Region/Countries: Mexico, North America Industry: Other Date: May 2017

Why this is important to Wisconsin businesses: As the number of international tourist arrivals continues to grow year after year, Mexico is emphasizing development outside the main sites where tourism has historically been concentrated.

The travel and tourism industry is one of the main engines of the Mexican economy, with a total impact of 8.9 percent of the country’s total GDP for 2016, according to Datatur. The sector was also among the major employers, with a total of 3.95 million direct employees at the end of 2016.  Mexico is regarded as one of the most culturally rich nations in the world, with a variety of archaeological sites and globally renowned beach resorts that contribute to the economic development of the country, and in particular of the less developed southern regions.

In addition, tourism is the third-largest source of foreign currency for Mexico, behind only the automotive industry and remittances from overseas residents, surpassing the oil and gas sector as of 2016. This growth has been achieved despite an unprecedented crime wave and the decision of former Mexican President Felipe Calderon in December 2006 to take the Mexican Army to the streets to fight organized crime, especially drug cartels.

In global terms, Mexico ranked as the world’s ninth-most-visited country in 2015, receiving a record high of 32.1 million travelers, up 9.5 percent compared to the previous year, and ranked 17th in terms of tourism receipts, with $17.5 billion in the same year, up 8 percent compared to the previous year. The revenue amount lags behind the number of visitors because of two factors. First, Mexico offers relatively affordable tourist trips, compared to countries such as the U.S., France and Germany. Due to the relatively low cost of living, Mexico records lower per capita spending for inbound tourism. In addition, since the majority of the inbound tourists in the country come from the U.S., this means shorter and less expensive trips for both business and pleasure, since travelers are not coming from far away. The other factor is the depreciation of the Mexico’s currency against the U.S. dollar in recent years, which has increased the attractiveness of tourism to Mexico. The Mexican peso depreciated by 33.3 percent between January 2012 and May 2017.

Mexico is well equipped with infrastructure to support tourism. There are an estimated 19,000 hotels across the country, with over 366,000 hotel rooms. International visitors to Mexico have a preference for upscale (4-star and 5-star) hotels, and typically register longer stays than travelers from within Mexico. In 2015, the most preferred hotel category by foreign tourists was 5-star hotels, which accommodated 56 percent of foreign tourists in Mexico, followed by 4-star (around 20 percent) and 3-star hotels (less than 15 percent). That same year, the U.S. was the main generator of international tourism, accounting for over 70 percent of international tourist arrivals in Mexico, followed by Canada, with a 5.5 percent share.

Acknowledging the importance of tourism to the Mexican economy, the federal government in January 2014 created the Institute for Tourism Competitiveness, as well as the Pueblos Magicos, or (Magic Villages) initiative, which aims to promote the development of a series of towns around the country for their natural beauty, cultural riches, historical relevance and preserved traditions, gastronomy, craftsmanship and architecture. By the end of 2016, a total of 111 Mexican towns were declared pueblos magicos. This initiative helped to distribute tourism that had historically been concentrated in three main areas: beach resorts such as Acapulco and Cancun, colonial cities such as Guanajuato and Oaxaca, and archaeological sites such as Teotihuacan and Chichen Itza. Notably, the World Economic Forum has ranked Mexico among the top 10 countries with the largest number of natural and cultural UNESCO World Heritage Sites, a fact that the Mexican government is using to tourism growth.