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Tourism Will Be 3rd Biggest Cash Source by 2018

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June 27, 2013

The Mexican government is finishing its infrastructure strategy and it will be unveiled in the coming weeks. The plan is to link well-known transportation hubs with lesser-known tourism destinations.

Mexico City, Mexico - Mexico’s tourism industry, already the nation’s fifth-biggest source of revenue, is seen taking on more economic importance by the end of 2018 as international visits rise and new infrastructure is built, according to a cabinet official.

Tourism’s participation in Mexican gross domestic product will climb 100 basis points to 9.4 percent by the end President’s Enrique Pena Nieto’s administration, Tourism Minister Claudia Ruiz Massieu said in an interview at Bloomberg’s New York offices on June 21st. The "upward trend" for the industry, which employs about 7 million people, will be driven by more visitors from countries outside of North America and better tourism facilities, she said

"Tourism is already one of the most important economic sectors for Mexico," Ruiz Massieu said. "We are confident that it can represent at least one point more of GDP at the end of the administration and that we can become the third source of revenue at least."

Last year, tourism generated $12.7 billion in foreign exchange inflows, according to a report by JPMorgan Chase & Co, a 10.5 percent increased versus 2011. Tourism trails manufacturing, oil, remittances, and foreign direct investment as the nation’s biggest source of revenue, according to Citigroup Inc.’s Banamex unit.

Ruiz Massieu said Latin America’s second-biggest economy received a record 24 million international visitors last year, or 2.6 percent more than the 23.4 million tourists it received in 2011. Global international arrivals grew by 4 percent in 2012, according to a report from a World Tourism Organization report, and reached 1 billion tourists worldwide for the first time.

Tourism Minister Claudia Ruiz Massieu

International visits abroad to the so-called emerging economies rose 4.1 percent, while arrivals to advanced economies climbed 3.6 percent, the WTO report shows.

Mexico’s Share

"We want to keep growing the market share in our traditional markets," such as the US and Canada, the biggest source of international travelers to Mexico, Ruiz Massieu said. At the same time, Ruiz Massieu is focusing on emerging markets such as Brazil, Argentina, Russia, and China. She declined to offer a projection for the total international visitors expected for this year.

The increase of international travelers to Mexico comes even as drug-related violence continues. Eduardo Medina Mora, Mexico’s ambassador to the US, said in a June 6th interview that the government’s efforts to fight organized crime "are going to take more time and be long-term driven, because they’re based on institutional buildup," and that the number of violent crimes is already dropping.

Economic Initiatives

Pena Nieto has said that legal changes he’s pushing for by year-end to open up the state-controlled energy industry and to increase tax collection may boost growth to as much 6 percent a year, versus 3.9 percent in 2012. Ruiz Massieu said Mexico seeks to increase private investment in the tourism industry.

The Mexican government is finishing its infrastructure strategy which will be unveiled in the coming weeks and the plan will for the first time include tourism development, according to Ruiz Massieu.

Mexico wants to build new airports, cargo and commercial ports, railways, and highways to link well-known transportation hubs with lesser-known tourism destinations, she said without specifying how much investment will go into the projects.

2013 Spending

This year Mexico is investing 310 billion pesos ($23.3 billion) in infrastructure, Pena Nieto said June 20th. Speaking at a construction industry event in Merida, Mexico, the president said that about 187 billion pesos will be invested in the second half of the year.

Ruiz Massieu said the Communications and Transportation Ministry will announce "in a couple of weeks" a final decision regarding potential measures to alleviate congestion at the Mexico City airport, the busiest hub in Latin America. "What I favor is getting more planes to an area where I can distribute more tourists to different destinations," she said.

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