Tuesday, October 6, 2009

Mexico's Secretariat of Tourism: Going, going, gone?

On September 8, 2009 the announcement was made by President Calderon that as part of the government's cost cutting efforts, the Secretariat of Tourism (SECTUR) would be merged with the Secretariat of the Economy. It will no longer operate as a separate entity. What effect will this have on the National promotion of tourism in Mexico? That depends on who you talk to.

Historically there has always been some controversy surrounding SECTUR, with many people thinking it has been paternalistic, done a poor job, contributed to the destruction of important ecological areas and is a waste of public resources. Others, primarily big businesses such as luxury hotels, tour operators, developers, restaurants, timeshare companies, etc. (which are also major employers in the country), have found it to be very useful.

What is concerning those large businesses about the disappearance of SECTUR as a separate entity is the potential loss of direct contact between them and the executive branch in a country where it is still the President who essentially controls everything. They also worry that being downgraded to only a kind of deputy tourism position in the Economics department would remove weight from the tourism sector, rather than providing a driving force that listens to their input.

To that end, some very large and important investors/developers within Mexico have been expressing their concerns. Among them is Eduardo Sanches Navarro of Grupo Questro, who is the main developer behind the massive Penasco Bay project on Sandy Beach (which is currently on hold due to economic stresses). Others include Pablo Gonzalez Carbonell (Grupo Costamex) and Olegario Vazquez Aldir (Grupo Empresarial Angeles, or GEA).

A bit of history might be in order here. The three major tourism entities at a national level are SECTUR, FONATUR and CPTM.

Up to now SECTUR has been the government department in charge of the nation's tourism promotion and development. The Secretary (the head of SECTUR) is appointed by the President of Mexico and is a member of the federal executive cabinet.

FONATUR, Mexico's National Trust Fund for Tourism Development, was formed in 1974 as an agency operating under SECTUR. It has been the driving force behind the construction of many coastal mega-resorts in Mexico. It is headed up by Miguel Gómez Mont, who as recently as 2008 was announcing plans for a massive new development south of Mazatlan and studying 10 areas on the Sea of Cortez, hoping to choose one and promote it as the next Cancun.

Also involved in promoting tourism is the Mexican Council for the Promotion of Tourism (CPTM by its initials in Spanish, generally referred to in English as the Mexico Tourism Board), a limited company in which the State has a majority stake. Its objective is the design and execution of domestic and international strategies for the promotion of tourism, with the participation of the various stakeholders in the industry.

The creation of this company a decade ago was an initiative of the Tourism Commission of the Lower House of the Mexican Congress, the Chamber of Deputies. The initiative, in the form of a Bill of Reforms and Additions to the Tourism Law, was unanimously approved by all parties. Has it been successful? One might look for an answer to the fact that in only 10 years CPTM has already had six general managers, an average of one per 20 months. In the private sector, such a company probably would not have survived.

Especially under President Vicente Fox, FONATUR, with John McCarthy in charge, took on some massive new projects that did not end well, the most notable being the infamous Nautical Ladder. During that period there was considerable infighting between McCarthy and the head of SECTUR, with McCarthy working hand in glove with Fox rather than going through channels with SECTUR. Controversy also existed between SECTUR, FONATUR and the CPTM, with accusations that CPTM failed to fully develop its potential or coordinate its efforts with SECTUR and FONATUR.

As early as the beginning of Fox's term as President there were already conflicts between SECTUR Secretary Bertha Leticia Navarro and Javier Camargo Vega, then-head of the CPTM, conflicts which led to Camargo's departure. A year later Navarro left her post due to continuing differences with management and with FONATUR's McCarthy.

In the three years that President Calderon has been in office he has been revamping Mexico's governmental structure, and among those changes has been a downsizing of FONATUR. The Nautical Ladder has been pronounced dead, more or less, and many of FONATUR's assets are up for sale. SECTUR, now headed up by Rodolfo Elizondo Torres (perhaps responding to directives from Calderon?), lost no time in arranging to clean up what it considered FONATUR's excess. But now SECTUR itself is facing a big change and no one is sure what will come of it.

Will it receive adequate funding? Will it continue to be responsive to the tourism industries in Mexico? Will it have the ear of the executive branch to the same level it had before?

All that remains up in the air, along with any corresponding effects the change might have on the operations of State and local tourism organizations. Stay tuned.

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