Concern over Mexico bookings sparked by alcohol allegations

The Iberostar Paraiso del Mar, where a woman drowned.  A U.S. senator has asked the State Department to solicit information from the Mexican government about her death.
The Iberostar Paraiso del Mar, where a woman drowned. A U.S. senator has asked the State Department to solicit information from the Mexican government about her death.
As allegations of incidents surrounding tainted alcohol at Mexican resorts continued to gain traction last week, evidence of a bookings hit began to surface.

With more alleged victims coming forward and a U.S. senator requesting an investigation into the incidents at all-inclusive properties in Mexico, the country's tourism industry was hit from another quarter: an expansion of the U.S. State Department's travel warning to include popular resort areas.

Most travel agents and tour operators last week said cancellations were rare. Future bookings, however, are showing signs of decline.

Jack Richards, CEO of Pleasant Holidays, said that during the first three weeks of August, the company had "seen a large decline in Mexico bookings for future travel in 2017 and 2018." Searches for Mexico on the company's websites had declined, and calls to the reservation center regarding Mexico had dropped double digits compared to the same time last year.

"This ongoing story about Cancun could have a significant impact on our business to Mexico for the remainder of 2017 and 2018," he said. "We are hopeful this situation is resolved in a timely manner, as Mexico is one of the top destinations for the company and has been for more than 15 years."

Pleasant, as well as most travel agents, has experienced minimal Mexico cancellations. However, it does have several large groups booked to Mexico in 2017 and 2018 that are considering changing to other destinations based on the information that emerges from the investigations into the illicit alcohol issue.

Rather than die down, concerns about potentially tainted alcohol gained steam in the last few weeks, prompting Sen. Ron Johnson (R-Wis.) to send a letter to Secretary of State Rex Tillerson asking the department to solicit information from the Mexican government about the death of a 20-year-old Wisconsin woman named Abbey Conner, who drowned in the pool at the Iberostar Paraiso del Mar, as well as other incidents that are alleged to involve tainted or illicit alcohol.

The allegations as well as the State Department's expanded travel warning that included the states of Quintana Roo and Baja California Sur threaten to cool Mexico's surging tourism sector, which has grown by more than 60% in the last decade, to 35 million international visitors; ranks No. 8 in the world; and generates $19.6 billion, according to the United Nations World Tourism Organization.

Quelling concerns

The latest report from the Milwaukee Journal Sentinel, which in July published the first accounts of tourists blacking out at all-inclusive resorts after only a few drinks, highlighted the poor treatment Americans have received from resort employees and Mexican authorities when they come forward seeking treatment or justice. U.S. authorities in the region have also apparently been unhelpful.

Agents have said that the Mexico Tourism Board has not been as characteristically communicative as it has in years past.

"I really think that they should be getting out there with a message, a statement, but they're not," said John Werner, president and COO of MAST Travel Network, which he found surprising. "I haven't seen anything."

Travel agents found themselves quelling travelers' concerns last week by relaying information the resorts were sharing with them about their safety and security measures. MAST, for example, had put together talking points, including steps the hotels are taking to help ensure customer safety, like adding more cameras around the pool area, as well as their policies when it comes to handling alcohol.

"The agencies are getting questions," Werner said. "Customers are raising the issue, asking questions about it or expressing concerns, but the interesting thing is, there haven't been that many cancellations of trips that have already been booked."

This was echoed by quite a few agents. Stephanie Turner of St. Louis-based Brentwood Travel, said her clients, especially brides planning destination weddings or honeymoons, have been asking about the situation, but as of last week, few had canceled. One group that opted to change destinations was a corporate meeting.  

"They're going to book at a different destination for this year and maybe see how things are going for next year," Turner said.

Rey Alton, with Travel Leaders in Houston, handled client concerns by both passing along information from the hotels and from his own experiences in Mexico.

"You have to take everything seriously, every concern that clients have," he said.

As of last week, Alton had only had one client switch to Jamaica after the illicit alcohol story surfaced.

Future bookings in question

Agents did express concern about future bookings, although as of last week, none had seen a decline. Both Werner and Turner said people were still booking.

"Our bookings [to Mexico] are strong," Turner said, adding that the country is her top destination.

"Knock on wood, I've had no cancellations yet as far as this round of bad Mexican publicity goes," said Diane Bean, owner of Andavo Travel affiliate Off On Vacation in Bangor, Maine. "But it absolutely may affect bookings in the future, I don't doubt that. Luckily, I think the market there is resilient."

That has certainly been the case over the last decade, during which Mexico rebounded from a global recession, drug-trade violence and the H1N1 virus.  Aided in part by the appreciation of the U.S. dollar relative to the peso, which has appreciated about 75% since 2013 before leveling off slightly in recent months, Mexico hotels' and resorts' revenue per available room, or RevPAR, rose 17% last year solely on room-rate increases.

Breaking out the Mexico resort market, demand growth in recent years has been even more robust. Between 2011 and 2016, average nightly room rates more than doubled, to about $202, while occupancy advanced almost 11 percentage points, to 68%, according to STR.

As a result, hotel and resort developers have been boosting their investments in Mexico. As of last month, Mexico and the Caribbean had 89 projects totaling more than 16,000 rooms under construction, marking a 24% jump from a year earlier, STR said this month. Mexico accounted for about 10,000 of those rooms.

The tainted alcohol reports specifically cast a shadow on Mexico's all-inclusive resort industry, led in part by U.S.-based companies like AMResorts, which oversees more than 30 Mexico resorts. Its Secrets Akumal in Mexico's Riviera Maya region was implicated in one Milwaukee Journal Sentinel report, which said a Cincinnati couple that had stayed there in early July blacked out though were not seriously harmed after drinking margaritas.

"We employ industry-leading operational policies and procedures to safeguard our food and beverage products from any tampering or contamination," Secrets Akumal general manager Javier Estelrich said in a statement last week. "We only purchase and serve premium brand, international and domestic, top-shelf spirits from leading authorized suppliers to Mexico."

For its part, Iberostar said last month that it only purchases "sealed bottles that satisfy all standards required by the designated regulatory authorities."

Danny King and Johanna Jainchill contributed to this report.

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