Snap Decisions

There are many ways for growth economies to attract foreign capital out of the global economy, and tourism is one of them. Mexico is lucky to be able to offer luxurious options for wealthy travelers in search of an “experiential” retreat, and can pay tens of thousands of dollars for the privilege.

In the US, these travelers typically have a net worth of USD2 million and a household income of USD200,000, according to a 2016 report by Resonance Consultancy. But their demands are greater than one might imagine. Instead of falling asleep under the sun on a beach with a Corona beside them, these travelers want to leave their destination transformed by some kind of experience.

That demand requires a more active role from the tourism sector, but that can pay dividends by potentially attracting even richer visitors seeking even more transformative trips. When trying to serve a niche, elite market, word of mouth is absolutely essential. Luxury travel is harder to advertise than mid-range getaways for weary North American city-dwellers, whose eyes might get caught by a sunny subway advertisement amid a grim winter. Luxury travel requires delivering a higher standard of personal pleasure than the elite already enjoy in daily life.

Luxury tourism is a space where Mexico enjoys an absolute advantage, not just a comparative one. Lots of countries can make cars or take out loans, but only Mexico has the shimmering waters of Puerto Vallarta.
Boosting luxury tourism destinations can also help make the tourism industry more resistant to recession. A sudden contraction in the availability of disposable income in the US could be coming in 2021, some analysts predict. That means Mexico must position itself to reach high-hanging fruit: the luxury traveler.

Some of the trends that are disrupting the rest of the economy affect the luxury tourism sector as well, namely the availability of information and the rise of the “sharing economy,” according to a report by Skift, a travel industry research group.
“Technology makes traveling to Riviera Nayarit, and ultimately all over the world, much simpler. You no longer need to book every activity, restaurant, or hotel before a trip, because everything can be done on the go. Specifically, we’ve noticed an increase in travelers booking airline tickets and hotels on their smartphones,” Richard Zarkin, a public relations officer with Riviera Nayarit Convention & Visitors Bureau, told Skift.

“This ability to dive into spontaneous experiences also helps travelers learn about our niche destination offerings, as they are constantly looking up reviews and background information on the go. Gwyneth Paltrow, a known fan of Punta Mita, booked a private villa last year through Airbnb to celebrate the New Year,” he added.

Paltrow commands a small but loyal, and most importantly wealthy, legion of health-obsessed fans online, eager to try what she tries. Attracting visits from such influential figures can serve as a force multiplier to attract others like her. In the past, even 15 years ago, a wealthy celebrity’s vacation would be a private matter. Today, that celebrity’s job is to share what they do on Instagram. The real estate might not be free, but the advertisement surely is.

And therein lies the rub. Before the rise of social media, a bad experience at a luxury resort might have been a private affair between a traveler and her travel agent. Today, if a trip goes awry, thousands of people could find out about it, and the location could face reputational damage. For as much as Mexico enjoys an absolute advantage on being the only place to enjoy Mexico’s destinations, that advantage is only as strong as the reputation of those places.

While Mexico’s efforts to expand air and road access to natural wonders are a good first step for attracting luxury travel, the rewards this sector can enjoy come with the risk social media poses for all businesses in 2019.