Editor’s notes: Quotes in this story were originally spoken in Spanish and come via a live translation provided by the conference.

MEXICO CITY — While hoteliers in Mexico remain optimistic about the outsize demand seen at Mexican resorts, there is increasing hope that the county’s business travel sector is poised for a dramatic rebound as more North American companies look to move Asia-based manufacturing back to North America.

Speaking during HVS’ 2023 Mexico Hotel & Tourism Investment Conference, Richard Katzman, managing director of HVS in Mexico City, said overall the hotel industry in Mexico remains resilient. He believes there continues to be “a lot of potential everywhere, including more room to run with resort-based leisure travel in markets like Los Cabos and Cancún, a return of demand to international cities like Mexico City and the expansion of business travel, particularly in the northern and central portions of the country.”

“There really aren’t many countries where both segments are so solid,” he said during the “Regional and Global Hotel Market Overview.”

Katzman said international hotel brands continue to grow their footprints in Mexico — sometimes by buying local operators such as Marriott International’s pending acquisition of City Express Hotels — which can be read as a sign of continued belief in the country.

“When you look at the chains investing in Mexico, many started as business products then diversified to be more resort-oriented. They’re in peso-dominated markets and U.S. dollar-dominated markets.”

“Nearshoring” was the buzzword of the conference, indicating hope that many U.S.- and Canada-based companies will continue with plans to move manufacturing sites away from Asian countries into Mexico in hopes of protecting themselves from future supply-chain disruptions. This will open the country up to a significant increase in business travel, speakers said, as many of those factories and manufacturing projects require long-term stays in the country and many even include hotels in their development plans.

Delia Paredes, an economic professor from Universidad Anáhuac, said nearshoring “could be a game changer for Mexico.” She noted it could more accurately be described as “friendshoring” or “allyshoring” in light of many companies wanting to move their supply chain out of geopolitically sensitive places like Russia and China.

“They want partners that are close and reliable and that are friends,” she said, during the “Economic Overview and Impact on the Hotel Industry” session.

She said reliability and proximity aren’t the only factors at play, though.

“That’s the first point to consider, but they’re also considering the profits from nearshoring, along with improving training and logistics,” Paredes said. “And companies are going to come here if they can get efficient and clean energy sources.”

In terms of concrete examples of the phenomenon, speakers pointed to plans for new plants in the country for both Tesla — which is opening a plant in Monterrey — and BMW — opening in San Luis Potosi — as early signs of a new manufacturing boom in Mexico.

“There’s a lot of new industrial activity near the border,” Paredes said. “And that could eventually help across the country.”

Both Katzman and Paredes said Mexico isn’t without its challenges, with concerns about safety and security and governance issues still ranking high among the list of concerns. But Katzman stressed there is more good than bad for Mexico going forward, adding the industry’s operations and underlying demand are “structurally sound.”

“We might have a second wave [of recovery] if we’re ready for it and issues in the energy sector don’t spill over into manufacturing,” he said. “So far, that hasn’t happened.”

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