Apple Leisure Group says it is putting a hold on some hotel projects worth up to $600 million in Mexico.
ALG CEO Alejandro Zozaya said four or five projects have been ‘put on pause,’ in part blaming the federal government’s decision to cut tourism funding.
The disbanding of the Tourism Promotion Council (CPTM) has led to lower revenue and profits for the hotel industry.
"Hotels weren’t as profitable in 2019 as in 2018 and 2017. The closure of the CPTM has hit us, it’s one of the factors that hurt Mexico," Zozaya said.
Added to this, supply is ahead of demand, he says.
"When demand doesn’t grow at the same pace as supply, [room] rates go down but operational costs haven’t fallen," Zozaya said.
The strength of the US dollar has also affected margins.
While the new projects will be suspended for now, ALG will still go ahead and open six new resorts in Mexico by the end of next year.
ALG currently operates 33 hotels across 15 destinations such as hotspots Cancún, Riviera Maya and Cozumel.
