Pablo Azcárraga
President
National Tourism Business Council (CNET)
/
View from the Top

Tourism Gains Traction Despite Macroeconomic Hardships

Wed, 11/01/2017 - 12:29

Q: What role does tourism play in Mexico’s economic development?

A: Mexican tourism follows a cyclical process. The 2008 financial crisis had a significant negative impact on tourism but in the last five consecutive years this sector has seen double-digit growth, which has motivated the industry to continue investing. Tourism revenue totaled much more than that of oil and gas exports in the last year and it was the only sector to register a surplus in 2016, which amounted to US$9.3 billion, while oil and gas saw a deficit of US$12.8 billion. Although the results have been strong, we must continue to demand more, not least because of the number of jobs the sector creates. In contrast to other industries, tourism will not be displaced by technologies because the service cannot be substituted.

Q: What does Mexico need to do to reach its tourism potential?

A: The sector needs more investment either in infrastructure or image. It needs to diversify, attract new markets other than only the US and Canada and finally move away from its dependency on beach destinations. Although North America will continue to be the most important contributor to Mexico’s tourism development in the future, we should complement this with higher market penetration from other countries. Infrastructure is key. If we want to attract 50 million tourists per year, we have to invest in infrastructure since, with the existing framework, we do not have the capacity to receive or host more tourists. If we do not invest, our numbers will remain stagnant at 30 million foreign visitors for years to come. The lack of a large airport in Mexico has been an enormous bottleneck for the industry. This is the price the country has paid for the lack of political will. It often goes unmentioned but this lack of airport capacity has impacted not only tourism, but all Mexican industries.

Q: How is CNET joining forces to secure the sector’s future growth?

A: For the first time, tourism executives have a seat on the Business Advisory Board for Mexico’s Economic Growth at CNET. Because CNET is able to bring together all associations and chambers associated with the tourism sector, it can represent the industry well. CNET is asking the government to develop an entity that will use public funds to develop Mexico’s priority tourism destinations. There must be more public investment in tourism to ensure the competitiveness and sustainability of each destination. Tourism is vulnerable and if we do not invest, it will lose all its competitive advantages. Without sustainable development, there will be even more problems that will create bottlenecks for future growth.

Q: How could the regulatory framework and fiscal incentives be improved to attract more investment?

A: There must be a change in the Fiscal Reform. We live in a vicious cycle whereby, if a tourism destination is successful, the municipality and state are allocated fewer resources to support the sector. The state and municipal governments suffer because the money collected in taxes is absorbed by the federal government and it leaves only a small proportion for the development of the area. This will only lead to problems since four to five days of the week, destinations are at full capacity. We need to develop a new fiscal incentive for tourism investment.

Q: What is the main factor that is holding back the Mexican tourism sector?

A: Mexico is a difficult country to develop because it continues to be extremely bureaucratic and has too many formalities. Often, federal government requisites are not aligned with those of the state and municipalities, which results in a delay in investment due to a lack of continuity. But all in all, the future looks bright. We have a steady growth that will continue to motivate players to change the sector’s business model and incorporate more efficient schemes that will allow us to boost growth. The potential market is huge, with more than 200 million people traveling within the US, while only around 20 million come to Mexico.