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Amid Mexico’s drug wars, hotel investors remain steadfast

Profile Photo By: H L
October 4, 2013

Amid Mexico’s drug wars, hotel investors remain steadfast

Mexico HotelInteresting article?from Bloomberg this morning focusing on hotel investment in Mexico. Particularly that there still is robust investment in the country, even in the face of ongoing drug wars. While government officials might be afraid, tourists, it appears are not, as they continue to flood the country, staying at its oceanside resorts and visiting such sites as the Mayan ruins.

According to the article, Hyatt Hotels Corp. is opening two resorts in Mexico later this year, and?in April?signed a management agreement for a DoubleTree in Toluca, which will open in late 2014.

In January, InterContinental Hotels Group opened the Holiday Inn Express Quer?taro (pictured). This is the first Holiday Inn Express hotel in Queretaro and the fifth IHG-branded hotel in the city.

Starwood Hotels & Resorts Worldwide is planning to increase its luxury portfolio (W, Luxury Collection, St. Regis) there by 50 percent. Blackstone Group?s La Quinta chain also wants to add hotels in the country to meet rising business demand as Toyota Motor Corp. (7203) and other companies open new factories, the article states.

Meanwhile, real estate investment trusts are also active, none more so than Fibra Inn, which has made a few deals already this year, in?Guanajuato,?Coyoacan,?Irapuato?and?Puebla. It also worked out an agreement with Wyndham Hotel Group to own and operate a portfolio of Wyndham-branded properties in Mexico.

More from Bloomberg: “Hoteliers and investors are counting on a continued surge in tourism across Mexico, where gains in hotel room rates outpaced increases in the rest of Latin America even as the economy slowed this year. Travel growth is being driven by a rising middle class, expansion by business and visitors from countries including China who are undeterred by the violent crime gripping northern Mexico.”

?Security issues?perceived or real?travelers pay attention to, and they can impact travel,? Ricardo Suarez, a VP of acquisitions at Starwood told Bloomberg. ?But there is such strong economic growth in the country, it?s driving domestic travel and demand from the U.S. and, more recently, also from places like Europe, Russia and Asia.?

Travelers are still heading to Mexico in increasing numbers even amid little relief from a years-long crime epidemic. One gruesome detail: In August, police found the decapitated bodies of 12 people who had been kidnapped from a Mexico City nightclub three months earlier. The most recent Mexican government data available, released in 2011, shows at least 47,500 people had been killed in drug violence in the country since former President Felipe Calderon took office in 2006 and vowed to crack down on the drug trade.

Some data: According to STR, in 2009, hotel occupancies in Mexico dropped to 50 percent and revenue per available room fell to $49.73, the lowest level in at least seven years. In May of that year, occupancies slumped as low as 29 percent. This year through July, occupancies recovered to an average of 61 percent, and RevPAR was at $74.49.

Source Hotel Investment News,

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