If you are looking for an excellent return on investment that can surpass the stock market and at the same time provide continuous income with solid real estate equity support, you should consider investing in the Mexican lodging market. In recent years, we identify an economic expansion of the professional middle class and growth in industrial competitiveness that is driving investment opportunities.
According to Forbes magazine, Mexico is the second-largest economy in Latin America and has a strategic location due to its proximity to the United States, which is its largest trading partner. This has helped to face the economic slowdown with better results than the other Latin American countries.
The consultant of the hotel sector HVS has expressed that "the economic panorama of Mexico is solid concerning the business trips and the demand for lodging in hotels". In this sense, the evolution of the markets will continue positively for the sector with a growing demand for hotel infrastructure.
To address this opportunity, AP Capital enters the 'Select Service' hotel market, taking advantage of the consolidation of independent brands seeking to integrate with international brands to maximize their local and regional positioning.
The tourism and lodging industry in Mexico is growing
According to the World Tourism Organization, Mexico is the number one destination for tourists from the United States and ranks eighth in the world. The tourism industry in recent years has progressed and currently represents 16% of the country's GDP, according to the World Travel and Tourism Council.
However, it is expected that hotel demand in Mexico will increase as a result of a 2.3% GDP growth, as well as increased government spending, national and international investment, the emergence of new industrial sectors such as research and development, and companies focused on technology and life sciences, thus expanding the consolidation of urban and manufacturing centers.
Today more independent hotels are becoming the property of recognized brands, as a result of restricted supply. And developers are increasingly turning to mixed-use real estate to allocate land costs to different uses.
Increase in the value of the dollar
The US dollar, like the Canadian dollar, has been at its historic maximum against the Mexican peso, which equates to fantastic offers for investors. Mexico offers an unbeatable value compared to other popular tourist destinations. The effect of the recent devaluation of the peso, combined with a moderate rate of inflation, helps boost tourism.
By increasing the demand for national tourists, travel is made more affordable for international visitors and the operating profitability of hotel companies is improved.
Compressed limit rates (low risk and high reward asset class)
The emergence of national real estate investment vehicles (FIBRAs and CKDs) aimed at the hotel sectorise increasing liquidity in the market, which drives investment in the sector. Today, there are more than a dozen FIBRAs active in the market that seeks to buy assets with stabilized flows; The same that complement the CKDs listed on the Stock Exchange are generally considered investment funds whose capital is mainly used for infrastructure and real estate development.
Higher Investment Returns
In places of interest such as Cancun, Mexico City, Guadalajara, Monterrey, and other industrial cities, as in border cities such as Hermosillo, Mexicali, Ciudad Juarez, and Tijuana, they are offering more than 17% ROI according to the study conducted by HVS (2018), which outperforms the stock market and also offers a hedge against inflation.
High demand and high levels of the hotel offers
Local mobility in Mexico provides easy access to major international airports, which offer numerous connecting flights to national cities and around the world. This makes it easier for businessmen and tourists to travel more frequently, for business or pleasure, which makes it possible to reach 79.1% of occupancy rates in places like Cancun. The main demands of new hotels are present in urban/industrial cities and regional centers such as Monterrey, Guadalajara, Querétaro, and Tijuana. In addition, there is a growing capacity for the new offer of hotels in tourist cities such as Cancun and Puerto Vallarta.
There is no depreciation in the value of the properties
The real estate sector is the second largest contributor to GDP, representing 15% of the total and generating more than 15 billion direct and indirect jobs. Hotels in Mexico also enjoy a remarkable appreciation. The hotel market is among the ten fastest-growing real estate markets in the world and demand is easily outstripping supply.