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Mexican Tourism UNCOVERED


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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 second 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 growing. 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.

Published in: Travel
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Mexican Tourism UNCOVERED

  1. 1. 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
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. 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 PLAYER IN 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 7 22 55 34 8 24 56 44 14 25 57 16 26 58 17 28 59 29 60 CONTENT
  7. 7. 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
  8. 8. CHAPTER 1 | FACTS AND FIGURES On these grounds, understanding the present and future of Mexican tourism means: • Summing up the facts and figures of recent growth (1st Chapter) • Shedding light on themes and issues that will shape the evolution of the sector in the years to come (2nd Chapter) • Asking what national strategies will address the present trends at a local and global level (3rd Chapter) • Discussing the need for actions by the public and private sector at all stages of tourism planning that can reinforce Mexican tourism’s current growth and potentially lead to higher development if the country is able to confront pressing challenges such as its image crisis, preparing for climate change, increasing the quality of services and improving tourist average expenditure, amongst other difficulties (4th Chapter) 6
  9. 9. CHAPTER 1 | FACTS AND FIGURES 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
  10. 10. CHAPTER 1 | FACTS AND FIGURES 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 Constant growth. 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
  11. 11. CHAPTER 1 | FACTS AND FIGURES 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
  12. 12. Big neighbours The 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
  13. 13. CHAPTER 1 | FACTS AND FIGURES Domination of the domestic market. 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. Domestic growth. 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
  14. 14. CHAPTER 1 | FACTS AND FIGURES Air lift. 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: 12
  15. 15. Increasing hotel occupation. 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. Cruise tourism recovery. 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
  16. 16. AN INDUSTRY WITH HIGH POTENTIAL CHAPTER 1 | FACTS AND FIGURES 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
  17. 17. CHAPTER 1 | FACTS AND FIGURES 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
  18. 18. CHAPTER 1 | FACTS AND FIGURES 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
  19. 19. CHAPTER 1 | FACTS AND FIGURES 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
  20. 20. 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. CHAPTER 1 | FACTS AND FIGURES 18
  22. 22. 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
  23. 23. 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. CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT SEA & SUN ELEMENTS DOMINATE PERCEPTIONS OF MEXICO AS A TOURISM DESTINATION 21
  24. 24. 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. CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT 22
  25. 25. CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT 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
  26. 26. 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 CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT 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 24
  27. 27. 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. A well-planned strategy of international position- ing, country branding and city marketing for sever- al destinations that are currently underperforming is not just necessary, it is absolutely urgent. National Museum of Art & Statue of Charles IV Historical Theatre in Guadalajara Coral reef in the Mexican Caribbean CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT SELF-ESTEEM PROBLEMS 25
  28. 28. WHAT ABOUT BUSINESS TRAVEL, CONGRESSES AND CONVENTIONS? CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT 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
  29. 29. CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT 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
  30. 30. 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. CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT The Fine Arts Palace 28
  31. 31. 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. CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT 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
  32. 32. 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. . CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT POPULAR VACATION DESTINATIONS 30
  33. 33. CHAPTER 2 | THE TOURISM INDUSTRY AS A KEY PLAYER IN MEXICO’S ECONOMIC DEVELOPMENT Fortunately, the effective use of social media can bypass the traditional media channels that have a narrower focus on Mexico’s problems, offering a means to reach consumers directly with positive messages about the country. 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
  35. 35. 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
  36. 36. 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. CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  37. 37. 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 seewhatwas 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 CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 35
  38. 38. 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
  39. 39. HEY BIG CHINESE SPENDER! CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  40. 40. 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. CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  41. 41. MILLENNIALS ARE SETTING THE AGENDA CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  42. 42. 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
  43. 43. THE SILENT TRAVELLER CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  44. 44. CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  45. 45. GETTING THE NUMBERS RIGHT MAKES FOR BETTER LOCAL DECISION MAKING CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  46. 46. THE EVOLVING NATURE OF THE TOURIST EXPERIENCE CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  47. 47. 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. CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  48. 48. GETTING DREAMS OFF THE GROUND CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  49. 49. 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 . CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD University of Guanajuato (Mexico) 47
  50. 50. 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. CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 48
  51. 51. 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. CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 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
  52. 52. 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 CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD characteristic XIX century hacienda in Mexico. 50
  53. 53. 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 . Acommon theme in the discussion ofprevious 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. CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD Waterfall and a hanging bridge at basaltic prism canyon at Hidalgo, Mexico. 51
  54. 54. 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 CHAPTER 3 | MEXICAN TOURISM AND GLOBAL TRENDS TO TAKE ON BOARD 52
  56. 56. 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: 54
  57. 57. 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. . CHAPTER 4 | SIX STEPS TO BOOSTING MEXICAN TOURISM HIGH VISIBILITY EVENTS SHOULD BE ORGANIZED AND PROMOTED AND SEIZED UPON 55
  58. 58. 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. CHAPTER 4 | SIX STEPS TO BOOSTING MEXICAN TOURISM THE DEVELOPMENT OF AN INTEGRATED CONGRESS AND CONVENTION POLICY IS A KEY PRIORITY 56
  59. 59. • 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 CHAPTER 4 | SIX STEPS TO BOOSTING MEXICAN TOURISM 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
  60. 60. FINDING NEW NICHE MARKETS CHAPTER 4 | SIX STEPS TO BOOSTING MEXICAN TOURISM 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
  61. 61. CHAPTER 4 | SIX STEPS TO BOOSTING MEXICAN TOURISM 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
  62. 62. MAKE TOURISM THE CLEANEST INDUSTRY IN MEXICO CHAPTER 4 | SIX STEPS TO BOOSTING MEXICAN TOURISM 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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  64. 64. ATHENS, GREECE t. τ+30 210 2419654 | +30 21ψψψψψ0 24 19 599 εεεεεεe.