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Inside Out: How Mexicans Are the Future for Mexico’s Hotel Occupancy

It’s well known that Mexico’s tourism industry relies mostly on international travelers: 60% of foreign visitors who arrive by air to Mexico are U.S. citizens. Accordingly, hotels’ revenue and sales strategies are generally based on attracting as many international travelers as possible. Selling Mexico to Mexicans has not been at the core of the plan, with some hotels not even having a dedicated sales force for Mexico. But that might be about to change.

Recent numbers tell an interesting story on demand within Mexico that could help boost hotel occupancy and serve as backup plan if the uncertainty of faltering demand from U.S. travelers to Mexico persists, due to the recent political scenario.

According to the Expedia Group, demand of travel to luxury hotels in Mexico grew 30% in 2016 vs the previous year (Cancun, Riviera Maya, Los Cabos, Puerto Vallarta and Riviera Nayarit all together represented 90% of bookings). It is no surprise that the United States continues to represent the largest market for the luxury segment in 2016, followed by Canada, which combined reported growth of more than 20% in room-nights bookings.

However, what is really interesting is that domestic travelers in Mexico are also helping boost the demand in the luxury segment, reporting a growth of almost 50% in 2016 for Expedia, a large number that cannot be ignored.

For Best Day, the largest OTA in Mexico, 80% of its sales are for trips within Mexico and only 20% international. The company, who focuses primarily in Mexico, reported a 23% growth in travel sales when compared to 2015, and it is now projecting a 28% increase for this year — very positive numbers for a market that is supposed to be undercut by international demand.

Hotel Occupancy Soars for Semana Santa

Continuing with this trend, this year’s Semana Santa, one of the few travel periods in which Mexico hotels tend to look for business within the domestic market, hotel occupancy across Mexico reached an average of 64%, with the most popular destinations reaching an average of 91% and some even to levels between 95% and 100%, a 2-point increase compared with 2016 and the highest in more than a decade, according to Sectur.

The industry is noticing a trend in more Mexicans opting for vacations in the country than abroad. The campaign “Viajemos todos por Mexico” has served its goal, but so too has the exchange rate fluctuation, which has made traveling internationally more expensive than the previous year.

Therefore, if Mexicans are more open and willing to stay in Mexico and discover their own country this year, how can hotels adapt their Revenue Strategy to cater to this new avid consumer? Airlines have set a precedent, as discount sales for long weekends are the norm, creating a base for the business on high-demand periods. The market has been trained to expect airline sales and offers.

However, hotels seem not to be following the trend — or at least are more cautious on generating the demand from inbound guests. As the summer season, another key travel period for Mexico, approaches, this could be a good time to set the engines at full speed and readjust the strategy to increase hotel bookings within a market that is showing growth.

As Taleb Rifai, secretary general of the UN World Tourism Organization, said at Tianguis Turistico: “The future is Mexico.” Increasingly, that is the case for Mexican tourists as well as typical foreign travelers.

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Pamela Espinoza, Contributing Editor, Latin America

Pamela Espinoza joined Duetto in 2017 as a Contributing Editor covering revenue management and the hospitality industry for the Latin America region. She is based in Mexico.

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