by Michael J. Shapiro | April 29, 2019

Mexico's hotel industry reported first-quarter drops in all performance metrics, according to STR. Analysts at the lodging-data provider attribute the decrease in part to the new federal government's decision to disband the Mexico Tourism Board; between continued security concerns and the lack of an organized approach to tourism and messaging, they speculate, travelers might be taking their business to other destinations.

Occupancy was down by 4.9 percent year-over-year for the first quarter, to 61.9 percent. While the decline can be attributed in part to solid supply growth of 2.7 percent exceeding soft demand, which fell by 2.3 percent, the absolute occupancy of the nation's hotels was the lowest for any first quarter since 2013.

Average daily rate dropped by 2.4 percent year-over-year to US$119.17. Revenue per available room plummeted by 7.2 percent to US$83.65.

Mexico's hotel performance is being dragged down by its traditional tourist havens, according to STR's regional breakdown. The only markets to experience drops in average daily rate vs. last year were the Yucatán Peninsula (home to Cancún and the Riviera Maya), which posted an ADR decrease of 4.8 percent, and Northwest Mexico (home to Los Cabos), where ADR dropped by 1.1 percent. The Northwest market was also the only one to suffer double-digit drops in occupancy (-12 percent) and RevPAR (-13 percent).

By contrast, Northeast Mexico (home to the commercial city of Monterrey) posted the largest gains to both average daily rate (5.1 percent) and RevPAR (2.7 percent).

Mexico Central South was the country's only market to experience a rise in occupancy, where that metric inched up by 1.3 percent, to 51 percent overall. While the overall occupancy remained relatively low in that region, it represents a slight rebound for the market that includes Oaxaca and Acapulco, the latter of which has been affected by organized-crime-related violence that has plagued the state of Guerrero in recent years. Other destinations in the market include the Oaxaca-coast beach resorts of Huatulco and Puerto Escondido, as well as Chiapas and Puebla.

Eduardo Chaillo, CMP, CMM, CASE, founder and director of the Global Meetings and Tourism Specialists consultancy, fully agrees there's a clear correlation between lackluster hotel performance and the dissolution of Mexico's national tourism agency. Chaillo, who previously served for 12 years on the Mexico Tourism Board as executive director for the meetings and incentives industries in North America, said the dismantling was a "terrible" decision. "However," he added, "I also am a very positive person -- and I hope that an even better solution will be found in which the private and public sectors will come together and continue to position Mexico as a trustworthy meeting destination."