Los Cabos, long immune to negative reports about drug
violence in Mexico, made an appearance for the first time in a U.S. State
Department travel warning in August.
The destination's response has been swift, aggressive and
The popular resort area at the tip of the Baja Peninsula has
seen tremendous expansion in terms of both tourism and population, each of
which has grown at an annual rate of 20% over the past five years, according to
Rodrigo Esponda, CEO of the Los Cabos Tourism Board.
A steady beat of announcements has been issued about the
development of new luxury properties. Mexican luxury brands, including Le Blanc
and Grand Velas, contributed more than 880 rooms to inventory this year, and
next year will see the debuts of Montage, Park Hyatt, Nobu, Ritz-Carlton
Reserve and Four Seasons among 15 properties that will add 3,757 rooms. A Hard
Rock, near a new convention center that is also scheduled to open next year,
will account for 600 of those rooms.
But along with the rising population that accompanied all
the tourism growth came attendant social problems. Drug-related violence
resulted in a shootout near the entrance of a beach, and there were other signs
of gang activity, as well. This not only triggered the State Department warning
but resulted in unflattering portrayals in media, including a prominent article
in the New York Times.
The Los Cabos Tourism Board itself is in many ways unusual
for a Mexican destination marketing organization. It is funded by a 3% local
hotel tax, and its five-person board (with a three-person majority reserved for
the business community) is unburdened by bureaucracy. Decisions can be
implemented quickly, Esponda said.
And the greater business community is also willing to put
additional money on the table to protect its interests, he said. It, along with
public authorities, have ponied up $47 million to create a rapid-response
program to deal with the negative incidents and reporting.
Working together, public and private interests created a
multipronged security plan to address issues, reassure tourists and communicate
progress to U.S. authorities in hopes of getting the warning lifted.
In the first stage, a rapid communications network was
established among private tourist interests and authorities so that information
on developing issues could be conveyed quickly. It was already tested by
Hurricane Norma in mid-September and was used to share information about debris
on roads that needed to be cleaned, areas needing repair and to report on
flight delays so that guests could wait in the comfort of their properties
rather than at the airport.
Second, a security plan was developed. A camera surveillance
system is being expanded from 50 cameras to 250. It will connect to both law
enforcement authorities and private security services, and eventually it will
also feed into a new $7 million headquarters for the Mexico Marines, built on
land acquired by, and being constructed by, the private sector, which had
lobbied hard to attract the new HQ.
Additionally, representatives of hotels, timeshares and
developers will be meeting every two weeks to evaluate any developments, and security
teams from hotels will meet with public officials twice a week to share
Third, hotels will adopt the protocols of the U.S.-based
Overseas Security Advisory Council, a bureau within the State Department that
provides security recommendations for diplomats.
"Tourism accounts for 90% of the Los Cabos economy,"
Esponda said. "Security is a priority. Without tourism, there would be
The opening of the convention center early next year adds
pressures. The tourism chief said that overall growth this year is still at
20%, with revenue per available room up 17.4% January through July and average
daily rate (ADR) at $300.
"Our strategy depends on high ADRs," Esponda said.
"We'd rather have 70% occupancy where we are than 95% with a lower ADR."
Despite sustained business, the warnings and articles that
came out during the winter sales season have shaken the tourism community.
"We're very concerned," Esponda said. "We
have to stay on top of things."
Part of the tourism strategy includes trade outreach, with a
team of trainers visiting tour operators and travel agents. Following
allegations in the Milwaukee Journal Sentinel about travelers encountering a
wide variety of problems at Mexican resorts, Esponda sent a team to Milwaukee
for two weeks to answer questions from agents and provide information on the
The day before a press breakfast in New York last week, he
had returned from World Routes, a global aviation conference in Barcelona, and
announced to reporters that Milwaukee will begin regional service to Cabo this
winter, a joint effort supported by Frontier Airlines and Apple Vacations.
In all, the destination has seen a 20% growth in airline
seats in the last year, with Southwest expanding the number of arrivals and
United adding capacity.
"We're working on Philadelphia and New York,"
Asked whether any hotel companies in the pipeline (or being
courted) wavered in the face of the travel warning and news reports, Esponda said
"Some owners have been here for 30 years," he
said. "If you're investing $200 million in a hotel, you've got a long-term
vision. You're not looking at headlines."
The tourism board convened a meeting with tour operators
over the summer to let them know what it was planning and to brainstorm on a
possible consumer campaign. The plan, with the theme "Los Cabos Today,"
could be launched as soon as November, though Esponda wants to see signs of a
reputational turnaround before committing.
Esponda said the tourism community is not ignoring the
social issues that might be the root of violence. The hotel, timeshare and
development associations, along with the tourist board and government agencies,
are working on an urban development plan to increase the number of schools and
other social services.
The board also realizes it needs to step up its corporate
social responsibility, Esponda said. "There are things we need to do
better," he acknowledged. But he also noted that with a 19% poverty rate,
Los Cabos already has an advantage over other destinations, given that 40% of
Mexico's overall population lives in poverty.
Tourism, he asserted, is uniquely positioned to help,
because unlike a factory job, there is the real possibility of upward mobility
Esponda admitted he has been a bit frustrated by the
reporting on Los Cabos.
"I can go to New York looking for horrible stories and
find them," he said. "And in the next sentence, I can say how much it
costs to stay in a luxury Manhattan hotel. We do need to make improvements in
areas, but I also believe tourism is a positive element and that Americans will
feel welcome and safe here."