Consumers Will Continue to Drive Growth and Prevent Economy from Slowing in Early 2020
Consumers Will Continue to Drive Growth and Prevent Economy from Slowing in Early 2020
The Conference Board Consumer Confidence Index® increased in January, following a moderate increase in December. The Index now stands at 131.6 (1985=100), up from 128.2 (an upward revision) in December. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 170.5 to 175.3. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – increased from 100.0 last month to 102.5 this month.
“Consumer confidence increased in January, following a moderate advance in December, driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects,” said Lynn Franco, Senior Director, Economic Indicators, at The Conference Board. “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020.”
The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was January 15.
Consumers’ assessment of current conditions improved in January. Those claiming business conditions are “good” increased from 39.0 percent to 40.8 percent, while those claiming business conditions are “bad” decreased, from 11.0 percent to 10.4 percent. Consumers’ appraisal of the job market also improved. Those saying jobs are “plentiful” increased from 46.5 percent to 49.0 percent, while those claiming jobs are “hard to get” declined, from 13.0 percent to 11.6 percent.
Consumers were also more optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months was virtually unchanged at 18.8 percent, while those expecting business conditions will worsen declined from 8.8 percent to 8.4 percent.
Consumers’ outlook for the labor market was more upbeat. The proportion expecting more jobs in the months ahead increased from 15.5 percent to 17.2 percent, while those anticipating fewer jobs declined from 13.9 percent to 13.4 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 22.7 percent to 22.0 percent, while the proportion expecting a decrease was virtually unchanged at 7.7 percent.
Source: January 2020 Consumer Confidence Survey®
The Conference Board / Release #6151
The Conference Board publishes the Consumer Confidence Index® at 10 a.m. ET on the last Tuesday of every month. Subscription information and the technical notes to this series are available on The Conference Board website:
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U.S. citizens’ outbound travel from the USA to the Caribbean fell by 3.4% in October.
The United States Government’s Department of Commerce, International Trade Administration’s National Travel and Tourism Office (NTTO) recently released the figures for U.S. citizens outbound travel from the USA to International Regions for the month of October 2019 as well as the first ten months of 2019.
While overall travel by US citizens to international regions was up by 10.4% in October travel by US citizens to the Caribbean fell by 3.4% from 537,150 in October 2018 to 519,048 in October of this year, a decline of 18,102 visitors.
This was largely due to a 26.6% drop in travel by residents of the USA to the Dominican Republic in October, which fell by 32,459 in October 2019 compared to October of the previous year.
The NTTO does not include travel by US citizens to either Puerto Rico or the USVI in their total for the Caribbean as both are deemed to be domestic destinations for the purposes of their study.
US Citizens Outbound Travel : October 2019
US Citizens Outbound Travel: 2019 YTD October
The numbers for air traffic both to and from all international regions (on US and foreign flagged carriers) are reported to the NTTO by means of the “U.S. International Air Travel Statistics Report”.
As can be seen: -
The NTTO defines the Caribbean as including the following countries: -
Included in Caribbean for APIS:
While the Caribbean saw good growth comparing the first six months of 2019 with the same six months of 2018, growth slowed significantly in the third quarter with the onset of the sharp decline in US travel to the Dominican Republic which was down from the US by 24.6% in July, down 24.4% in August, down 33.0% in September and down 26.6% in October.
By CHUCK THOMPSON
New Republic : January 24, 2020
These aren’t easy days for travel touts. The class of journalists who enjoy comped experiences at Hawaiian resorts and Michelin-starred restaurants don’t normally generate a lot of public compassion. But I couldn’t help feeling a few pangs of sympathy for the writers and editors who put together The New York Times’ recent Travel package “52 Places to Go in 2020.”
This is the annual feature meant to draw visitors to heretofore-neglected world gems. Far more apparent in this year’s roundup, however, was the running theme of “responsible tourism.” Words like “sustainability,” “green,” and “conservation” were shoved into every other euphoric blurb like the last pair of shoes jammed into a suitcase already bursting at its zippers. In Sicily, grassroots groups have pledged to use less plastic. In Uganda, proceeds from gorilla trekking permits go toward conservation efforts. Read the piece front to back and you might conclude the entire planet has morphed into one giant, eco-friendly playground, with new nonstop service to Ulaanbaatar and Lima making access easier than ever.
It’s all bullshit, of course. A 2018 study published in the journal Nature Climate Change announced tourism alone—that’s nonessential pleasure travel—is responsible for 8 percent of global greenhouse gas emissions. The traveling public is freaking out. It knows about flight shaming; it loves Greta Thunberg; and it’s ready to bid au revoir to Volvic, Dasani, and plastic straws. But it still wants to sit on a beach in Aruba.
This puts travel media in a tricky spot. In a somewhat tortured explanation accompanying “52 Places to Go in 2020,” Times Travel editor Amy Virshup noted that climate concerns prompted the jump onto the “eco” bandwagon. This acknowledgment was preceded by pages selling Times-branded “Journeys” to Ethiopia, the Galapagos, and other faraway markets.
Last week The Washington Post fretted over the same issues in a story headlined, “You want to be a responsible tourist. But what does that even mean?” Advice came from newfound groups like the Center for Responsible Travel and Travel Care Code.
It’s easy to make fun of people putting Band-Aids on bullet wounds. And the Times’ spin on sea-level rise at Grand Isle, Louisiana—“Does a place appear more hauntingly beautiful when you know it’s disappearing?”—was tastelessly macabre. (The answer is no. It’s just haunting.)
But these aren’t bad people promoting travel. It’s just that they’re engaged in the impossible task of reconciling international tourism with a genuine desire to neutralize tourism’s impact on climate change. The trouble is these concepts are incompatible. Telling people to “be thoughtful about lodging” and “mind what you eat”—two Earth-saving tips from that Washington Post story—is like trying to sober up by switching from gin to beer.
As evidence piles up about the deleterious impact of global tourism, the travel media charade is starting to feel like the almost comical hypocrisy of Trump surrogates ginning up increasingly contorted justifications on cable news for a worldview that’s becoming more detached from reality by the day. Even if unintentionally, the opening spread of the Times package elegantly summarized the problem. The left-hand page touted Bolivia’s “efforts toward sustainability,” hyped a “new environmental focus” in the British Virgin Islands, and included a helpful reminder that “with that mile-thick ice sheet melting fast, and two new international airports slated to open in 2023, the time to explore an untrammeled, intact Greenland is now.” The opposite page (in my West Coast edition) was taken by a full-page ad for Emirates airline: A woman alone in business class sipped from a flute beneath the seductive offer of “Champagne?” in 130-point type.
Tourism is an addiction. In 2019, the United Nations World Tourism Organization announced international travel had increased to a record 1.4 billion tourist arrivals. It predicted a 3–4 percent increase in international travel in coming years.
By some measures, travel and tourism is the world’s largest industry, bigger even than oil and petroleum. According to the World Atlas, tourists account for 60 percent of all air travel. Forget the pain it’d cause Emirates. The economic impact of even a modest reduction in global tourism would be cataclysmic. All 50 states and most countries have become dependent in some fashion on tourism revenues. Travel is an important way we signal status. According to one survey, most 18–35-year-olds would rather travel than have sex.
All motorized transport is a problem—cruise ships generate 21,000 gallons of sewage per day, much of it flushed into the ocean—but the primary offenders are airplanes. According to U.K.-based Earth Changers, another outfit dedicated to “sustainable tourism,” aviation emissions account for 3.2 percent of total global carbon emissions. That figure could rise to 12 percent by 2050.
Perhaps even more troubling, the 2018 study pinning 8 percent of global carbon emissions on tourism relied on data collected between 2009 and 2013. It’s already badly out of date.
“I would expect a bigger number as our society travels more frequently and relies more on aviation,” Ya-Yen Sun, senior lecturer at the University of Queensland in Australia and one of the study’s lead authors, told me. “Tourism has expanded by 3.9 percent annually, [more than] the global economy for the eighth consecutive year, and total passenger-kilometers in aviation increased at 7.9 percent annually since 2011.” Meanwhile, she added, the world has seen “no significant breakthrough in how to mitigate tourism emissions.”
Those counting on that breakthrough magically materializing will be counting for a long time. A multitude of factors make biofuels and other renewables either impractical or in the realm of fantasy for mass aviation.
“With electric aircraft, the problem is that energy density of batteries is much lower than that of jet fuel, which means that all-electric, large, long-range aircraft are a long way off and may never be feasible, barring substantial advances in battery technology,” said David Zingg, director of the University of Toronto Institute for Aerospace Studies.
Small and slow solar-powered aircraft like Solar Impulse and Solarship make for hopeful headlines. But all sorts of limitations render them little more than aeronautical curiosities.
“The surface area of commercial aircraft is simply insufficient to provide the necessary power,” Zingg said. “Solar power would only be feasible for fast, heavy aircraft if some way of accessing more solar power than the aircraft would normally be exposed to were invented. One has to be very careful saying that something is impossible, but a fully solar-powered, fast, heavy aircraft may be impossible or close to it.”
Virtual reality continues to be pushed by futurists as a travel surrogate, but I can’t imagine anyone who’s actually used VR thinking this is true. The world’s most famous VR tourist to date is Mark Zuckerberg, who was lambasted for his virtual tour of hurricane-wracked Puerto Rico in 2017. The internet called the tone-deaf Facebook CEO a “heartless millionaire” for using a natural disaster as the aesthetic backdrop to promote the Oculus Rift VR system. The insensitivity of the timing overshadowed Zuck’s similarly absurd statement about VR capabilities: “One of the things that’s really magical about virtual reality is you can get the feeling that you’re really in a place.”
No, you can’t—for a variety of reasons. As Gizmodo explained in a piece titled “The Neuroscience of Why Virtual Reality Still Sucks,” the main problem is latency. This is the tiny but perceptible delay between when you move your head in VR and when the image in front of your eyes changes, “creating a mismatch between the motion we feel (with our inner ears) and the image we see (with our eyes). In real life, the delay is essentially zero.”
Even given improvements, VR will never replicate an impromptu assignation with a stranger in a foreign land or the sensation of biting into a chunk of roasted lamb from a street vendor the moment before you spot a roach crawling out of his pile of uncooked skewers. Every time we hear some flack telling us VR allows us to “go for a swim with tropical fish in the Great Barrier Reef” or behold Mars while “walking on its dusty red surface” (as an article on AR/VR Journey claimed) we should all be screaming: “No, it doesn’t!” VR is a pretty slick upgrade from those View-Master 3D stereoscopes people in the 1950s used to look at reels of transparency images featuring the Grand Canyon and the Eiffel Tower. But neither it nor any other as-yet-unknown technological breakthrough is going to replace real travel—its wonders, its inconveniences, and its ability to forge new connections.
The only actual way to mitigate tourism’s impact on climate change is for humanity to stop traveling. This, too, is impossible to imagine.
I’ve called travel an addiction, and I believe it’s a particularly powerful one. After reading that Times “52 Places” package, I decided to test this pessimistic view with Dr. Ken Allen, a professor of psychology at Oberlin College. Allen taught a course last year called “The Science of Self-Destructive Behaviors.” Though it was designed around maladies like alcoholism and eating disorders, the course description precisely described the travel community’s vicious relationship with its own compulsion: “Self-defeating behaviors are a universal part of the human experience. We occasionally delay unpleasant situations at the expense of increased anxiety, pursue exciting activities with potentially harmful consequences and favor short-term pleasures over long-term positive outcomes.”
“It’s a spot-on comparison,” Allen told me, offering a tidy explanation for why human beings appear genetically predisposed to fly Economy Plus from Los Angeles to Ireland, even if doing so expends six months’ worth of their typical carbon dioxide emissions at home. “In general we’re ‘hardwired’ to seek things that bring us immediate reward or reinforcement even if those things might have long-term harmful consequences to our health or the health of the planet.”
This carefree, avoidant disposition is compounded by something called “diffusion of responsibility.” This is the socio-psychological phenomenon in which, faced with a public crisis, people figure somebody else will take care of things.
“We’re kind of assuming scientists or someone else is going to fix the problem (of climate change) because we all have this information,” Allen says. “I don’t have much faith that people are going to change with the current ways that we’re delivering this information to them. The expectation is, we tell people how bad this is for them, they’ll respond by modifying their behavior. We know that’s not true.”
Short of regulations and fuel taxes on a scale that would restructure the entire global market, people probably aren’t going to stop traveling. More likely, as the world becomes ever more distressed by over-tourism—the 145 million annual overseas trips currently taken by Chinese tourists alone is expected to surpass 400 million by 2030—the travel journalists we rely on for hot tips and insider advice will simply conjure new ways of assuaging our guilt. That may serve the interests of their airline underwriters, but it won’t be doing the planet any favors.
I take no joy in saying so. I like travel as much as you do, and I’m not stopping either. Where’s the line between hypocrite and addict? I suspect we’re all going to find out sooner than we’d like.
Chuck Thompson is the author of comic travel memoir Smile When You’re Lying, and the former executive producer of CNN Travel.
The Caribbean has the potential to do much more to develop its identity, spur growth, soft power and competitiveness, if its citizens reimagine the future of its countries and cities.
This is in part the message contained in the fascinating recently published book Brand Jamaica: Reimagining a National Image and Identity edited by Hume Johnson and Kamille Gentles-Peart which follows from a symposium held at the University of the West Indies in late 2017: ‘Reimagine Jamaica: Unlimited Possibilities’.
The book, suggests that there is a need to interrogate, deconstruct and reimagine the ways that the country’s national image has been created.
Its editors and contributors suggest that up to now Jamaica’s image and brand has been created by a top-down elite and an approach that is grounded in destination tourism. Citizens’ role in the making of the national image and identity they argue, has at best been limited and is in danger of being supplanted by what tourism would have us believe.
This is an idea that’s time is now. It accords with the view of an increasing number of younger undergraduates and graduates in the region who are worried about tourism and its impact, not just on the environment but on the Caribbean’s identity.
They suggest that it is time to reclaim the Caribbean’s image and that tourism should not be allowed to define the way the region is seen. Tourism, as one recent correspondent pointed out, is a colonial construct and needs to be re-developed and reimagined as Caribbean, rather than imposed. Or as another put it, the time has come to reclaim the Caribbean’s image through its achievements and not allow tourism to define the way the region is seen.
These are ideas that suggest an embryonic movement which allied to environmental concerns could easily form a basis for a new Caribbean-centric populism.
Brand Jamaica goes some way towards addressing such concerns.
Although a significant part of its focus is the importance of new approaches to country branding, it also contains essays that address the relationship between nation branding and the messaging of the tourism industry, the need to hold on to national intellectual property and culture, and the importance of reimagining the role of cities.
In this latter respect it notes the way in which Kingston has begun to regenerate itself, has become a place of business, the arts, and creativity and has begun to show the potential that cities create through proximity, citing the development of new millennial-led tech-related and culture based enterprises.
It observes that this gradual renaissance has occurred though improved urban management and government’s recognition that investment in urban infrastructure can bring prosperity back to a city that has seen decades of deterioration.
However, it also points out that a reimagined Kingston as a creative global new age city of the future cannot and should not happen without the full participation of Jamaica’s citizens and that the planning process should assume a bottom up collaborative approach.
For Kingston to truly reinvent itself, its editors argue, it must utilise the opportunities, skills, resources and capabilities that lie within it and in its core values. This they suggest requires government to have a development philosophy that goes beyond tourism.
It is an argument that goes to the heart of what should drive the development of every city in a tourism dependent Caribbean economy, in which citizens feel marginalised by an industry that brings jobs and growth but at the cost of cultural dilution or the hijacking of streets and beaches by non-residents.
This is a problem that is global. Around the world over-tourism threatens to damage the environment, overload infrastructure, push out local communities as house prices rise beyond what citizens can afford, and ‘Disneyfication’ displaces culture and historic locations.
To be fair, government and opposition in Jamaica see Kingston’s renovation and more generally tourism’s role in achieving this, as a way in which benefit can be brought to wider groups of residents in disadvantaged communities.
Kingston is experiencing multiple developments in a number of midtown, downtown and other locations. It involves the gradual redevelopment of Kingston’s waterfront with government, private sector and Chinese support; the relocation of the headquarters buildings of some of the country’s leading commercial enterprises; and the creation of a range of new facilities, including a cruise ship pier, condominiums, museums and visitor attractions. In parallel, government is to gradually relocate ministries and government departments to the midtown and waterfront areas.
There are also plans to turn the city into a destination for tourism.
The idea is to attract regional travellers, the diaspora, and millennials from overseas, wanting to participate in join the city’s music and party scene, its cultural and sporting events and cuisine.
This is welcome in a city which for decades has been perceived as run down, in parts verging on lawless and which had an image that had negatively branded the country.
The significance of the Brand Jamaica book however is that it starts to address issues less talked about, relating to the broader social and cultural impact of tourism; the economic and political contradictions between urban development and the requirements of residents; the role of cities in changing a nations brand; and more important, albeit indirectly, who should drive the perceptions that drive tourism?
Put another way, it raises the question about who owns tourism: is it the people of a country, Government’s desire for economic growth, the investor, or those who brand and make the images that sell the product?
The book’s editors argue for a holistic approach. They suggest that by igniting a sense of community, participation and a new sense of ownership, it is possible to create a new national identity and a sense of collaboration and connectedness that can change citizens thinking about the future.
This is a message with worth considering by all involved in the tourism industry.
David Jessop is a consultant to the Caribbean Council.
Hotels in Hawai’i saw a 4.1 percentage increase in average room occupancy in December to reach 80.2%.
According to the Hawai‘i Hotel Performance Report published by the Hawai‘i Tourism Authority (HTA), hotel performance was strong statewide in December 2019.
RevPAR statewide grew by 12.5% to $282. 36, with ADR growing by 6.8% to $352.12 and occupancy growing by 4.1 percentage points to of 80.2%.
HTA’s Tourism Research Division issued the report’s findings utilizing data compiled by STR, Inc., which conducts the largest and most comprehensive survey of hotel properties in the Hawaiian Islands.
In December Hawai‘i hotel room revenues statewide increased by 11.7% to $469.2 million. There were nearly 58,000 more occupied room nights (+4.5%) and nearly 13,000 fewer available room nights (-0.8%) compared to December 2018. Several hotel properties across the state were closed for renovation or had rooms out of service for renovation during December. However, the number of rooms out of service may be under-reported.
All classes of hotel properties reported growth in December compared to 2018. Luxury Class properties earned RevPAR of $582 (+10.9%), with ADR at $794 (+4.7%) and 73.3 percent occupancy (+4.1 percentage points). Midscale & Economy Class hotels reported RevPAR of $175 (+13.4%) with ADR at $214 (+6.5%) and occupancy of 81.5 percent (+5.0 percentage points).
In December, Maui County hotels reported the highest RevPAR of all four counties at $415 (+18.4%), which was supported by increases in both ADR to $540 (+7.7%) and occupancy of 76.8 percent (+6.9 percentage points). Maui’s luxury resort region of Wailea reported RevPAR of $760 (+18.7%), with growth in both ADR ($890, +13.7%) and occupancy (85.4%, +3.6 percentage points).
O‘ahu hotels earned 8.6 percent RevPAR growth to $237, driven by higher ADR ($286, +6.4%) and occupancy of 82.8 percent (+1.7 percentage points). Waikīkī hotels reported growth in RevPAR, ADR, and occupancy for December.
Hotels on the island of Hawai‘i saw increases in RevPAR to $263 (+20.5%), ADR to $330 (+5.9%), and occupancy to 79.5.5 percent (+9.6 percentage points) in December compared to a year ago. In May 2018, Kīlauea volcano started erupting in lower Puna, which contributed to a downturn in visitors to the island of Hawai‘i in succeeding months.
RevPAR for Kaua‘i hotels was $245 (+3.9%) in December, with growth in occupancy (72.5%, +3.3 percentage points) offsetting slightly lower ADR ($338, -0.8%).
Hotel occupancy grew by 0.9 percentage points in 2019 to 81.2%
During calendar year 2019 statewide RevPAR rose by 3.6% to $229.32 with ADR growing by 2.5% to $282.56 and with occupancy growing by 0.9 percentage points to 81.2% compared with CY 2018.
In 2019, statewide hotel room revenues of $4.49 billion were 1.8% higher than in 2018. There were nearly 356,000 fewer available room nights (-1.8%) and more than 111,000 fewer occupied room nights (- 0.7%) compared to 2018. Several hotel properties across the state were closed for renovation or had rooms out of service for renovation during 2019.
Luxury Class properties reported RevPAR of $431 (+4.0%), with ADR at $567 (+1.9%) and occupancy of 76.0 percent (+1.5 percentage points). Midscale & Economy Class hotels reported RevPAR of $144 (-0.7%), with ADR at $177 (-0.5%) and occupancy of 81.2 percent (-0.2 percentage points).
Hotel Results by County
In 2019, Maui County hotels led Hawai‘i’s four island counties in RevPAR at $310 (+5.8%), with ADR at $399 (+3.4%) and occupancy of 77.7 percent (+1.7 percentage points).
O‘ahu hotels earned higher RevPAR of $203 compared to 2018 (+2.5%), with ADR at $241 (+2.0%) and occupancy of 84.2 percent (+0.4 percentage points).
Hotels on the island of Hawai‘i reported RevPAR growth to $205 (+6.6%), with increases in both ADR to $267 (+3.2%) and occupancy of 77.1 percent (+2.5 percentage points).
Kaua‘i hotels’ RevPAR decreased to $216 (-3.4%), with declines in both ADR to $283 (-1.8%) and occupancy of 76.3 percent (-1.2 percentage points).
Comparison to International Markets
When compared to international “sun and sea” destinations, Hawai‘i’s counties ranked among the top 10 markets for RevPAR during 2019. Hotels in French Polynesia ranked highest in RevPAR at $393 (+7.3%), followed by Maldives at $356 (-0.2%). Maui County ranked third, with Kaua‘i, the island of Hawai‘i, and O‘ahu ranked fifth, sixth, and seventh.
French Polynesia also led in ADR at $566 (+2.9%), followed by Maldives at $542 (+1.8%). Maui County ranked third, with Kaua‘i, the island of Hawai‘i, and O‘ahu ranked sixth, seventh, and eighth, respectively.
O‘ahu led in occupancy for sun and sea destinations, followed by Maui County, the island of Hawai‘i, and Kaua‘i.
Tables of hotel performance statistics, including data presented in the report are available for viewing online at: https://www.hawaiitourismauthority.org/research/infrastructure-research/
About the Hawai‘i Hotel Performance Report
The Hawai‘i Hotel Performance Report is produced using hotel survey data compiled by STR, Inc., the largest survey of its kind in Hawai‘i. The survey generally excludes properties with under 20 lodging units, such as small bed and breakfasts, youth hostels, single-family vacation rentals, cottages, individually rented vacation condominiums and sold timeshare units no longer available for hotel use. The data has been weighted both geographically and by class of property to compensate for any over and/or under representation of hotel survey participants by location and type.
For December 2019, the survey included 166 properties representing 46,980 rooms, or 87.6 percent of all lodging properties with 20 rooms or more in the Hawaiian Islands, including full service, limited service, and condominium hotels.
Travel Weekly – January 5 2020
With the health of Mexico’s hospitality sector continuing to deteriorate in the latter part of 2019, the long-term outlook for the country’s tourism appears grim.
Year to date through November, hotel data company STR reported that revenue per available room (RevPAR) across Mexico was down 6.6%, to $69.11. Concurrently, average daily rate (ADR) slipped 3.8%, to $112.17, while occupancy fell 2.9%, to 61.6%.
Supply also outpaced demand, with the former up by nearly 3.2% year to date through November and the latter virtually flat at 0.1% growth.
“There is certainly a threat of oversupply in Mexico,” said Jennifer Dohrmann-Alpert, vice president for advisory services at global design firm HKS, which has an office in Mexico City. “We’ve seen tons of developments entering the pipeline, especially in places like Riviera Nayarit and Cabo, and many of these projects are opening between 2020 and 2025. If there’s an economic slowdown, I think we could see definite impact from oversupply in the next three to five years.”
A supply-and-demand imbalance, however, is far from Mexico’s only challenge, added Dohrmann-Alpert. Exacerbating matters is a recent uptick in cartel-related violence, which has sparked safety concerns, as well as the Mexican government’s decision in early 2019 to shutter the Mexico Tourism Board, diverting millions in tourism promotion dollars toward a proposed train to connect key destinations along the Mayan corridor.
According to Dohrmann-Alpert, the latter move has likely had an outsize impact on Mexico’s Yucatan region, home to tourism-dependent hot spots like Cancun, the Riviera Maya and Cozumel, which have long been dominated by the all-inclusive model.
“Mexico has banked much of its tourism expansion in the broader Yucatan on all-inclusive properties,” said Dohrmann-Alpert. “But millennials, in particular, may not be as keen on all-inclusive resorts, and so that segment may be starting to trend downward a little bit as the travel market [shifts to preferring] more of an experiential travel product.”
Indeed, STR data indicates that the Yucatan Peninsula has borne the brunt of Mexico’s recent troubles. RevPAR in the market declined 12.9%, to $111.94, year to date through November, while ADR plummeted 10.6%, to $163.28. Occupancy in the Yucatan Peninsula year to date was down 2.5%.
Also weighing heavily on the region was last summer’s unusually severe sargassum seaweed outbreak, which at times rendered beaches across the Riviera Maya and Cancun coastlines virtually uninhabitable.
In late October, Francisco Zinser, executive vice president of Mexican hospitality group Grupo Hotelero Santa Fe, blamed sargassum for some of the company’s third-quarter woes, while also calling 2019 “a tough year for the Mexican tourism sector in general.”
Grupo Hotelero Santa Fe saw RevPAR slip 10.9% for the nine months through September, as the company’s ADR fell 7.8% over the same period. Occupancy across the group’s portfolio, which includes 25 properties in Mexico, decreased 2.2 percentage points, to 60.9%.
With the hospitality segment clearly losing steam, Dohrmann-Alpert believes hotel developers may be hesitant to bet big on Mexico moving forward.
She cited as one example Apple Leisure Group’s recent decision to put up to $600 million in Mexico hotel investments on hold. Apple Leisure executive chairman Alex Zozaya said at a press conference in December that the company’s AMResorts arm would defer construction of four or five properties, blaming the tourism board’s closure for a downturn in visitor numbers and pointing to growing pressure on hotel profitability and room supply growth outpacing demand.
“Some institutional investors are off-loading projects,” said Dohrmann-Alpert. “[And] savvy developers like AMResorts have started to scale back on their ambitious expansion plans for the region as they assess the future demand for luxury all-inclusive resorts.”
In the Mexican Caribbean, resorts may also be facing increased competition from a wave of what Dohrmann-Alpert calls “newer and more amenitized [cruise] ships.”
“There has been a significant push toward cruise tourism in the last five years,” she added. “With 5 million-plus visitors coming to the Mexican Caribbean this year via cruise ship, this could have a negative long-term impact on RevPAR as hotels have to drive prices down to attract visitors back.”
Tom Brussow, president of the nonprofit organization YesToMexico and owner of Wisconsin-based travel agency Sunsational Beach Vacations, is seeing solid demand for Mexico travel among his clientele despite cooling RevPAR trends.
“In 2019, there were a lot of challenges, whether it was the sargassum or all the sensationalized headlines, but overall, I think that the industry came together really very well,” said Brussow.
“The resorts, tour operators, [regional] tourism boards and agents are all doing a great job of educating consumers,” he said. “In doing that, I’m starting to see that my clients’ concerns about travel to Mexico have decreased compared to what we were dealing with a year ago.”
Most notably, Brussow said he’s seen his Mexico destination wedding business spike significantly, which he believes is a “good barometer” for overall tourism strength.
“Weddings always involve a lot of people with very different perceptions and concerns as it relates to travel,” explained Brussow. “A couple has to make decisions based on ensuring that everybody within their party is comfortable with the decision that they make. So, when we see the weddings come back to Mexico, that’s definitely a good sign.”
The Conference Board Consumer Confidence Index® decreased marginally in December, following a slight increase in November. The Index now stands at 126.5 (1985=100), down from 126.8 (an upward revision) in November. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 166.6 to 170.0. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – decreased from 100.3 last month to 97.4 this month.
“Consumer confidence declined marginally in December, following a slight improvement in November,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “While consumers’ assessment of current conditions improved, their expectations declined, driven primarily by a softening in their short-term outlook regarding jobs and financial prospects. While the economy hasn’t shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020.”
The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was December 13.
Consumers’ appraisal of current-day conditions improved in December. Those claiming business conditions are “good” was virtually unchanged at 38.7 percent, while those claiming business conditions are “bad” decreased from 13.6 percent to 11.1 percent. Consumers’ assessment of the job market was mixed. Those saying jobs are “plentiful” increased from 44.0 percent to 47.0 percent, however, those claiming jobs are “hard to get” also increased, from 12.4 percent to 13.1 percent.
Consumers were moderately less upbeat about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months increased slightly from 18.6 percent to 18.9 percent, while those expecting business conditions will worsen declined from 11.4 percent to 9.3 percent.
Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs in the months ahead decreased from 16.5 percent to 15.3 percent, while those anticipating fewer jobs increased from 13.4 percent to 14.9 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 22.9 percent to 21.1 percent, while the proportion expecting a decrease rose from 6.2 percent to 7.7 percent.
Source: December 2019 Consumer Confidence Survey®
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics.