Citing a downswing in Mexico tourism,
Apple Leisure Group executive chairman Alex Zozaya said the company will be putting up to $600
million in Mexico hospitality investments on hold.
At a press conference earlier this month, Zozaya said ALG
plans to put the construction of four or five Mexico hotels “on pause.” He
attributed the deferral in part to the Mexican government’s decision to shutter
the Mexico Tourism Board earlier this year.
According to Zozaya, the tourism board’s closure has
impacted visitor numbers, with U.S. travel to Mexico on the decline. He also
pointed to growing pressure on hotel profitability as well room supply growth outpacing
demand.
Despite these challenges, Zozaya said ALG’s AMResorts is
still on track to open six hotels in Mexico by the end of next year.
Still, the company’s decision to pull back in Mexico is a
significant shift in strategy. In April, Zozaya told media at the Tianguis
Turistico conference that Mexico expansion was one of the company’s “major
priorities,” and that ALG was “bullish on the country's long-term potential.”
AMResorts has 34 resorts in Mexico operating under the Zoetry,
Secrets, Breathless, Dreams, Now, Reflect and Sunscape flags.
Year to date through October, Mexico’s hotel sector saw
occupancy dip 3.3%, to 61%, and average daily rate slip nearly 4%, to $113, according
to STR. Revenue per available room was down 7%, to $69, over the same period.
Supply, meanwhile, was up 3%, as demand dropped 0.3%.