International Trends

Tourism

Mexico’s natural beauty and abundant cultural heritage, including pre-Columbian and Spanish colonial sites, make it an attractive tourism destination. The government has taken an active role in tourism promotion since the 1990s, as it seeks to foster the growth of high-end niche markets, such as cultural and ecological tourism.

“Tourism is the key to Mexico’s economic development. It generates wealth for other economic activities and for all socioeconomic groups… This requires consistent long-term policy measures in marketing, facilitation and in the promotion and encouragement of investment.”
SECTUR (Mexican Ministry of Tourism)

Mexico is projected to be the second fastest growing tourist destination in the world by 2013 with 9.5% annual growth, ranking third in total tourism-related employment at four million jobs. In 2004, tourism contributed USD $3.9 billion to the Mexico government, while consuming a mere 0.033% of the Federal budget. Given that the trade deficit was USD $8.5 billion that year, this represents a critical income source. Tourism ranks third in foreign exchange earnings, after exports of oil (a declining industry) and manufactured goods, and dollar remittances by Mexican nationals.

Tourism typically generates around 8.5% of GDP, and almost 10% of all jobs are related to tourism, directly or indirectly.

During the first quarter of 2007, international tourism revenues reached USD $3.758 billion, a 14.6% increase over the first quarter of 2006. The 3.6 million international tourist arrivals during the period represent an increase of 8.3% compared with the first quarter 2006 results. Mexico’s tourism trade balance also increased, to USD $1.946 billion—a 31.5% increase compared with the USD $1.48 billion reported during the first quarter of 2006. The number of international visitors to Mexico on cruise ships grew by 78,000 from the first quarter of 2006 to the first quarter of 2007.
Sources: SECTUR (Mexican Ministry of Tourism)
Mexican Travel and Tourism Industry Forecast
The Economist 09/07

Reflecting the federal government’s commitment to the tourism industry, a new elite tourism police force and special tourist buses have been recently introduced. Mexico is also seeking to expand convention and conference business. Since 2004, conventions have been exempted from value-added tax (VAT). Mexico remains heavily dependent on the US market, which accounts for 80-90% of foreign visitors.

ENGINE OF ECONOMIC ACTIVITY AND SOCIAL REFORM

“Mexican government, from the national SECTUR (Secretaría de Turismo) to state and local governments, are deeply committed to supporting high quality tourism and foreign investment. SECTUR describes tourism as ‘one of the most important sources of wealth, employment and stability in Mexico’ and defines promoting it as a State priority, ‘in order to strengthen its economy, to preserve its heritage and to improve the distribution of wealth and income.’”
Tourism: Where We Stand, Where We are Heading
SECTUR report (02/05)

“Productive activities in the tourist sector generate 8% of the country’s gross domestic product and 1.5 million jobs. By August, USD $8.4 billion had flowed in from foreign visitors, which is 15.3% higher than the same period (January-August) a year ago. To August, Mexico registered its greatest dynamism in the flow of tourists into the country and these represented the greatest average inflow of expenditure.”
Tourist Activity: Present and Prospects
Ma. De Lourdes Rocha Juárez for Banamex (02/02/06)

“The reception of international visitors is one of the main foreign exchange generators for Mexico, after exports of manufactured goods and oil, and dollar transfers by Mexican nationals from the US to Mexico.”
International Tourism
Ma. De Lourdes Rocha Juárez for Banamex (10/03/02)

“Calderón, of the conservative, pro-business National Action Party [PAN], said he would promote investment in infrastructure projects including airports, highways, bridges, and dams, as well as petrochemical plants. He also promised to convert the country’s tourism industry into a major force against poverty, which still affects nearly half of the country’s 107 million people.”
Mexico’s New President Promises Investors Safe Environment
The Associated Press (12/04/06)

GOVERNMENT INFRASTRUCTURE SUPPORT

The Calderón government has announced sweeping initiatives to reverse the decline in infrastructure investment of the past decade. This neglect has negatively affected productivity by raising the cost of electricity and telecom services, and reducing the quality of the road infrastructure. The new National Infrastructure Plan focuses primarily on transportation infrastructure and a sharp increase in public and private investment. 20,000 kilometers of new or modernized roads are slated for development. The plan also encompasses the expansion of railways and ports, and the construction of at least three new airports.

The slated improvements will allow Mexico to take maximum advantage of its proximity to the US. The government intends to make increasing use of public-private partnerships to finance these projects.

The Calderón administration also projects tourism infrastructure investments of USD $20 billion during its term of office (2007-12), up from USD $12.8 billion during the previous administration.

“The ratio of gross fixed investment (GFI) to GDP stood at 21.8% in 2006, the highest since at least 1993, the current base year for national accounts. We think this fact has gone largely unnoticed, as it stems from steady growth over a relatively long period of time, not exactly headline-grabbing behavior. It is nonetheless crucial: increased capital accumulation could mean that potential GDP growth rates are finally about to take off…

“Against this backdrop, we welcomed the announcement of the National Infrastructure Program (see Emerging Markets Daily—Latin America Edition, July 24, 2007)… We calculate that Mexico’s ratio of gross fixed investment to GDP could reach 26%. This ratio is well above the 20% regional average… and would certainly imply a major boost to potential GDP growth rates.”
Mexico: Infrastructure Could Turn Rising Investment into a Boom
Sergio Luna Martínez for Banamex (8/23/07)

Tourism infrastructure support extends beyond the federal level. State and local governments are also engaging in joint partnerships to promote tourism, which is widely regarded as a lucrative and relatively low-impact opportunity for job creation, creating mutual economic advantage with the serious wave of gringo retirees starting to head south.

“'Thanks to the conditions of peace, work, order and legal certainty that exist in [the State of Nayarit, where San Pancho is located]… tourist investment reached MXN $8 billion pesos this year [USD $740 million—which places it in the top three States in Mexico], with predominantly Mexican capital,’ according to the Secretary of Tourism, Jorge Humberto Sanchez Ibarra… ‘This is an indication of the high confidence national and foreign investors have in our State. The Nayarit government welcomes the American, Canadian, Spanish, and Dutch investors, and especially Mexican investors, since those profits are reinvested in this country.’”

“Sanchez Ibarra also noted the launching of the mark ‘Riviera Nayarit,’ representing a zone that ‘provides us with a product of national and international impact, from the port of San Blas to the Ameca River and represents low density and environmental sensitivity.’ MXN $53 million has been dedicated to promotional activities this year (mainly in Mexico, the United States and Canada), resulting in an increase in visits and hotel occupancy by affluent tourists.

“To consolidate the promotion of the Riviera Nayarit, the national Council of Tourist Promotion of Mexico supports (for the first time in the history of Nayarit) a national campaign in joint partnership with the Council, private companies, and the State of Nayarit. In addition, as part of the State Plan of Development, the Nayarit government is promoting educational programs in subjects such as English, business accounting, guest services and tourist culture, to provide a competitive edge to local residents.

“Ethnic and cultural tourism is also being promoted, ‘mainly in rural and indigenous communities. These communities have rapidly integrated this opportunity for tourism development. There are 27 companies at the present time that are actively participating in this initiative.’

“Under the leadership of Governor Ney Sanchez, plans for hydroelectric and infrastructure improvements have been drawn up for all the municipalities of Nayarit, according to Director Pedro Alvarez Hormaheche.”
State of Nayarit 2005-2011 Development Plan
Second Annual Report (12/09/07)

Environmental Leadership

Mexico was recently ranked fourth in the world on the Climate-Change Performance Index, which ranks countries based on their greenhouse-gas emissions and policy. Only Sweden, Germany, and Iceland outscored Mexico. The United States ranked 55th out of 56 countries, ahead only of Saudia Arabia.

“‘I don’t think any developing country has spelled out as comprehensive a strategy as Mexico,’ said Pankaj Bhatia, director of the Greenhouse-Gas Protocol Initiative of the World Resources Institute, a sustainability think tank. ‘I think it's a great example for developing countries like China, Brazil and India…’

“Known for its manufacturing and natural-resource extraction industries, Mexico is not typically considered a paragon of environmental planning. Recent years, however, have seen a marked change in government policy. The government adopted a comprehensive climate-change mitigation strategy in May, and the new mayor of Mexico City, Marcelo Ebrard, has received international acclaim for his $550 million plan to reduce the capital's emissions. Mexican companies were also the first in the developing world to begin voluntarily inventorying their greenhouse-gas emissions along World Resources Institute guidelines.

“Ned Helme, president of the Center for Clean Air Policy, said Mexico’s aggressive direction on climate change stems from the country's new president, Felipe Calderón, who was sworn in last December. ‘Calderón had come out of the Ministry of Energy and is really committed to moving on climate change...’

“‘The Mexican government has been very courageous,’ Bhatia said. ‘Their success is inspiring similar programs in other countries.’ In fact, the development of Mexico as a leader in the battle to reduce greenhouse-gas emissions has already proven to be a valuable model that other developing nations are looking to follow… Mexico’s vigorous activity domestically has also given it a new voice internationally. At the Bali climate-change conference, Helme said the Mexican delegation became a leader among developing nations. ‘Stay tuned. Mexico is going to be very aggressive in the next year…’
Bali Meeting Ends, Mexico Emerges as a Leader on Climate Change
Alexis Madrigal for Wired (12/14/07)

REFORESTATION

The Environment Secretariat (SEMARNAT) announced an ambitious new emissions-reduction plan that may significantly improve the quality of life for millions. The nation will set targets for carbon dioxide emissions by early 2008, in hopes of significantly reducing the effects of global warming over the next decade.

Mexico has committed to planting 250 million trees in 2008. The reforestation plan, called ProArbol (pro-tree), is part of the UN goal to plant a billion trees this year. Mexico plans to single-handedly fulfill a quarter of this goal. To do so, it has earmarked USD $400 million to compensate farmers and others to plant and care for the trees. Applications for financing to plant trees is running ahead of projections. If nothing else, Mexico is likely to be 250 million trees greener by the end of this year.

CULTURAL TOURISM

SECTUR (the Ministry of Tourism) has announced plans to invest USD $90 million in cultural tourism to attract more high-end tourists. Cultural tourism, which currently brings in USD $5 million annually, includes visits to archaeological sites, museums, historical cities, and cultural events. Cultural tourism is widely believed to generate more revenue than mass tourism to beaches and resorts like Cancún. It is also considered less destructive to the environment.

Funds will be distributed to more than 180 projects to develop and improve tourist infrastructure. Projects will include restoration of historic city centers, installation of lighting for archaeological sites and museums, and the relocation of telephone cables and other unsightly wires underground to improve the appearance of historic sites.

The Ministry of Tourism is signing agreements with the Council on Culture and the Arts (Consejo Nacional para la Cultura y las Artes), the National Institute of Anthropology and History (Instituto Nacional de Antropología e Historia), and the Association of World Heritage Cities (Asociación de Ciudades Patrimonio de la Humanidad) to promote cultural tourism in these areas.

WORLD HERITAGE SITES

“Our country counts on a vast cultural heritage that includes 26 sites classified as World Heritage, and that recently was increased to 27 by the designation of the National Autonomous University of Mexico.”
Rodolfo Elizondo
SECTUR Minister of Tourism

Mexico ranks first in the Americas and eighth worldwide in the number of World Heritage Sites, with 27 in all. These sites, considered by the United Nations Educational, Scientific and Cultural Organization (UNESCO) to be “of outstanding universal value,” include the historic downtown areas of several colonial cities. In fact, Mexico has more cities with World Heritage Sites than any other country. Other sites include:

• Ruins of Monte Alban
• Whale sanctuary at El Vizcaino
• Islands in the Sea of Cortez
• Rock paintings of Sierra de San Francisco in Baja California
• The 16th-century monasteries on the slopes of the Popocatepetl volcano
• Franciscan Missions in the Sierra Gorda region of Queretaro
• Hospicio Cabañas in Guadalajara
• The agave landscape of Tequila, near Guadalajara
• Floating gardens of Xochimilco at Mexico City
• Former house and studio of Mexican architect Luis Barragan in Mexico City

Retirement Haven

The front edge of the 79,000,000 members of the post World War II baby boom generation (born between 1943 and 1960) are reaching retirement age. This group—which has been generally more willing to take cultural and investment risks than their parents and grandparents—is about to inherit the greatest generational transfer of wealth in history, estimated by Fortune magazine (10/17/05) at between USD $41 and USD $136 trillion.

Living abroad has become much easier than in the past, supported by increased availability of air transportation and higher disposable incomes. Even more fundamental, internet access has made it easy to stay in touch with family and friends by e-mail or phone. More revolutionary still is the geographic liberation of being able to work or manage investments from remote locations.

Many of these people are seeking more relaxed lifestyles as they age, including locations with amenable climates. At the same time, this is a group not known for having a high threshold for boredom. Mexico is nearby, relatively safe, offers many cultural and recreational amenities, and has great lifestyle and climate. At the same time, it is still possible to buy premium view and beachfront real estate at a fraction of the cost of comparable properties in the US (if you can find them at all).

Retirees are also happy to find quality medical and dental care in Mexico, available at much lower costs than in the US. This is due to government social policies that produce a surfeit of healthcare professionals and to a culture that remains remarkably free of the impulse to sue. This allows Mexican healthcare providers to avoid ruinous insurance premiums as they also dodge the excesses of US-style managed care.

Many retirees are remaining fit for much longer than was common for previous generations. Those dollars need to stretch right out there with those fit old legs. Lower costs for many items, but especially for home service providers like cleaning and gardening help, as well as spa services, are also a big plus.

Finally, when this wave becomes a mass migration, the desire for community and a quieter and more relational lifestyle may well become easier to fulfill in Mexico than in the US or Canada.

Get ready, Mexico. The gringos are coming!

INTERNATIONAL LIVING

International Living does an annual assessment of the world’s top retirement destinations. In 2007, Mexico scored top honors. The top ten Mexican locations were also listed. Guess who made it onto this list? Puerto Vallarta and (separately) our little village of San Pancho! No kidding.

“In our [annual] Global Retirement Index, we look closely, and specifically, at the best opportunities worldwide for retirement living. Where will the pensioner’s dollars go furthest? Which country is the safest? Where is the health care best? We give top priority to those things that matter most to anyone planning for retirement, including programs of special benefits for retirees (tax breaks, discounts, and freebies, for example, that various governments proffer to residents, sometimes specifically to foreign residents in an effort to attract investment and retirement dollars).

“Moving up four places to take our top spot as the world’s top retirement haven this year is Mexico. Mexico offers the perfect mix of centuries-old traditions and contemporary lifestyles. Moving to Mexico means you can still have all of the amenities you grew accustomed to north of the border: cable TV, high-speed Internet, and modern home appliances. And if you prefer, when you move to Mexico you can even bring all of your favorite things with you without paying import taxes.

“Goods and services cost less, so you can afford the kinds of luxuries only the very wealthy enjoy up north: a maid, a cook, and a gardener for example. In your retirement here, you’ll have time to volunteer at the local school, time to golf in the mornings, time to relax on the beach… time to savor life.

“Whether your vision of the ideal retirement involves shopping, fishing, sunbathing, diving, biking, mountain climbing, parasailing, collecting crafts, visiting archeological sites, partying, going to concerts, attending the theater, or fine dining, in Mexico you can engage in all of these activities, and many more.

“If health care is a concern, you should know that in much of Mexico the health care is first rate. Private clinics and hospitals are staffed by expert physicians (many of whom trained in the US, Europe, or in Mexico’s own world-renowned teaching hospitals), medical care and prescription drugs will cost only a fraction of what you would pay in the States…

“You can also own the home of your dreams in Mexico—for much less than it would cost you most anywhere in the US or Canada. Despite what you may have heard, it’s not too late to buy real estate here…”
Excerpted from The World’s Top Retirement Havens in 2007
Laura Sheridan for International Living (09/01/07)

International Living publishes a monthly e-zine called Mexico Insider, along with a series of special reports. Special thanks to Suzan Haskins and Glynna Prentice for their pioneering work on living in Mexico.

HIGH VALUE REAL ESTATE

In 2007, the American Association of Travel Agents (ASTA) announced that Puerto Vallarta was one of the ten most popular world travel destinations.

“The market has just become prolific in Mexico, with about 1.5 million Americans now owning property there. Values in some markets have tripled in five years—far exceeding the rates of return you find in the United States.”
Mitch Creekmore
Stewart Title Insurance Company

Whether your dream retreat is a simple beachfront bungalow where you can kick back in your cabaña and watch the waves, a graceful colonial home with lavish gardens, an expansive hacienda with acreage and horses, or a cliff-side villa with sunset views and silky sea breezes, you can find it in Mexico.

“Mexican beach resorts are so popular with retired Americans, baby boomers nearing retirement age and even middle-aged couples wanting vacation homes that condominium and housing developments are often sold out before construction is complete.”
American Invasion
Jenalia Moreno for the Houston Chronicle (12/28/04 Business Section)

Americans are rapidly becoming aware that both internal rates of return and appreciation on Mexican properties exceed those in the US. This burgeoning market will continue to grow as awareness increases among foreign investors.

See the Real Estate pages of this website for more details.

AMENABLE LIFESTYLE

Many retirees are using their retirement as an opportunity to break out of complacency and the mundane, discovering that learning a new language and culture is enlivening and revitalizing. The visa process is easy and not restrictive.

Every place has upsides and downsides, and Mexico is no exception. On the one hand, it can be loud and dirty with bad driving and byzantine bureaucracies. On the other, every day is filled with great beauty. Artistic flourishes abound, from exquisitely wrought architectural details, to lovely trees, abundant flowers, laughing children, and an endless parade of music, celebration and dancing.

You can easily find healthy, fresh edibles. The food in this little village of San Pancho is fantastic. The town must have one of the highest good flavor to mouth ratios in the universe.

Public transportation is safe, reliable and inexpensive. There are 6000 miles of coast to explore. The beaches, mountains, old cities, ancient architecture, and sacred sites are a joy. Attend mass at a baroque cathedral or sit with natives that still practice the ancient rites at the old places.

However, at the end of the day the best, the most truly outstanding thing about Mexico is Mexicans! One of the delights of living abroad is the endless analysis of cultural differences. Of course any human description purporting to encompass 120 million people is, on the face of it, absurd. Nevertheless, we forge on with glee.

Mexicans are honest, amiable, generous, creative, and cheerful. A passion for learning and culture is common, including among the less educated.

They can’t say no, are proud, want to save face and shun confrontation, and are sensitive to criticism and feedback. “Mañana” means that your request has been registered and has joined the queue, which, according to esteemed sociologists, looks like this:

1) Family
2) Church
3) Community
4) Business

Of course, if your cultural norm looks like this...

1) Business
2) Family
3) Community
4) Church

... genuine failures to understand may occur.

The Mexican values that many expats find refreshing include: Do not postpone happiness. Be happy today. Life is not a hell-bent race to get to the promised land, but rather a repeating pattern, a circle of family and community relationships. Accepting the inevitabilities of fate, one relaxes. Mexicans are excellent improvisers.

Directions can be non-linear. Confess to having trouble understanding and ask them to be really explicit. If it really matters, ask more than one person to be sure.

Put money in the cashier’s hand, not on the counter. A limp handshake or averted gaze can be a sign of respect.

Good manners and disposition matter here. Match pace and tone. A lack of etiquette is considered boorish and low. Our okay sign is a vulgarity. Proper greetings, chivalry, and graciousness are expected. Men defer to women.

Mexican men are warm and friendly and make lots of physical contact. Touching between men is normal and expected. Enjoy.

An appreciative positive comment to the opposite sex is considered good form. Say buen provecho (good eating) before meals or in passing people who are eating.

Always offer a guest (including business guests) a beverage when they arrive. Not doing so is considered very rude.

Art, culture and family life are rich. Family and community are important. Individual dignity is important. Religion is important but not oppressive. Mexicans are generally progressive.

Fun, food and fellowship are imperative. Celebrations are ubiquitous. Attend a nine-day fiesta if you think you know what stamina means.

You can afford a maid, a cook, and a gardener. However, this is not an anonymous relationship--you have just joined a social system.

In a worldwide ranking of happiness by New Scientist in the UK, Mexicans came in second after the Kenyans. US citizens came in 16 out of 65—not bad. However, note that the researchers concluded that the desire for material goods is a happiness suppressant.

If you are genuinely interested, Mexicans are proud of their heritage and happy to share.

Que le vaya bien.

Most places are safe, with minimal violence and crime. The expat community nurtures a fertile brew of eccentrics, idealists, sweetie-pies, and hardcore cranks.

Many families are in business together, sons, brothers, sisters, daughters. Developing personal relationships is essential for successful business dealings.

Babies and children are intensely nurtured. They get new padrinos and madrinas (god-parents) at each life-cycle event. You make a child safe by building an ever-widening social network around her or him. That way there is always someone there to help.

Little ones belong to the community--pick them up, wipe them off, and set them back down to play. They are in wagons, running in packs, doing arts and crafts projects, laughing and playing with focused abandon.

“Perhaps Mexico is unlike any other place in the world, the cradle of genius. From the first Mayans to the modern peasant artisan, Mexico has done no more than lavish incessant beauty. The songs, the dances, the sculptures, the pictures, the ceramics, the tapestries, toys, jewelry—all testify that these people, from immemorial time, have somehow known truth.”
Waldo Frank

LOW COST OF LIVING

As the US dollar continues to plunge, many vacation and potential retirement destinations, such as Europe, are becoming ever more expensive. While the dollar has recently reversed historical precedent and fallen against the peso as well, these changes are modest by comparison. Security is also an increasing concern at many global destinations.

The underlying cost of living in Mexico remains modest. You can find gringo supplies at gringo prices in Mexico. If you really need it, you can find that KFC. The key to smart shopping in Mexico is local shopping. Fresh fruit like mangos, papayas, oranges, or pears costs roughly 25¢ per pound. A pound of avocados will run about 75¢.

The overall cost of living for housing, food, healthcare, transportation and entertainment is roughly 20% to 50% less. Your overall quality of life can be higher—labor costs are low and you can afford household help. A maid or gardener will cost between $60 and $80 per week for three trips.

AFFORDABLE HEALTH CARE

There is a national health program, IMSS, which foreigners can join for $225/year. Quality private insurance will cost half of what you would expect to pay in the US, although to qualify you must be under the age of 65. Note the Medical section under Essential Services for healthcare costs.

CONCLUSION

Mexico is the United States’ closest neighbor to the south, and at no other time in the long history of that relationship have the benefits of living and investing in Mexico been more apparent… and more easy to take advantage of. Not just for US and Canadians citizens, but also for Europeans, South Americans, anyone looking for great weather, low prices, rich culture, and potential profits.