Quintana Roo emerging economy for the future

By: Javier Murillo | General Director of DECONARQ

[aux_dropcap style=”classic” extra_classes=””]W[/aux_dropcap]ith a record of 35 million people in 2016, Mexico remains eighth place in the ranking of international tourist arrivals, as reported by the World Tourism Organization, Tourism Highlights 2017, showing an increase of almost 9% in the number of travelers as compared with the same period in 2015. Unquestionably, Quintana Roo plays a key role in this scenario, remaining a leader in tourism with the internationally renowned brand “Cancun”. This strength has helped in decreasing the public debt, and its internal management has generated greater certainty, attracting more domestic and foreign investment. Based on this course of things, the rating agency Global Ratings S&P confirms for the state of Quintana Roo the credit rating BBB as domestic long-term issuer, with stable standing, as reported by the Ministry of Finance and Planning.

Other factors were also considered for the rating, such as its financial administration, still facing the challenge of consolidating a long-term vision that guarantees stability in tax matter. With this information and rating, the state will continue to benefit from a quite particular economic dynamism that has managed to exceed national standards.

As such, Quintana Roo is clearly an emerging economy, where tourist activity has triggered a powerful flow of new hotel investments, in their turn generating new jobs and labor, attracting a constant stream of new migrants looking for higher life quality; and so, in less than 50 years since its foundation, Cancun’s population already exceeds one million. This population growth has been crucial for different important supermarket chains, suppliers, schools, hospitals, business centers, warehouses, clinics, offices and upstart restaurant chains, among many other lines of business attracted by this emerging economy in constant growth.

For the coming period 2018 to 2022, the numbers will continue to increase as new hotel rooms are to be built, mainly in Cancun and the continental zone of Isla Mujeres. By the end of this period, approximately 9 thousand new hotel rooms are expected, resulting from the expansion and construction of approximately 20 new hotel buildings. To these, at least 6 thousand more rooms will be added in Riviera Maya, in the section that runs from Puerto Morelos to Tulum. Likewise, other destinations in the region, such as Bacalar, Mahahual, Holbox and Cozumel, are also growing in new rooms.

For the expected development of the state in this period, especially in Cancun and Riviera Maya, these numbers represent an important economic spill for the destination and a growth of at least 20% in its hotel capacity. That is, as long as there is no external economic, political or climate factor preventing such. It is important to note that Quintana Roo’s economy is frail in spite of its consolidation and leading position in tourism and population growth. That is the case, precisely, because it depends on a single industry, tourism; and so, if any of the aforementioned factors is affected, the flow of visitors can decrease drastically, as it happened with the financial crisis of 2008, when the real estate sector was heavily impacted in a negative way for a period of at least three years. Adverse factors such as hurricane Wilma serve as another example, as it affected the tourist market directly for over two years, although it is worth mentioning that its effects were finally mitigated by the forceful economic activity derived from the infrastructural reconstruction of the area.

All of this taken into account, and anticipating that Quintana Roo will continue to be the vanguard on tourism, it can be safely stated that the economic growth forecasts for the state in the coming years are encouraging, particularly for its northern part.

In 2018-2022 15 thousand new hotel rooms will be added to the existing supply in Cancun, Riviera Maya and the continental zone of Isla Mujeres increasing the hotel capacity in the region in more than 20% Quintana Roo was ranked as BBB domestic long-term issuer of credit, with stable standing.


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