Economics: Despite a massive decline, a recovery in tourism is well underway, but pandemic-related restrictions could pose renewed challenges
Tourism is one of the sectors most affected by the pandemic in Mexico. Tourism GDP posted an annual 47.7% decline in the second quarter of 2020 since it was not until March 2020 when authorities began to massively apply restrictive measures in response to the Covid-19 pandemic.
The largest decrease was observed in inbound tourism consumption, since by the second quarter of 2020 the annual reduction in international tourist spending reached a whopping 89.8%, while domestic tourism consumption fell 42.1%. The hotel and motel services index fell close to 80% between March and May 2020. And as of April 2020, airlines had lost close to 90% of their revenue, but a year later a major increase was posted, albeit from a low base of comparison and still 40% below 2019 levels.
In January-April 2021, international tourist arrivals were still at levels 50% lower than in the same period of 2019, as were hotel occupancy rates. Yet, a recovery is clearly underway, albeit with the industry’s numbers still below pre-pandemic levels, particularly hotel and lodging services. Average hotel occupancy rates in the first four months of 2021 were still less than half what they were in 2019, at 30.5% vs 61.9%. In percentage terms, the drop was greater in city hotels than in resort venues.
The significant recovery seen in April 2021 is related to the lifting of pandemic restrictions – such as the closing of hotels, restaurants and non-essential businesses and tourist attractions – along with the Easter Week holiday, and increased vaccination rates in the United States and, to a lesser extent, in Mexico.
Expectations for the summer of 2021 appear to be positive, as tourist resorts such as Cancun have reported occupancy levels above 60% in June 2021. Yet, analysts urge caution. In addition to new fears over more virulent strains of the virus, which are affecting international tourism as a whole, uncontrolled openings of tourist resorts in Mexico, such as those in Quintana Roo, have resulted in a considerable increase in Covid-19 cases. If this becomes a trend, a new round of restrictions could be reinstated, with the resulting negative effects on the sector.
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