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News release

Mexico City

Four Mexican Lodging Markets to Watch

JLL launches Hotel Destinations Mexico report at CHRIS/HOLA conference

MEXICO CITY, May 15, 2018 – Mexico ranked the eighth most visited country in the world last year by the World Tourism Organization with more than 35 million travelers each year, so it's no surprise that the lodging market is seeing robust growth.  JLL short-listed four key cities to watch in 2018 in its Hotel Destinations Mexico report launched today at the CHRIS/HOLA conference in Miami.

"The travel and tourism industry plays a vital role in Mexico's overall economy, so when protectionist rhetoric about U.S.-Mexico trade policy occurred last year it spurred concerns over Mexico's ability to achieve meaningful economic growth. However, what we've seen is quite the contrary," said Mauricio Campos, Senior Vice President for JLL in Mexico. "Mexico's economy fared better than expected in 2017, with real GDP growth at 2.3 percent year-over-year, and we expect similar growth this year. This is giving way to more robust hotel operating profit margins."

The Mexico tourism industry has seen an increase of travelers to Mexico City, Los Cabos and Cancun/Riviera Maya due to their re-classification as low-risk travel destinations, which is positively affecting U.S. travel sentiment to the country. Additionally, the Mexican peso to U.S. dollar exchange rate remains favorable for U.S. travelers which should continue supporting the country's record international visitation levels.

According to JLL's report, the following four cities are top destinations and investment targets for Mexico:

1. Mexico City:  In 2017, visitation hit a new record by surpassing 22 million air arrivals, a 7.2 percent increase over prior year levels, with international arrivals boasting 12.2 percent growth. The new airport, currently under construction and anticipated to be operational in 2020, is expected to be one of the largest in the world. The city's strong underlying demand fundamentals allowed the city to quickly recover from the 7.1 magnitude earthquake in September 2017 with a historical high in occupancy of approximately 70.0 percent for the year.

Approximately 40 percent of the city's incoming supply over the next five years will be in the luxury and upper-upscale chains, including the 153-room Ritz-Carlton, the 162-room Park Hyatt and the 220-room Waldorf Astoria. Mexico City is extremely well-positioned to weather the uncertainties that this year's political and economic events may bring.

2. Cancun / Riviera Maya: Despite a challenging active hurricane season and heightened travel advisory warnings, the Cancun/Riviera Maya market experienced an overall increase in visitation and improved performance of the lodging sector in 2017.  The overall outlook for the Cancun/Riviera Maya area remains positive and Cancun continues to set record visitation levels year after year. Year-to-date November 2017 data indicated that air arrivals grew by 10.5 percent compared to the same period in 2016.

The Cancun/Riviera Maya corridor boasts 86,000 hotel rooms, the highest concentration of any beach resort destination globally. Supply increases, while notable, remain below that of demand increases and include: 3,175 rooms slated to open in 2018; 1,556 in 2019; and approximately 1,000 in 2020 and 2021. Most of the new supply is in the luxury/upper upscale segment, such as the St. Regis Kanai, the W Hotel Kanai and the Waldorf Astoria Cancun.

3. Los Cabos: The destination has quickly recovered from the significant damage caused by Hurricane Odile in late September 2014. Many incoming and new resort developments are also now offering branded residences, such as Montage, Auberge, Solaz and Four Seasons, marking an evolution in Los Cabos' luxury lodging market. According to year-to-date November 2017 data, international arrivals to Los Cabos International Airport hit a new record with a 16.7 percent increase compared to the same period in the prior year.

Occupancy growth for 2017 was 5.8 percent and 14 new hotels are expected to open by 2020, bringing total lodging supply near 18,000 rooms. The addition of internationally recognized luxury brands, such as Ritz-Carlton, Park Hyatt, 1 Hotel, St. Regis, Montage and Le Blanc Spa resort, will further strengthen Los Cabos as Mexico's premier luxury resort destination. The addition of new luxury resorts over the next several years is expected to incentivize further improvements in infrastructure and accessibility, which will elevate demand levels, helping absorb new supply over time.

4. Monterrey: The overall outlook for Monterrey is quite positive as its lodging sector has experienced consecutive RevPAR growth in local currency since 2012. Monterrey enjoys good demand fundamentals given its reputation as one of Mexico's key economic centers with a diversified economy. This bodes well for solid lodging performance, despite the fact that the U.S. State Department has encouraged U.S. travelers to reconsider travel to the area until further notice.  Nonetheless, the improvement of the city's Fitch Ratings from AA- to A+ signals that Monterrey is establishing itself as a more mature economy, which is a positive indicator for future infrastructure and lodging investment.

Occupancy in the area has steadily risen over the past years, increasing from the mid-fifties in 2012 to the mid-sixties in 2017. The market's hotel supply remains relatively unsophisticated. Independent hotels comprise 37.0 percent of total rooms; more than two-thirds of rooms are considered upper-midscale or below. More than 2,000 rooms are slated to open over the next three years including a 180-room Westin in 2018, a 250-room JW Marriott in 2019 and a 250-room Hilton in 2020.

"While we view the Mexico lodging sector through a more optimistic lens relative to last year, we are mindful of the detrimental implications that an exit of the U.S. from NAFTA could potentially have on the country," said Clay Dickinson, Managing Director for JLL's Hotels & Hospitality Group. "Of perhaps greater immediate concern are domestic issues, such as the upcoming presidential election in Mexico in July and the potential for resumed drug-related violence in key tourist destinations. Both of these will influence the country's economic outlook as well as its prospects for growth in leisure tourism."

Mexico boasts the most developed hospitality sector, and represents the second largest economy in Latin America. For more insights on how the country's economic and hospitality trends impact the industry, download JLL's 2018 Hotel Destination Report for Mexico.

JLL's Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years globally, totaling more than $77.5 billion worldwide. Between negotiating property deals, the group's 350-person global team also closed more than 5,300 advisory, valuation and asset management assignments. To find out more visit:


About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with nearly 300 corporate offices, operations in over 80 countries and a global workforce of 83,500 as of March 31, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit