The rise of Mexico

Major international hotel groups eying growth as tourism rebounds

After two years in a pandemic-induced recession, Mexico’s tourism industry is recovering fast, promising a new era of growth for the hotel industry.

International tourist arrivals nearly tripled from January to July 2022 compared to the same period in 2021, and according to the United Nations World Tourism Agency (UNWTO) World Tourism Barometer the sector is back to almost 60% of pre-pandemic levels and is expected to rake in some $6 billion this year.

The Riviera Maya region, the epicenter of Mexico’s tourism sector and home to hotspots including Cancun, Tulum and Play del Carmen, has seen an even stronger recovery with tourism numbers in the first eight months of this year hitting 13.5 million, a 14% increase on the same period in 2019.

The rebound is attracting renewed attention from major international hotel brands like Marriott International. In the last week, All-Inclusive by Marriott Bonvoy signed a deal with international developer AB Living Group to add three resorts comprising 688 rooms across Mexico to its growing all-inclusive portfolio.

JW Marriott and W Hotel in Costa Mujeres
JW Marriott and W Hotel in Costa Mujeres

The investment in these new luxury properties illustrates the white-hot global post-pandemic boom in all-inclusive resorts. Marriott launched its all-inclusive platform in 2019 and has since been joined by Accor, Wyndham, Melia, and Hyatt’s recently announced plans for its all-inclusive dreams brand in Portugal.

Marriott’s move also shows that Mexico’s long-standing move up-market, including catering to the growing interest in high-end culinary experiences and programming, shows no sign of slowing despite the global economic uncertainty.

Marriott’s Chief Development Officer, Laurent De Kousemaeker, believes “the resorts will elevate the current hospitality offering in the destination and further expand our luxury footprint in the region.”

The new Marriott hotels will launch in Mexican beach destinations from 2024-2026, including Almare, a Luxury Collection All-Inclusive Resort, Isla Mujeres; JW Marriott All-Inclusive Costa Mujeres and W All-inclusive Costa Mujeres.

Marriott is not alone in expanding its high-end footprint in Mexico. In just the last month, Four Seasons opened Naviva, a luxury resort consisting of 15 tents spread over 48 acres on the edge of a private peninsula, and the ultra-luxury 157-room Four Seasons Resort Tamarindo on a 3,000-acre private reserve.

From luxury to affordable – investments seen across the spectrum in Mexico

The gold rush into Mexico extends beyond the luxury and all-inclusive spaces. In October, Marriott announced its foray into the affordable and mid-scale segment with the acquisition of Hoteles City Express.

The $100 million transaction will see Marriott take over 152 hotels including 17,356 rooms across 75 Mexican cities. The deal means that Hoteles City Group will form part of Marriott’s franchise system.

Marriott’s confidence in the deal reflects the economic green shoots in Mexico and the consumer demand for more moderate-priced offerings catering to both domestic and international travel.

And closer to home, Mexican hotel operator FibraHotel announced it is pivoting its portfolio back to its home market in yet another signal tourism is bouncing back.

The group will release underperforming assets offshore and in some urban cities in Mexico in favor of investing in the all-inclusive resort space in Cancun, Los Cabos, and Puerto Vallarta.

With Mexico rising out of its 30-month slump, the time is now for hotel groups to turn their attention to Mexico or risk losing out on a major growth opportunity.