John McCarthy
Founding Partner and Principal
Leisure Partners
View from the Top

Boutique Consultancy Projects Continued Growth

Wed, 11/01/2017 - 13:17

Q: What is behind the tourism industry’s success in the last few years?

A: Tourism in Mexico has become competitive in many ways. Areas like Cancun and Ixtapa, which were completely empty not too long ago are now full of resorts. Few countries have invested as much in their tourism sectors as Mexico has over the last few decades. The country has a large number of financial agencies such as Bancomext that help finance project development that would otherwise be deemed unfeasible by commercial banks. This institution has financed 50 to 60 percent of the hotels that are being built in both coastal and city destinations in Mexico.

Many believe Mexico’s competitiveness is based solely on the depreciation of the peso but other factors play into the country’s success. First, Mexico’s geographical situation is helpful because it attracts visitors from the US and Canada due to its proximity and sunny climate. Second, our current administration has cleaned up Mexico’s image as an unsafe country, encouraging the return of tourists in large numbers. We have a rich cultural heritage and attractive natural reserves. Finally, the country’s massive population of over 120 million and the resulting internal tourism is a factor many overlook.

Q: What industry segments does Leisure Partners cover?

A: We specialize in resorts but also cover other segments. Leisure Partners is sure that traditionally strong cities such as Guadalajara, Monterrey and Mexico City will continue thriving since many private equity funds are now deciding to focus entirely on tourism real estate, which is less risky.

Leisure Partners is excited to revitalize what once was Mexico’s prime destination: Acapulco. We are working to adapt the area to the current market needs. Another incredibly important project for our company is Puerto Peñasco, Sonora. We are practically creating an entirely new destination there. Leisure Partners is also looking into building hotels in Huatulco, Oaxaca and Mexico City.

Developers in this segment often make the mistake of duplicating the successful methods applied in one area to another. For instance, Loreto in Baja California Sur is a beach destination that was originally designed to imitate Los Cabos to the south. This was a mistake as Loreto lacks the same atmosphere and characteristics as Los Cabos. Emphasizing each destination’s unique tourist attractions is important.

Q: In what ways does your company collaborate with the public sector?

A: We have close ties with the government both directly and indirectly through finance schemes and permits. For example, Mexico’s National Trust Fund for Tourism Development and Promotion (FONATUR) provided the land on which we are building a US$170 million project in Huatulco. We will be able to bring back investment with the support of the public sector. Working with the government provides us extra security in the areas where we develop projects.

This collaboration also effectively reduces risk for investors as the support of the government exponentially increases the probability and speed of ROI. Large projects such as Puerto Peñasco need the participation of the public sector to ensure smooth operations and long-term benefits for investors, the area and the country.

Q: How does the company see its positioning in the tourism industry in the years to come?

A: We have a lot on our plate right now. Leisure Partners takes pride in being a boutique consultancy that carefully selects projects and developments. Our biggest challenge at the moment is a completely new city we are building outside an old Mexican town. We cannot disclose the location yet but the idea is to build the infrastructure from scratch and create a location with all the necessary amenities. We hope to have a river in the middle and a tram that connects the development to the nearby town.