Mexicans are used to hearing this: “in spite of the violence and insecurity, the Mexican economy is booming and attracting foreign direct investment.” After a recent visit to Monterrey, even Thomas L. Friedman wrote for The New York Times about this in “How Mexico Got Back in the Game,” providing a positive outlook on Mexico’s ability to compete in the global market. Then again, macroeconomics is just part of the story.
Yes, Mexico is becoming an attractive place for U.S. and Europe to invest. The commercial and technical factors to take advantage of are there. However, our current competitive position vs. China and other manufacturing countries should not downplay the fact that drug-related violence is directly affecting certain hotspots in the country. While the flow of foreign direct investment may continue and even flourish, both the reality and perceptions of violence in Mexico are damaging tourism. Brand Mexico is tail-spinning and losing value when it comes to vacation destinations. This should matter to a country that the UN World Tourism Organization (UNWTO) called the eighth most visited nation in the world in 2007.
Cities like Guanajuato, Los Cabos, Manzanillo, Puerto Vallarta, Cancún, and Acapulco depend on capital influx from foreign and national visitors, especially during vacation seasons like spring break and summer. Yet, Acapulco is set to register an all-time low for tourism this season. Congresswoman and Tourism Commission Representative Karen Castrejón Trujillo recently told the press that up to 80 percent of Acapulco’s hotel reservations that had been blocked earlier in the year have been cancelled since six Spanish tourists were raped while vacationing there. Only 300 of the original 5000 foreign visitors forecasted for this season (already an all-time low), will brave the trip. Imagine the implications for local businesses there. And even worse, isolated but high-profile cases like the violence in Acapulco or the border town of Reynosa are hurting the whole country’s reputation, just like the Zapatista guerilla conflict (which was contained to a couple of cities in the southeast of Mexico) did in 1994-1995, when foreigners were afraid to travel anywhere in the country because “they’re at war.”
Now, the Tourism Ministry is doing an exemplary job of trying to sell the Visit Mexico brand all over the world, but no amount of marketing will overcome the bad press about a crime situation perceived as widespread and out of control. There is no way that a beautiful ad highlighting the rich culture, cuisine, landscape and many more things the country has to offer, will supersede warnings like the one the U.S. Department of State issued on November 2012, telling vacationers, “we won’t tell you not to go there, but if you do, you’re on your own.” It’s no wonder South Padre Island in Texas is recording an all-time high domestic tourist season this year.
Friedman may be right about our ability to attract FDI, but is it enough of a consolation prize if investors are willing to send their money into Mexico just as long as they don’t have to visit it?