This dynamism has occurred in a context in which the strength of the dollar has skyrocketed. After hitting a 20-year high in recent weeks, even beat the euro for the first time in two decadeswhich was recently quoted at 0.99 units per dollar.
What does this imply for a country like Mexico, where about 70% of foreign tourism came from the United States last June? For specialists, it could benefit the country in terms of currencies, while other markets with less strong currencies could be pressured to travel.
“On the income side, we have adjusted upwards the foreign exchange forecasts due to the inflationary issue, but we are in a position to beat the 2019 record of 24,000 million pesos,” explains Francisco Madrid, director of the Anáhuac Tourism Research and Competitiveness Center (Cicotur). “It would be due to a recovery in demand and an inflationary factor.”
To date, the dollar is an important benchmark in the tourism industry. According to the study’Exchange Rate Elasticities of International Tourism and the Role of Dominant Currency Pricing‘, published by the International Monetary Fund last February, a general strengthening of the dollar may have a contractionary impact on tourist flows.
“A 1% appreciation of the US dollar against all other currencies can be associated with a 0.12% decrease in tourist flows in one year,” he says.
However, in the current Mexican case, although the forecast is not for more tourists, it is for more spendingdue to several factors.
On the one hand, the confinement caused by the pandemic created a generalized desire to travel when possible, to which is added a common phenomenon in developed economies: the change in consumption patterns such as the purchase of fewer goods due to confinement, and the saving content that he left to travel, refers Madrid.
On the other hand, the depreciation of the euro could influence a change in the behavior of tourists from the Old Continent, but also from the United States.
“It is double-acting. Americans will travel to Europe, which is cheaperand Europeans with the crisis will stop coming to Mexico due to the depreciation of its currency and purchasing power”, considers Roberto Montalvo, an academic from the Universidad Iberoamericana.
In the short term, the forecast is that this trend will continue, subject to the effects of other macroeconomic factors, such as the rise in the prices of fuelshave in other links of tourism, such as the air sector.
“Inflation itself is on the supply side, not the demand side. It is not because you have a large quantity demanded, but because of an increase in costs and it is a product of this”, concludes Madrid.