliver real 360ο experiences.

Ik-Kil Cenote, Chichen Itza, Mexico

45

GETTING DREAMS OFF THE GROUND


Many students finish tourism schools with a fixed

idea; to, work in a hotel, travel agency or in the best

case scenario, in an airline. However the reality is that

many of them spend some time in poorly paid work

in hotels and restaurants or simply move to work in

other industries. Scarce attention has being given to

the creation and support of new tourism companies

offering thriving experiences like surfing, diving, trek-

king, handcraft learning or catering and there is a gulf

between young people’s aspirations and actually set-

ting up a successful business that puts their dreams

into practice. The fact is that small businesses (‘tour-

ism verticals’) are essential to guaranteeing a qual-

ity visitor experience and avoid the disappointment

of not being able to experience the activities that at-

tracted them to the destination in the first place.

This is not just the case in beach destinations; some

magnificent archaeological sites located in the wild

have no range of tourism products that would en-

courage visitors to increase their stay for a day or two.

Local handcrafts ateliers, agricultural tourism or trek-

king expeditions and fauna observation could com-

plement the main range of services offered.

LOCAL HANDCRAFTS ATELIERS, AGRICULTURAL EXPERIENCES OR TREKKING EXPEDITIONS AND

FAUNA OBSERVATION CAN BE ADDED TO THE TOURISM PRODUCT OF MEXICO

46

We suggest the creation of a national business incubator network that could asses and support entre-

preneurs and give ongoing support of at least three years for tourism enterprises .

ENTREPRENEURSHIP

IS ONE OF THE MAIN KEYS

TO JOB GENERATION AND

GROWTH.

Entrepreneurship is one of the main keys to job generation and growth. It can enhance the competitiveness of an

area: new entrepreneurial initiatives put pressure on existing businesses, which are then obliged to improve their ef-

ficiency and the quality of their product or service. However it is still somewhat lacking in Mexico’s tourism industry.

Of course, ensuring a viable community requires a solid economic base. Newly established enterprises are es-

pecially vulnerable in their first years, so long-term involvement of the incubator through regular consultation

and feedback can be necessary. Mexico has already a business incubator system for other industries to promote

entrepreneurship in communities that have no entrepreneurial culture38.


University of Guanajuato (Mexico)

47

ALL-INCLUSIVE HOTELS GO UPSCALE

Widely acknowledged as a motor

of the hospitality sector worldwide,

all-inclusive hotels have begun to

resemble low-cost carries in their

efforts to improve product quality

and integrate more closely their ac-

commodation establishments with

the wider area of each destination.

For major destinations in the Medi-

terranean, the Caribbean and par-

ticularly in the Mexican beach des-

tinations, it is a crucial debate given

that the all-inclusive industry has

been subject to criticism by Tourism

Concern39 and the Tourism Foun-

dation40 for providing limited ben-

efits to local economies as well as

less favourable working conditions

than other areas of the hospitality

market. In almost all Mexican beach

destinations, restaurants complain

about the all-inclusive systems that

handle large number of tourists

while the local food and beverage

sector struggles.

In response, all-inclusive hotels have become more

open to embracing what Skift41 has called ‘the rise

of local in hospitality’. The idea that a sense of local

culture can pervade every aspect inside all-inclusive

hotels as a stimulus for further growth outside is no

longer regarded as a contradiction in terms. It is un-

likely that all-inclusive hotels will ignore the sophisti-

cated needs of an increasing percentage of tourists

who seek to combine organised entertainment and

favourable pricing with memorable moments that

they can share through social media. An argument

provided in a recent article by HotelNewsNow.com42

is that the growing expansion of international chains

into the all-inclusive industry will enable the renewal

of customer service perceptions and local com-

munity engagement with the potential to add value

through the participation of tourists in thematic activi-

ties such as cultural tours and special events.


48

Mexican Caribbean destinations (Cancun, Cozumel and Riviera Maya) differentiate their product from other

all-inclusive Caribbean destinations like Cuba or Dominican Republic by promoting the Mayan archaeologi-

cal sites, the Mexican Food and in general, better food and service in their hotels and the possibility to dine

outside and spend time outside the resorts which actually involves less costs of food and drinks for the

hotels.


For Ernst & Young43 , major traditional US and European lodging brands have decided to step up into the all-inclusive

industry with an eye on the spending habits of Millennials along with the rising middle-class from emerging econo-

mies. Some have even launched their own custom brands to cater specifically to this demographic. Currently, this is

another case of product repositioning aimed at untapped market niches, with transitional phases at both ends of the

travel spectrum promoting the adoption of higher quality standards.

The same argument also relates to the development of brands aimed at targeting specific groups of customers along

with the provision of higher quality food and entertainment.

49

BOUTIQUE HOTELS, SAVING HERITAGE BUILDINGS

FROM TIME EFFECTS.Mexico´s destinations have several historical heritage

buildings, some of which can be visited like museums,

but with most only visible from the outside. Some oth-

ers are used for offices or simply abandoned. Boutique

hotels and restaurants in several destinations have

played a key role in the recovery, preservation and im-

provement of old heritage houses and buildings that

might be lost otherwise.

This phenomenon is not unique in Mexico, the use of

unique historic buildings for tourist accommodation has

become popular worldwide. In Mexico, boutique hotels

should play a big role in this resurgence, given the in-

crease of buildings available for rehabilitation, the value

added opportunities they offer, their generally relatively

smaller physical size and the potential to put together

innovative financial structures44.

Boutique hotels tend to concentrate in an upscale market and are known to create larger economic impact

per client than mass tourism hotels45 . Mexico should create a specific strategy to promote boutique hotels

and restaurants, improve their “Tesoros de México” program and make it a national program instead of

covering only a handful of states.

BOUTIQUE

HOTELS TEND

TO CONCENTRATE IN AN

UPSCALE MARKET AND ARE

KNOWN TO CREATE LARGER

ECONOMIC IMPACT PER CLIENT

THAN MASS TOURISM

HOTELS


characteristic XIX century hacienda in Mexico.

50

DOES SUSTAINABILITY ‘SELL’?

As a result, the terms ‘green-washing’ and ‘grey-washing’ have come to a point where they both carry equally

negative connotations. Green-washing denotes controversial practice whereby consumers begin to perceive

products or production processes more positively on the basis of misleading information about their actual

degree of sustainability. Grey-washing is a keyword for the failure of tourism industry to undertake substan-

tial investments in sustainability and engage in dialogue about the subject with customers, employees, and/or

stakeholders. Against this unnecessary dualism, an encouraging sign is that major industry groups such as TUI

have decided to speak more openly about sustainability and put forward examples of responsible credentials47 .

A common theme in the discussion of previous trends is

that the growing self-awareness and confidence of in-

dividual travellers has contributed to capacity-building

for a variety of groups of travellers, who appear more

empowered than ever to harness the brands of both

their favourite destinations and service providers. This

does not necessarily have to be a straightforward pro-

cess for business sustainability. The European Tourism

Futures Institute46 has noted that people as citizens are

in favour of sustainable practices, but as consumers the

vast majority do not want to be confronted with sustain-

ability and the problems that relate to it.


Waterfall and a hanging bridge at basaltic prism canyon at Hidalgo, Mexico.

51

From the perspective of customers, however, the latest report of Blue & Green Tomorrow suggests a variety of

questions people should ask in relation to their own behaviour (e.g. whether they contribute to water conserva-

tion or if they avoid the use of plastic bags and bottles) and the practices of the destinations they visit and the

brands they choose during their holidays or business trips. The power to disseminate viewpoints and impres-

sions based on facts is a breakthrough for both corporate and individual responsibility in tourism development.

Hence, DMOs are recommended to enrich their policy agenda and play a critical role in encouraging local entre-

preneurs and residents to associate actively with visitors and help them spread the word about their areas and

the achievements they have made to drive sustainability.

Many Mexican destinations are dependent on natu-

ral assets such as beaches, rivers, canyons, forests,

volcanoes or mountains. Some of them have envi-

ronmental problems like water pollution in Acapulco

and Cañon del Sumidero or the extinction risks of the

Vaquita Marina in the Sea of Cortés.

Destinations that promote such elements as part of

the attractions should generate immediate strategies

to preserve and improve the environmental condi-

tions in order to remain competitive. Instead of being

a reason to travel or to visit again, poor environmental

conditions can quickly turn into a weakness for these

destinations.

THE POWER TO DISSEMINATE VIEWPOINTS AND

IMPRESSIONS BASED ON FACTS IS A

BREAKTHROUGH FOR BOTH CORPORATE AND

INDIVIDUAL RESPONSIBILITY IN TOURISM DEVELOPMENT


52

SIXSTEPS

TO BOOSTING

MEXICANTOURISM

53

According to the analysis set out in this report, Toposophy experts have

identified six areas that the Mexican tourism sector is recommended to

focus on and make important steps in order to make current growth truly

sustainable. These areas are not intended to cover the full agenda of on-

going priorities; rather they outline the wider framework of policy issues

which should attract the attention of all stakeholders involved in Mexican

tourism in the near future.

CHAPTER 4 | SIX STEPS TO BOOSTING MEXICAN TOURISM

Sources: photosbychris.smugmug.com

54

ALTERNATIVE PROMOTIONAL STRATEGIES

Mexico should try to implement non-conventional promotional strategies given that in the current context of

Mexico’s struggle to beat violent crime, traditional advertising has less credibility. Important destinations like

New York, Barcelona or Dubai are investing in movies, music videos, video games, apps or TV series to promote

destinations´ attractions, art de vivre, cultural events, festivals and in general to transmit the message of a vibrant,

interesting, global and safe destination and the Mexican authorities should learn from these practices.

At the same time, national, regional and local au-

thorities lack a clear social media strategy. Offi-

cials in the Mexico Tourism Board, the provincial

tourism ministries and the local tourism entities

(not really DMOs) do not yet appear to have un-

derstood the size and impact of social media in

their target markets. Mexico as a national des-

tination and almost all local destinations (ex-

cepting Los Cabos and Cancun) have not paid

enough attention to the main social media net-

works such as YouTube, Twitter, Facebook, Ins-

tagram and other platforms that could increase

Mexico’s presence on the web and in the mind

of the potential visitor. Even when private com-

panies understand and have much better use of

these tools, there is still a large number of ho-

tels, restaurants and attractions that have limited

presence on the web.

High visibility events like concerts, sports or in-

ternational film, fashion or food events should

be organized and promoted and seized upon to

position the country and its destination amongst

the top countries in the world in each field. For

example Formula 1 is coming back to Mexico in

2015 after 22 years of absence, this is a golden

opportunity to attract attention to the country

and maximize international appearances. .


HIGH VISIBILITY

EVENTS SHOULD

BE ORGANIZED AND

PROMOTED AND

SEIZED UPON

55

Other countries have shown appealing results from implementing such institutions. For example

recently Spain analysed the German, French and other strategies in order to create the Spanish

convention Bureau. A similar exercise is needed to evaluate the country’s actual needs and the

right formula that Mexico should implement.

MAKE CONGRESS AND CONVENTIONS TOURISM

A KEY ELEMENT OF THE NATIONAL STRATEGY

Mexico is the third commercial partner of the US after Canada and China49,

though in terms of congress, conventions and events the number of US events

in Canada far outnumber those held in Mexico. There is a huge opportunity for

growth in this strategic sector that authorities should not only treat as a tourism

segment but as a key driver of economic development, R&D, knowledge trans-

fer and commerce touchstone for the future development of the country. Mex-

ico has an urgent need for implementing an integrated congress and conven-

tion policy including the creation of a Mexico Convention Bureau if the country

really wants to be taken seriously in the international convention market.


THE DEVELOPMENT OF

AN INTEGRATED CONGRESS

AND CONVENTION POLICY IS

A KEY PRIORITY

56

• A profound impact upon culture and lifestyle as well as upon the interactive nature of tourist experience, whose time hori-

zon extends nowadays long before the arrival of visitors and long after their departure.

• A dramatic effect on the rise of online reputation management, with businesses following clients’ reviews, reacting swiftly

and sensitively to poor reviews, and building client relationships through maintaining a continuous conversation with them in

the place where they are to be found: that is, online, 24/7.

• A significant influence to the growth of search engine marketing including both paid search and organic search results.

BRIDGE THE DIGITAL DIVIDE


It is essential for Mexican businesses and destinations to close the gap in the usage of technology compared

with the majority of countries in the competitive tourism markets. Besides the development of functional, visually

appealing and multilingual websites, the scope of action in B2C marketing is wide given the wealth of opportuni-

ties provided by the applications of social media and mobile devices. The first step, however, is to gain a proper

understanding of how technology has:

It is not enough to have someone at the office that opens Facebook or Twitter from time to time to post

a few photos. Some destinations employ 3 or 4 people to spend 8 hours a day following up, answering

on TripAdvisor, liking comments about the destination and feeding the web with constant news, on

real time. Sales have proven to increase dramatically. Furthermore, this activity is set to develop into

a 24 hour job.

57

FINDING NEW NICHE MARKETS


SOME NICHE MARKETS

ARE COMPLETELY

IGNORED IN NATIONAL

AND LOCAL STRATEGIES

• Mexico counts 1,096 bird species identified,

while the world has 9,600; consequently Mexican

birds represent 11% of all birds in the planet51 .

• The state of Oaxaca alone offers 736 bird species.

• In the USA, birdwatchers are estimated to spend

over $2.5 billion each year. In the UK, expenditure is

estimated at $500 million each year52 .

Mexico (as mentioned before) is a mature destination

used to doing business with the same clients, year af-

ter year. However the game has entirely changed and

travellers now have more choice of destinations (that

are more accessible) than ever before. Mexican des-

tinations therefore cannot assume that things will stay

the same forever. Some niche markets are completely

ignored in national and local strategies. While millions of

US dollars are invested in golf courses to attract 25 mil-

lion people market from the US, no Mexican destination

is investing in areas such as bird watching, a market of 47

million people and 17 million potential travellers50 in the

US alone and for which Mexico needs no major invest-

ments. Mexico is the 5th most biodiverse country, 2nd in

the world for reptiles, the 3rd country in number of mam-

mals, 4th in amphibians.

In spite of these impressive figures, no single Mexican state has a clear defined bird-watching strategy or infra-

structure, while having the assets to create a spectacular destination and the largest potential market for this

activity on its doorstep right next door.

Several niche markets can offer Mexico new amazing possibilities to develop alternative offer, increase tourism

revenue, reduce seasonality and create jobs.

58


INVESTMENT IN HUMAN CAPITAL

The investment of money and time implied from the

previous recommendations is not going to be effec-

tive and efficient in the medium- and long-term, unless

there is a concerted effort to enhance the knowledge

background of people involved in the Mexican tour-

ism sector. This matter goes beyond the purpose of

research as a tool to support strategy preparation and

implementation in tourism policy. It is more suggestive

of challenges involved for destinations and businesses

to stay competitive, provide high-quality services, and

be aware of the dynamic environment of the interna-

tional tourism market.

Mexican universities teach tourism almost everywhere in the country but the ap-

proach is extremely narrow as it tends to create professionals that consider tour-

ism only from the hotel-restaurant perspective. Neither entrepreneurial skills are

included, nor high-tech tools nor niche market knowledge is offered on specializa-

tion courses.

instead of 4-5 year graduate studies. Technical skills such as hotel accounting, res-

ervations systems or web promotion, are extremely necessary. Tourism, being a

major part of the economy, cannot be approached through a myopic point of view

and a whole range of knowledge tools should contribute to preparing young men

and women for the future of this noble industry.

Mexican authorities and private schools should ensure that more on-the-job train-

ing skills are included in the curriculum and promote short term formation centres

59

MAKE TOURISM THE CLEANEST INDUSTRY IN MEXICO


Natural assets are part of the value of Mexican tourism destinations. Rivers, lakes, forests and beaches are the

main reason or an important part of the decision making when choosing a tourism destination and evaluating

activities that can be performed in it. Unfortunately, many natural areas suffer negative ecological impacts. Even

when tourism is not directly responsible for environmental harm, it can be an important part of the solution.

Mexican authorities and companies should prepare a clear strategy to identify the activities that have an impact

on the environment, implement specific actions and regulations to diminish the ecological impact of tourism and

even transform tourism into a catalyst of environmental improvement (forest recovery, coral reef recovery, water

cleaning).

Mexico could implement a national parks system and contribute directly to the conservation of sensitive

areas and habitat. Revenue from park-entrance fees and similar sources could be allocated specifically to

pay for the protection and management of environmentally sensitive areas. Special fees for park operations

or conservation activities could also be collected from tourists or tourism companies53 .

Church of Santo Domingo de Guzman in Oaxaca, Mexico

EVEN WHEN TOURISM IS NOT DIRECTLY RESPONSIBLE FOR ENVIRONMENTAL HARM,

IT CAN BE AN IMPORTANT PART OF THE SOLUTION

60

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61

ATHENS, GREECE

www.toposophy.com

t. τ+30 210 2419654 | +30 21ψ ψ ψ ψ ψ0 24 19 599ε ε ε ε ε εe. [email protected]