February 4, 2011

Defending Mexico Tourism in Tough Times

By La Prensa San Diego

By Kent Paterson
Frontera NorteSur

    Violeta Serrano takes a break from haggling with a couple from Seattle over the price of a beach towel. Part of the wave of people that’s gradually drifted from Acapulco to other vacation destinations in Mexico, Serrano runs a curio shop just off Puerto Vallarta’s popular Los Muertos Beach.

    The small business owner has seen better days. “There are no sales,” Serrano sighs. Last year, in particular, was a very rough year for Serrano and other people she knows, according to the eight-year resident of Puerto Vallarta. “Everybody has economic problems,” she says.

    On the other side of town, in the yacht-jammed Marina Vallarta where tycoon Carlos Slim is known to hang out from time-to-time, Stan Gabruk recounts a similar story.

    A former Boeing consultant who moved to Puerto Vallarta ten years ago, Gabruk sells t-shirts and books fishing expeditions for marlin and other big game from his Master Baiter’s Sportfishing and Tackle shop.

    Gabruk says his business is down 60 percent from three years ago, and those customers he does greet are much more guarded with their wallets. “If you tell people t-shirts are more than $20, they choke,” Gabruk laments. The years 2009 and 2010 were the worst ones he’s seen in a decade, he adds.

    A tour around the port city of more than 300,000 people that stretches along Banderas Bay and creeps into the lush Sierra Madre foothills, reinforces the assessments of Serrano and Gabruk.

    For the third year in a row, “For Rent” and “For Sale” signs dangle on empty apartments and condominiums, vacant storefronts and abandoned homes.

    Many restaurants stand half or completely empty of diners. Anticipated cruise ship arrivals, which were pegged at 276 ships carrying 589,000 passengers in 2008, are down to an expected 190 dockings with 460,000 travelers this year, according to a report in the Tribuna de Bahia newspaper. Businesses have slashed their workforces.

    Locals are apt to blame Puerto Vallarta’s misfortunes on bad press stemming from violence and the so-called narco war elsewhere in Mexico.

    And the January slaying of US missionary Nancy Davis hundreds of miles away in Tamaulipas is likely to reinforce negative impressions of the country.

    While Puerto Vallarta has its share of crime and drug-related problems, it is a far cry from Ciudad Juarez, Monterrey, Acapulco or even Guadalajara, which experienced its first “narco-blockade” of a major road this month, according to local media reports.

    Until now, the city made famous by Richard Burton and Elizabeth Taylor has arguably experienced less drug-fueled violence than many US cities such as Oakland or Albuquerque.

    “Puerto Vallarta is safer than just about 90 percent of the cities in the US,” insists Gabruk, who is quick to urge “responsible” media coverage.

    “If there is massacre in Tijuana, it is a massacre all the way to Central America,” says Martin Puebla, vice-president of the Puerto Vallarta branch of the Canaco-Servytur business association. “People look at Mexico and not the specific place.”

    How much of Puerto Vallarta’s tourism downturn is due to negative perceptions of Mexico or continued financial difficulties confronting potential US tourists is an open question. Whatever the reason, the tourism boom that peaked a few years ago is becoming a nostalgic fable of the Golden Age.

    In 2006, as the boom crested, Puerto Vallarta raked in about one billion tourist dollars from more than 3.8 million people, according to a book prepared for the 2007-2009 Puerto Vallarta city government.

    Nationwide, tourism still represents Mexico’s third largest legal source of foreign exchange, Tourism Secretary Gloria Guevara told a national meeting of Canaco last fall. According to Guevara, tourism-related business activity, which accounts for nine percent of Mexico’s Gross Domestic Product, provides 2.5 million direct and 5.0 million indirect jobs for the nation.

    Breaking down the sources of tourism spending, Guevara said 86 percent of the money comes from within the country and 14 percent from abroad. The Calderon administration official added that $50 billion is invested in the Mexican tourism industry.

    In her presentation, Guevara urged business leaders to share “the good news” that happens in Mexico and spread it abroad.

    Despite high-profile US media coverage of Mexican violence, Guevara’s department reports the number of US visitors arriving to Mexico by air increased to 5,907,528 people in 2010.

    The US passenger flow is a 9.7 percent increase (12 percent for Puerto Vallarta) over problem-plagued 2009, a year when the economic melt-down, the so-called swine flu epidemic and publicity surrounding narco-violence all came together in the proverbial perfect storm.

    According to many locals, however, the tourist stream is nowhere near pre-crisis levels. While Mexico has attracted more Canadian and South American tourists within the past year, Puerto Vallarta and other resorts long have been dependent on the free-spending gringo, a species which might become a candidate for the endangered list if the US economy continues to lag and 10 percent unemployment becomes the “new normal” as suggested by some economists.

    Though in less numbers and with modified spending habits since the cash frenzy of the boom years, US tourists still come in noticeable quantities.

    Readily visible in all sizes, shapes and colors, tourists stroll about a waterfront dotted with quaint statues, elaborate sand sculptures of sphinxes and pyramids, obligatory palm trees and a bar that blasts Hendrix, the Rolling Stones, Rod Stewart and other bards of the Baby Boom Generation so important for Mexican tourism.

    It is even surprising to see younger US couples, school-aged children in tow, moving around the waterfront and slurping down ice cream well outside the normal holiday season and during an era when everyone up north is supposedly getting serious about education.

    Flanking the rolling parade of tattooed flesh and wiggly waist lines are the never-ending legions of street vendors hawking silver jewelry, Indian dolls, fruit, gum, personal portraits and more. Their numbers have gone up during the Great Recession, Martin Puebla says.

    Carolyn Burnett and Michael Stachowiak are two US visitors from Seattle enamored with Puerto Vallarta. “I love how there is a lot of culture here. It is thriving,” says Burnett, a second-time visitor.

    Plopped down in a spectacular environment, visitors to Puerto Vallarta readily encounter other charms. Humpback whales, sometimes breeching from the water, frequently approach the waterfront. Along the Rio Cuale, slithering iguanas wow camera-snapping visitors, while squirrels gnaw away at coconuts. Not far away, a bold grackle lands on a cafe table and zooms off with packet of sugar.

    A tall, husky insurance man, Stachowiak says he’s been to Puerto Vallarta five times and is so confident of the town’s safety he brought along a large contingent of his work colleagues. Stachowiak says he once forgot his wallet in a taxi-cab but actually got it back intact and with no money missing after inquiring with the operator.

    “They appreciate the tourists. They know how they spend money,” Stachowiak says. “I’ve never had a problem. We’ll always be coming to Puerto Vallarta.”

    Any mention of Puerto Vallarta’s downside would have to include reckless bus and taxi drivers, pesky street drunks, downtown traffic pile-ups and bouts of beach pollution. During the past three municipal administrations, garbage collection and disposal have been a serious problem; early this year the city government announced it was sub-contracting trash removal to a new private company.

    Local cops have been known to shake down both locals and tourists when the money gets tight. Although an animal rights group recently posted a public statement denouncing society for allowing so many street dogs, at least one of the canines, a brawny mutt known as “Scooby,” is a local legend that lives high off the hog. Like clockwork, the dog drops in on several different businesses that supply food, massages and fame and glory.

    And there are examples of tourist gouging.

    Some banks, especially Citigroup’s Banamex and HSBC, have adopted the practice of money exchange houses that pay less pesos for dollars than reasonable. Contrary to standard rates of peso to dollar exchanges in which the difference is measured in centavos, some establishments now make one peso or more per transaction, bringing in fast profits of ten percent or better.

    The practice means more money for corporate headquarters outside town, and less of a cash flow for businesses inside town.

    In early 2011, US dollars fetch about 20 percent less in pesos than they did two years ago. Regulations enacted by the Mexican government last year put another cramp on the money flow. Ostensibly aimed at curbing money-laundering, the new rules limit the amount of dollars that can be exchanged at any one institution where customers do not have accounts to $300 per day and $1,500 per month. Prior to a transaction, US visitors are required to show their passports, which are then copied and the personal data archived for possible review by Mexican authorities.

    Even amid crisis, entreprenuers are attempting to make a go of it. In the city’s Old Town neighborhood, new enterprises include a gourmet deli and wine shop, a French bistro and a home-style Italian eatery. Over in the Marina, a couple from Kingman, Arizona, recently opened the Puerto Vallarta version of their D’z Rock N Roll Route 66 Diner.

    As the name suggests, the hamburger and shake joint is a throwback to Americana, featuring a mural of James Dean, Marlon Brando, Elvis Presley and Marilyn Monroe. Gusty renditions of “Suspcious Minds” and other hits from the God of Graceland entertain several tables of older tourists. “It’s going well. People recognize (the concept),” says manager Luis Alberto Barrales. “Tourism is coming along. We hope for more.”

    Canaco’s Martin Puebla says there is reason for optimism. Endorsing President Felipe Calderon’s outlook on economic recovery, he points to the strength of the peso, record-high foreign reserves and an ample line of credit from the International Monetary Fund.

    Locally, the Disney Wonder cruise ship has resumed weekly port calls, while a Mexican-owned line, Ocean Star Cruises, has announced service to Mexican Pacific ports including Puerto Vallarta beginning in April. Based in Acapulco, the Ocean Star will have a 1,500-passenger carrying capacity.

    “Not everything is so bad,” Puebla ventures.

    The business sector, Puebla says, is warily eyeing 2012, when in addition to electing a new president and federal congress, voters in Puerto Vallarta and the state of Jalisco will cast ballots for new state and municipal authorities. The three-way contest could produce a political outcome in which rival political parties control separate branches of government. “This gives us uncertainty about what political party will stay in which position,” the business leader affirms.

    Jalisco’s current governor, possible 2012 presidential contender Emilio Gonzalez, represents President Calderon’s PAN party, while Puerto Vallarta and the state’s bigger cities are governed by the PRI. The main challenge in the near term, Puebla adds, is for Mexico to maintain political stability and avoid “bad perceptions in the exterior.”

Frontera NorteSur (FNS): on-line, U.S.-Mexico border news Center for Latin American and Border Studies New Mexico State University Las Cruces, New Mexico.