March 2000 - 1999 Mexican lodging statistics show a positive picture compared to the same period in 1998 despite the fact that December statistics confirm the difficulties faced by all segments and locations of the hotel industry due to Y2K related fears and millennium celebrations.

Despite a poor December, annual occupancy and ADR statistics for most Mexican destinations demonstrate stability as compared with 1998. In some cases, such as border cities, significant increases were registered.

However, FONATUR's beach destinations did not recover this year. In fact, their occupancy levels were lower than those registered in 1994, the year before devaluation and the beginning of Mexico's recent economic crisis.

Beach Resort Destinations

Hotels in the "integrally-planned" beaches of FONATUR ended 1999 with occupancy, ADR and RevPAR levels lower to 1998. In fact, occupancy percentages were the lowest level registered in the last six years.

Once again, the explanation to this situation is the new supply in the Cancun-to-Tulum corridor (mainly all-inclusive) and the Los Cabos market. Demand actually increased in the overall Cancun market, although Cabo San Lucas has continued to experience demand decreases.

"Traditional resort" hotels recorded decreased occupancy in 1998 compared with the previous five years, but reversed the trend by registering an increase of 1.5 percentage points in 1999 over 1998. An ADR increase of $7.50 was also registered.

Large Industrial Cities

Since 1996, lodging statistics for hotels in these destinations have demonstrated steady recovery from the adverse impact of the 1994 peso devaluation. Guadalajara realized a 21 percent increase in RevPAR in 1999 over 1998; Monterrey continues to absorb new supply with strong demand growth; and, Mexico City is increasing steadily and is expected to receive new supply again in 2000.

Regarding ADR, the cities in this segment registered levels $13 dollars higher than in 1998 and, for the first time in six years, higher than 1994.

Smaller Interior Cites and Border Cities

Occupancy levels for hotels in the smaller interior cities increased nearly 2 points higher than 1998, though they continue to be below the pre-crisis levels.

ADR in dollars for hotels in these destinations registered almost 14 percent higher than in 1998 and, for the first time, higher than 1994.

It is worth emphasizing the case of the border cities. Hotels located in border cities achieved an occupancy level 10 points higher than 1998 and 13 points higher than 1994. 1999 ADR dollars are $19 higher than 1998 and 1994.

In 1994, before the economic crisis, ADRs in border cities were 20 percent lower than the ADR in interior cities. Reflecting the strong growth in these markets, 1999 ADRs in border cities were 20% lower than the hotels in the smaller interior cities.

Several new hotels have been developed in the border and interior cities. Such new products as Fiesta Inn, Holiday Inn Express and Hilton Garden Inn, have enjoyed success in response to the needs of the growing demand related with growing "maquiladora" industries and new NAFTA -stimulated demand.
 

For more information, please contact: Maria del Carmen Vallejo or Bruce Goodwin, ISHC (858)558-4488.