Boutique Hotel And Tourism In Mexico Tourism Essay

Boutique Hotel And Tourism In Mexico Tourism EssayIntroductionThis report conducts the feasibility study to invest a boutique hotel in Mexico. It illustrates the structure of Mexico economic system, tourism diligence, and the situation analysis. In order to evaluate the potential business, merchandise blend in is c atomic number 18fully analysis. Since the product is already chosen as boutique hotel, we essential define boutique hotel and where is the location to be investing in. A boutique hotel is a small to medium size usually with no much than 150 rooms provide personalized service and distinction design to inveigle the corner market. Boutique hotel is attracting the niche of customers looking for individual and special needs different than other property can offer. The investing boutique hotel allow be situated in Cancun Island, which is well known by its sea resort, and wide medley of activities can be d unrivalled it is voted one of the best tourism destinations.Mex icoUnited Mexican States, which is commonly known as Mexico it is located in the central of Americas. Mexico is the 14th largest nation in the world with estimated population 112 millions. Before Mexico declargond independence in 1821, it was Spain colony for three hundred years. The most spoken language in Mexico is Spanish. The GDP by pastoral in 2009 is 1.017 trillion. Felipe de Jesus Calderon Hinojosa is the current president in Mexico.CancunCancun is located in the east part of Mexico, in the state of Quintana Roo alone with the Caribbean Sea. Cancun is famous by the beautiful nature, b from each one, and the ancient Mayan archaeological sites. There are somewhat 140 hotels in Cancun with 24000 rooms (Cancun Tourism Center) the occupancy focus in 2010 is 80% during the high season in July to the end of August. The weather of the city is gay 70% the time during the year, and the temperatures are between 26C to 36C all year around. There are plenty of activities to enjoy in Ca ncun city with the water activities in the beach, nightlife in the downtown, and also the well famous heritage, the Mayan ruins.Yucatan General InformationState name YacatanCapital Merida White City (955,000 population)Population 1,945,840Area 39,612 square kilometersCurrency peso (1 Peso = 100 Centavos)Language SpanishReligion Roman Catholic 76.5%, Protestant 6%, other 0.3%, unspecified 13.8%, none 3.1%Cancun population is 542,043 people.Tourism industry in MexicoTourism is a very large industry in Mexico it is rank as 2nd foreign destination within Latin America, initiatory in Spanish speaking country, and 10th place in term of international tourists arrival (World Tourist Organization), figure 1 shows the international tourist change of location around the world. Tourism sector 8% of the total GDP in Mexico. Mexico has one of the largest tourism industries in the world in 2008, it had total 22.6 million tourists, with 13 billion generated by tourism industry. However, due to the economic crisis and swine flu H1N1 in 2009, new visa regulation and drug dealer violence act Mexicans tourism industry had a large drawback, which causes the tourism visit Mexico drop by 16% in the 2nd quarter of 2009.The year 2009 was rather difficult for Mexicos live and tourism industry. The situation expects to change in 2010 with 5% annual growth for the next decade. Experts of the AMHM are looking forward to 2010 are forecast this year will become an eventful year for Mexico with the upcoming bicentennial and action plans for extensive program of events. The tourism and hospitality industries are counting down on these events as a lot of tourists are expected to come to Mexico, which will become the first step to recover from the recession. The tourists will be able to learn more about Mexican culture, history, and the people.International tourist arrivalTourist (Stop-over) Arrivals in by YearDestination200420052006200720082009Bahamas14500431514532149166315277261462404132672 2Cancun233136221341801586942202230221653201434416Jamaica141478614786631678905170078517672711837091Tourist AttractionAn amazing fusion of European and especially Spanish and Meso-American cultures, which make up a unique culture, plus the swoopal climate make Mexico even more attractive. The peak seasons in the country are during the calendar month of December and the months of July and August. Cultural event in Mexico are mainly focused onAn amazing fusion of European and especially Spanish and Meso-American cultures, which make up a unique culture, plus the coastal climate make Mexico even more attractive. The peak seasons in the country are during the month of December and the months of July and August.Cultural event in Mexico are mainly focused onReligionArtLiteratureNational holidaysMusicDancingcuisineCinemaSportThere are three categories of event in MexicoCatholic religious events,national eventscultural events.El Da de Los Reyes which is the deuce-ace Kings Day is the tradit ional gift giving day. Carnaval (Mardi Gras) festivities take place from February to March with parades, dancing, fireworks and music. From 10-13 May, the Cancn Jazz Festival takes place, featuring top musicians.The nation celebrates Independence Day on 15 and 16 September with fireworks and parties. The International Caribbean Festival is celebrated in November which is followed by the Fiesta of Isla Majors that honours the patron saint and the Cancun Fair in early December.Potential Problem in Mexico tourism industryPassport Visa requirementStart from June 2009, all the U.S. travelers returning/entering to the United States from Mexico must present a valid passport or other WHTI documentation, such as passport card, birth certificate or enhanced drivers license.Hurricane impact the coastSince our hotel is located in at the coast of the Yucatan Peninsula, Cancun, the area can be affect by the hurricane season. Hurricane season in Mexico last from June to November, in 2009, the hur ricane season was comparatively mild in comparison with the few previous years, but the heavy storms had affected the tourists come to visit the country.Economic in MexicoThe economy of Mexico is rank at the 14th largest in the world, and place 11th by the purchasing power parity. Since the year 1994, when the most severe crisis in the whole history of Mexico, Mexican peso suddenly suffered devaluation due to the high inflation rate, nearly 50% of the population suffered due to the no value in the currency. However, the country has made an impressive recovery, expression a modern and diversified economy, and financial support from the U.S. governing body even the 2002 South America economy crisis, it didnt influence much of the countrys economy as the government did everything possible in order to improve countrys economic fundament.Mexico is characterized by macroeconomic stability, by reducing inflation and interest rates to increase per capita income however, enormous interrup tion remain between the urban and the rural area, which only the rich and poor people remain, the middle class is almost disappearing. The Mexican government is facing the challenges accommodate the upgrade of substructure, the modernization of tax system and labor laws, and the reduction of income inequality. Mexico has a strong business relation with the U.S., it suffered from the economic slowdown and economic recession by -6.8% in GDP in 2009. In 2010, Mexico is expecting a 3% growth and 2-3% growth for the next decade.Economic systemFree Trade ActMexico is a free-market base economy, by signing up free trade agreements (FTAs) with more than 40 countries, which including the European Union, Japan, Israel, and much of Central and America. More than a quarter of the countrys GDP are generated from the export goods to the U.S. Mexican government are welcome for business to enter. Mexican economy is depending on the following agriculture and food production, industry natural cho ice and services. Figure 2.2 shows the GDP sector.TaxationIn order to open and develop a business in Mexico, there are some factors that should be taking into consideration before planning the correct strategy of investments. The political situation of the country, economical situation and demand that will help to build a marketing plan directed to making high revenue.Federal tax in Mexico may vary from 10% to 28% despite to the income. Corporations are been charge for 30% tax rate however, for foreign private investors, the tax rate is set at 25%, which is slightly lower than the residents. This has a positive effect on the development of business in Mexico and attracts entrepreneurs to invest their money.The value-added tax (VAT) on the sale of goods, rendering of services, granting the use or enjoyment of goods and importation of goods or services is commonly set at 16% in Mexico. In the border areas (international land border areas) is at 10%. (www.taxrates.cc)The concept of c apital gains in Mexico does not exist. The earning that one gains from the sale of a product is treated as normal income.S.W.O.T. analysis of MexicoStrengthsLocation is good because it is the major connection between North and South America. equatorial climate two main seasons (rainy and dry)Beautiful nature and rich culture with a lot of historyWeaknessesEconomy is closely related with export to ground forces around 70% is export.Swine flu that hit very badly the whole country and they need to close it to stop the pass out of the fluBig enigma is drugs (selling and transport to USA)Natural disasters tsunami, earthquakes and hurricanesSplit oil in the Gulf of Mexico related with tourismTreatsEconomy depends too much on USA economy high-pitched violence because of drug traffic and cartels related with itOpportunitiesReducing dependence of USA economy and increase independency of the economyDevelopment of the economyS.W.O.T. analysis of CancunStrengths ingenuous locationVery goo d known like tourist destination world widePopular with Mesoamericans history and Mayas ancient buildingsBig variety if worldwide well known hotelsA lot of options to explorer Caribbean Sea or Gulf of Mexico also regions around Cancun (scuba diving, fishing, jeep trips, Mayan ruins, parks, museums) also there are 475 bird species, over hundreds different mammals and twelve hundred plants.Accessible (airport 10 km)WeaknessesToo crowded because of the many touristsHurricane ( Dean 2009)TreatsDepend too much on the tourism and hospitality industryOpportunitiesEncourage people to invest and extend the agriculture (support and subsidize the sector)Develop green sites of the cityForeign investors in infrastructureConclusion InvestmentThree quarter of the hotels in Cancun city are rated as 5 star luxury hotels. The average room rate is $80-200 consort to dealbase.com, which is relevantly cheaper than Miami resort, start from $119 and go up. Cancun city became a favorite tourists destinat ion by the U.S. and European. The occupancy rate is consistently stayed above 70% in the stock bases (Latin American Berald Tribune), which provide large clienteles to make profit. Cancun city has 140 hotels with very few boutique hotels in the area, by the research on escapio unique hotels clear site, there are only 2 unique hotels can be fit into the boutique hotels categories. They are Hotel Villas HM Paraiso Del Mar and Las Nubes de Holbox. These hotels have standalone building for each room and only 20 rooms and 26 rooms each. This creates a huge demand of boutique hotels once the concept and advertising are spread in the area. Since there are only few unique style hotels in Cancun, the sustainability is low, it create inelastic of demand. This is why we think it is a good theme to invest boutique hotel in Cancun. From the customers side of view, the VAT is Cancun is at 10% rate, which is 6% lower than other inner states, because it is on the border of Mexico, this will attr act more potential customers to Cancun. As we mention earlier, the taxation is set at 30% to corporation in Mexico, 33.3% in Jamaica, 20% in Belize. From an entrepreneur item of view, the taxation is quite high compare to the neighbor country Belize.To start the business, we must look at the factor of production capital, labor, entrepreneurs, and land. The capital will be the most important factor to invest due to the high startup capital. However, our aim is to open a boutique hotel with 40 rooms, this can be an improvement to enter the business with lower initial investment. The labor cost is cheap in Mexico the average minimum wage is at $4.5-6 per day. To maximize the profit, the operational outlay will be the key to success, which the salary will be limit to the bottom to maximize the profit.