Roughly six months after cartel-related unrest disrupted tourism across Mexico, hotel companies say the destination’s recovery progress has stalled.
While Hyatt and Marriott each reported strong results in the Caribbean in their Q2 reports, the hotel companies reported weakness in Mexico. Hyatt, which has dozens of resorts in the country, said net package RevPAR across its Inclusive Collection fell 1.2% because Mexico underperformed.
Hyatt CFO Joan Bottarini said Cancun was particularly affected.
“Booking trends at our all-inclusive resorts are improving sequentially but have not yet recovered to the extent we expected,” Bottarini said during Hyatt’s Q2 earnings call. “We’re seeing sequential improvements week on week into Cancun in particular, because that is the market that has been the most disrupted since the February security incident. It’s improving, but not as much as we had anticipated.”
In comparison, Bottarini said net package RevPAR in the Dominican Republic rose more than 8% in the quarter, driven in part by travelers redirecting bookings away from Mexico.
She also indicated that Hyatt’s all-inclusives on Mexico’s west coast are performing better than the Cancun-Riviera Maya resorts. Looking at bookings for the first quarter of 2027, she said Cancun was roughly flat, while the west coast of Mexico and the Dominican Republic were both up significantly.
Grupo Posadas, which has some 200 properties across Mexico and operates brands including Live Aqua and Grand Fiesta Americana, released Q2 results on July 23. It showed a similar level of impact on its Mexico coastal resorts, where occupancy dropped 15 percentage points to 62% and RevPAR fell 22%.
The company attributed much of the softness to a slowdown in U.S. tourism, citing Mexican government data showing U.S. air arrivals were down 6.5% from January through May. Additionally, that data indicated Cancun passenger volume fell 4.7% over the same period, while Los Cabos passenger volume was down 5.6%.
Marriott International briefly spotlighted Mexico challenges during its Aug. 3 earnings call. CFO Jennifer Mason said Q2 RevPAR growth of 3% in the Caribbean and Latin America region was “led by strong leisure demand across the Caribbean, offsetting weakness in Mexico.”
Wyndham Hotels & Resorts also reported Q2 softness in Mexico, with CEO Geoff Ballotti saying Latin America RevPAR declined 7% due to decreased U.S. inbound travel to Mexico.
What’s going on here?
Jace Tarbell, founder of Missouri-based Somewhere Travel Co., said his Mexico inquiries are down from last year. He attributes that in part to a lack of sustained messaging to reassure travelers in the months after February’s unrest.
“There was a lot of press immediately after the unrest that kind of said, ‘Hey, everything is fine,’ but then it almost seemed as though the effort to maintain that messaging kind of fell off,” Tarbell said.
Geoff Millar, co-owner of Phoenix-area agency Ultimate All-Inclusive Travel, said the heavy accumulation of sargassum, a brown seaweed, off Mexico’s Caribbean coast has hurt tourism.
“Mexico is now saying not only is it unsightly, but it could be dangerous for health, too,” he said.
Millar said media coverage of Mexico’s sargassum problem has influenced travelers, as the Gulf of Mexico hit a record-high bloom of an estimated 5 million metric tons in June, according to data from the University of South Florida’s College of Marine Science.
In response, Mexico president Claudia Sheinbaum announced in late July that the government plans to invest roughly $115 million in sargassum management along the Mexican Caribbean coast.
Millar also sees signs that Mexico’s challenges may be tied to broader economic trends.
“The all-inclusive world has tended to cater to the middle class, not the upper class, and I think everything from an economic standpoint has hit the middle class worse than anything else,” he said. “We’ve noticed that most of the middle-level clients aren’t traveling at all.”
Jennifer Doncsecz, president of VIP Vacations in Bethlehem, Pa., similarly pointed to affordability as a significant factor.
“Those two adults and two kids as a family who want to spend $5,000 on a summer vacation and would normally go to Mexico or Punta Cana, we have lost them,” she said, citing rising fuel, electricity and food costs eating into budgets.
To help combat those challenges, several family-friendly resorts have rolled out kids-stay-free promotions. Doncsecz pointed to a Hard Rock offer for Thanksgiving and Christmas week bookings in Punta Cana and Riviera Maya as particularly notable because discounts during holiday periods are highly unusual.
In early August, Hyatt’s Inclusive Collection launched a similar offer for children ages 3 to 12 at select family resorts across Mexico and the Caribbean through the end of the year.
