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Mexican Tourism: Beach areas down but still not out  Feb 16, 2009

The squeeze is on. Up and down Mexico's Pacific Coast tourist resorts are feeling the pinch of the world economic meltdown. In Puerto Vallarta, Jalisco, signs of the downturn are literally everywhere. "For Sale," "For Rent" and "Business Available" are ubiquitous messages emblazoned in Spanish and in English on storefronts, on apartment buildings, and on unfinished condominiums.

In January, the peak of the foreign tourism high season, local media reported hotel occupancy rates hovering around an anemic 60-65 percent nightly. One evening, the rate reportedly dropped to 36 percent.

On a pleasant winter day, Ruben Galaviz and Fernando Martinez sat chatting on Puerto Vallarta's Malecon, a romantic place where pelicans dive-bomb off the beach and humpback whales occasionally leap from the waves. In good years the men might be too busy to talk, but not now.

"When there is no money in the US, there is no money here. There are no jobs and work is scarce for the people," Galaviz sighed. "There are people who don't speak English and who are just suited for construction work, and there are no jobs."

Members of the Mexican Workers Confederation, Galaviz and Martinez try to hustle tourists into buying silver jewelry, t-shirts, blankets and trinkets. The tourist economy has been sluggish for some time, Martinez acknowledged, but the first weeks of 2009 have marked new lows.

"There are less sales, and everyone is seeing it ‚Äď restaurants, hotels, stores, everyone," said the 20-year resident of Puerto Vallarta.

Puerto Vallarta's vibrantly diverse but chronically under-rated art scene is among the business sectors witnessing the shortage of tourist dollars.

Originally from Canada and now in her 26th year running the Galleria Dante, Claire Guarniere sells surrealistic paintings and sculptures produced by artists hailing from Mexico, France, Cuba, and the US. Last year was Guarniere's "best year ever," the gallery owner gushed, but business was down by 2009. Some affluent clients, Guarniere recalled, complained of losing up to "two million in the stock market."

Not all the news was bad. Some businesses, especially popular watering holes, report doing brisk sales this year, though fortunes go up and down depending on the day. And people are still trickling in from the north. A husky Canadian man who identified himself only as "Bob" gave a simple reason for making the trek to Mexico in the midst of uncertain economic times: "zero degrees and three feet of snow."

Asked about splurging while an economic disaster unfolds, Iowan Scott Derby, who jetted to California with his wife Rhonda and then hopped aboard a cruise ship in Long Beach headed south, scoffed at the very notion of a crisis.

"There isn't one," Derby insisted. "It's just those who over-extended their credit, over-extended, basically, their life-style who are having a problem. It's those who live within their means who are doing great."

Down the street from Galleria Dante and just a crab's crawl from popular Playa de los Muertos, Audalio "Yeso" Aburto sells custom jewelry designed with precious stones, silver and gold. As the foreign tourist high season swung into high gear, Aburto calculated the customer flow was 25 percent less than in good years. "Last February was phenomenal," Aburto said, a hint of nostalgia electrifying his voice.

"The beginning of this season has really dropped," added US transplant and assistant Lisa Carkner. "It started slowly, every day is better but it's a drop from last year."

Aburto said he had endured a struggling tourist economy before coming to Vallarta ten years ago. A native of Lazaro Cardenas, Michoacan, Aburto lived in the nearby international resort of Zihuatanejo, Guerrero, for many years before deciding employment prospects and educational opportunities for his children were better up the coast in Vallarta.

In Aburto's old stomping ground, meanwhile, the economic picture is very similar to Vallarta's.

A six-year resident of Zihuatanejo, former Oregonian Lawrence Marbut served as the 2009 chair of Sail Fest, an annual event featuring a sail parade and a chili cook-off that raises money for struggling schools and low-income students. "There are at least 500 children who are going to school in this city who wouldn't be if it weren't for Sail Fest," Marbut said.

After hearing anecdotal reports that sail cruising was down 30-50 percent along the Pacific Coast this year, Marbut said he was pleasantly surprised people "came out of the wood work" to participate in activities, volunteer their time, and donate goods and services to Sail Fest.

Although the festival was down significantly from a peak of 100 boats several years ago, Marbut still waxed confident organizers could raise $40,000 with matching funds to help the local educational system.

Perhaps now more than ever, Mexican tourist-based economies must rely on repeat visitors, annual snowbirds and expatriate residents, who have grown in number over the years.

"A lot of tourists who come here for two or three months a year have long-term commitments to Zihuatanejo," said Bill Day of Portland, Oregon.

Personal service, friendliness and fair prices are common traits that seem to attract the same people back to both Zihuatanejo and Puerto Vallarta year after year. In today's economy, expensive, indifferent enterprises could have trouble keeping their heads above water.

For businesses, now could be the time of innovation. Puerto Vallarta's Claire Guarniere, for example, said having her inventory posted on-line keeps sales buzzing year-round even when few foreign tourists are in town. And when business got bleak, Guarniere reduced prices.

"People are spending money. The discount helped," Guarniere affirmed. "It pushed them over whether they buy or not."

To counter the tourist drop-off, Mexico's federal government is making industry subsidies an important part of President Felipe Calderon's economic rescue package announced last month.

In the latest round of subsidies, the Secretariat of Tourism (SECTUR) announced about $100 million will be made available to Mexico's 32 states for tourism projects. It is still unclear how most of the money will be spent, but in the state of Michoacan plans exist to invest approximately $5 million in the "artistic illumination" of old buildings in the state capital of Morelia.

Monies will also be spent on improving the public look of the "Magic Towns" of Patzcuaro, Cuitzeo and Tlalpujahua, and on supporting the route of the imperiled monarch butterfly.

"We will continue to decisively push domestic tourism as well as create routes and circuits that allow national and international tourists to experience and enjoy beach destinations, cultural destinations and nature on the same trip," SECTUR Secretary Rodolfo Elizondo vowed in Michoacan.

In another initiative, the Tourist Promotion Council of Mexico is expected to spend about $90 million on promoting Mexico as a vacation getaway. More than half the money could go to the principal broadcast outlets in the US and Canada.

Favoring Mexican tourism is the high value of the US dollar, which fetches an average exchange rate of 14 pesos per dollar and buys more than it has in many years. However, highly favorable exchange rates mean nothing for millions of would-be tourists north of the border who have no money in their bank accounts or credit left on their plastic cards.

Many Mexican resorts face added challenges in attracting new foreign tourists. Public insecurity as well as the contamination of beach waters are negatives that have already driven off tourists in places like
Acapulco and Zihuatanejo.

In Zihuatanejo, at least four shootouts involving automatic weapons were reported in the city and its outskirts between February 2 and February 9. Two Mexican nationals who were apparent targets of attacks were killed in the incidents. As in other regions of Mexico, the narco war is rearing its hydra-like head in a place with a once-quiet reputation. In the small but growing city's old downtown area, LA-style gang graffiti now stands scrawled on several walls.

Multiple messages seemingly emanated from a recent scene outside a Banamex (Citigroup-owned) bank branch located across the street from a popular Zihuatanejo restaurant catering to foreigners. While visitors from a cruise ship enjoyed a midday meal amid a fun-filled, folkloric ambiance, a detachment of seven heavily armed Mexican soldiers stoically guarded the bank as a pair of armored car guards nervously toted shotguns and hustled big bags of cash into the building. A sign posted on the window exhibited the weak value of the peso in unmistakable numbers.

Zihuatanejo is still not Ciudad Juarez or Tijuana, but locals are very concerned about the future of their town.

Taking the long view, the current world economic crisis presents a unique opportunity for Mexico to seriously rethink and renovate a tourism industry that has failed to create enough decent-paying jobs to sustain a growing population, while at the same time it has fallen short on balancing development with social service and public infrastructure needs.

For Zihuatanejo environmentalist and columnist Silvestre Pacheco, the cat is already out of the bag.

"There's no better promotion than clean beaches, healthy food, an educated population, sufficient running water, and adequate sewerage," Pacheco wrote in a recent column published in the daily El Sur.

Mexican Tourism: Beach areas down but still not out
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