Cartels in Cancún

Mexico’s tourism industry is being battered by rising Covid infection rates and a strengthening cartel presence.

Covid infections are rising rapidly in Mexico’s key tourism states of Quintana Roo and Baja California Sur. Sun-soaked resort cities including Cancún and Tulum have seen hotels, shops, restaurants, and a whole host of tourism infrastructure paralysed by the pandemic. This is not only unwelcome news for business owners and employees in the firing line, but also for the Mexican economy where tourism contributes almost 9% of GDP. On a more sardonic note, the pandemic has forced a rethink about the status quo culture which permeates Mexico’s tourism industry. An overreliance on revenue generated by North American tourists has left the sector wanting for innovation when it comes to attracting a more diverse demographic.  

A former adviser to the government of Quintana Roo said, “One of the key challenges for the sector is to loosen the dependence on revenue streams from North America. It took decades for the sector to understand the importance of better air connectivity with emerging client markets including China, Turkey and the UAE. The pandemic has put flights from Qatar, South Korea and South Africa on hiatus, but it is in the interests of the sector to open these routes up as soon as possible.” 

“One of the key challenges for the sector is to loosen the dependence on revenue streams from North America.”

Former adviser to the government of Quintana Roo

Gleaming new infrastructure such as the Tren Maya – an intercity rail system traversing much of the Yucatán peninsula could galvanise the industry. It has also been the object of intense criticism. The adviser commented, “Is this work really necessary given the environmental damage? It’s important to take into account the reality that the region is deeply impoverished, many local residents will be unable to afford to use the train.” 

President Lopez Obrador has repeatedly highlighted the importance of the sector to Mexico’s economy and has called for greater investment. Hotel chains including Grupo Posadas and City Express have welcomed his sentiments – they are among a more innovative group of hoteliers who have recently expanded their portfolios to Central and South America. However, they are also unsettled by a lack of fiscal clarity on the part of the government especially in relation to new airports and airline routes. Promising investment is one thing, delivering it is quite another.  

The killing of two Canadian tourists in the Riviera Maya last month has put into sharp focus the region’s deteriorating security situation. A former public official in the Ministry of Tourism said, “Large companies in the region including General Motors and ATT have warned that insecurity in the region will exert a profound impact on operations. Compared to tourist infrastructure, they have far higher levels of security insulation. Cancún, Mexico’s tourism jewel in the crown, has seen increasing levels of cartel activity and has become a major shipment point for narcotics.”

“Cancún, Mexico’s tourism jewel in the crown, has seen increasing levels of cartel activity and has become a major shipment point for narcotics.”

Former official, Ministry of Tourism, Mexico

An additional danger lurks drug traffickers launder money through tourist consortiums – from hotels to beach clubs. Mexico’s anti-money laundering authority is working on the challenge, but it is an issue that makes it hard to entice new investment to the area. Mexico remains one of the world’s leading tourism destinations but if it wishes to keep that spot post Covid, it will need to appeal to a global market not just its northern neighbours. This will be a hard act so long as the cartels continue to holiday in Cancún. 

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