With remarkable pent-up travel demand, tourists are jet setting to Mexico

CHICAGO, April 30, 2021 – Mexico is featuring robust market dynamics that suggest strong hospitality and lodging industry recovery amid the pandemic. In JLL’s Hotels & Hospitality Group’s latest Travel and Tourism Update, there are several factors that put Mexico on the map for tourism recovery and increased investor interest.

Economic Outlook

Being the second largest economy in Latin America and sixth largest emerging market across the globe, almost two-thirds of Mexico’s economic gross added value is generated by the service industry and 16 percent of the country’s GDP is directly impacted by the travel and tourism sectors. Despite the current state of government affairs, Mexico is expected demonstrate big strides toward recovery, with the country’s GDP growth projected to be stronger than all of Latin America in 2021. With those factors, investors across the globe are doing a double take at Mexico’s resilient lodging industry.

Lodging Performance

In 2019, Mexico was named the #1 visited destination by foreign tourists within Latin America, #2 most visited destination on the Americas and #7 most visited country in the world. Despite the pandemic and occupancy declines, the country managed to reach average daily rates that surpassed 2019 levels in key markets of Los Cabos, Cancun, Riviera Maya and Mexico City.

Pent-up demand both domestically and internationally, predominately from the United States, drove Mexico’s lodging industry to keep their doors open.

Additionally, Mexico’s commitment to health and safety has not gone unnoticed, with many of its destinations being the first to obtain the Safe Travels stamp established by renowned, global industry group, the World Travel & Tourism Council (WTTC). As health and safety remain at the forefront of concern for travelers, it’s imperative that the lodging industry continues to implement guidelines as recommended by global healthcare leaders.

Supply Dynamics & Pipeline

Mexico is the most developed hotel sector in Latin America, consisting of over 400,000 hotel rooms. The room supply is divided between branded and independent properties, but key destinations are leading the way in terms of branded supply, with 60 percent of branded rooms being located in Cancun and Riviera Maya and Mexico City. Adding to that, over one-third of Mexico’s supply are resort destinations, with Cancun and Riviera Maya holding the largest concentration of rooms in the country, followed by Mexico City, and the Puerto Vallarta and Riviera Nayarit regions.

Even more impressive, the pipeline of new hotels for the country stands at 14,000 rooms under construction and 10,000 rooms currently in planning, expected to deliver by the end of 2023, a true testament to investor confidence. As part of the pipeline, luxury brands such as Ritz Carlton, Park Hyatt, Waldorf Astoria, Four Seasons, St. Regis and JW Marriott, will strengthen positioning and drive higher room rates in destinations such as Mexico City, Cancun and Riviera Maya.

Current State: An Investor’s Market

Mexico is a strategic gateway destination in Latin America and there is ample opportunity to invest in quality and profitable assets with long-term market fundamentals. Mexico’s sophisticated financing system allows investors to finance hotel acquisitions and development at attractive rates. Drawing interest from investors domestically and internationally, attractive loan-to-values (LTV) range near 50 percent of the total value of the asset, with lenders in Mexico including both local banks and international banks.

Read the full Travel and Tourism Update here. For more global research and information regarding investor sentiment, download JLL’s Hotels & Hospitality Group’s Hotel Investment Outlook for 2021.

JLL’s Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totaling $83 billion worldwide. The group’s 350-strong global team in over 20 countries also closed more than 7,350 advisory, valuation and asset management assignments. Our hotel valuation, brokerage, asset management and consultancy services have helped more hotel investors, owners and operators achieve high returns on their assets than any other real estate advisor in the world.

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