By all accounts, last year was a rough one for the Mexican tourism industry, and Mazatlán was no exception. Though local real estate investment has stayed relatively strong, many small businesses are barely hanging on.
In September 2020, the World Travel and Tourism Council estimated that the Mexican tourist industry would lose $129 billion by the end of that year, putting 5 million people out of work. Around town, the economic slowdown is evident in shuttered store fronts and quiet(er) streets. Merchants who were thriving before the Coronavirus pandemic are running in the red, weighing whether to hold on, or close and cut their losses.
“Tourism and the travel industry are without a doubt the most impacted segment of the economy… 2020 was a very difficult year, where the main achievement of tourism businesses was to get back on their feet, aiming to stay open despite never-before-seen revenue losses,” said Julio Birrueta, Director of the Associación de Hoteles y Empresas Turísticas of Mazatlán. “The good part is, despite the impossibility of receiving some kind of stimulus or economic support from the federal government, the tourism industry in Mazatlán was at least able to reopen and recover an important part of the jobs [lost].”
This year will require an extraordinary effort to keep afloat as many businesses and jobs as possible in Mazatlán, Birrueta said, and the pandemic and post-pandemic impact is expected to continue throughout the year.
“The pandemic is a public health situation and the general priority is to stay healthy and strictly follow the established [health] protocols,” he said, noting that health is the top priority, followed by keeping the economy open.
The outlook for 2021 depends on the evolution of the pandemic, with many business owners hoping that the roll out of vaccines will lead to more visitors and more spending. At best, Mexico could see a 65 percent increase in international tourism this year compared to 2020 (up to 42.7 million visitors). At worst, the increase in foreign tourists could be just 1.6 percent, or 26.3 million visitors, according to the Mexican Secretary of Tourism, Miguel Torruco Marqués.
So far in 2021, Sinaloa has seen a “moderate increase” in Covid-19 cases post-holiday season, as vaccinations continue for healthcare workers. But so far, visitation is sluggish and small businesses are paying a heavy price.
Geovanna Vélazquez, a jewelry retailer also based in Mazatlán’s Golden Zone, said that her business has survived the pandemic so far thanks to online sales. Her business, Flamenco Rosa Fashion Jewelry, started online and opened a physical location for the first time last summer.
This year has been “disastrous,” she said. “I’m thinking about setting up a workspace in my house and going back to selling [only online] like I did before.”
The economic crisis has dampened spending, and clients now often look for different, more casual styles than they did before the pandemic. “My specialty before was party jewelry but the pandemic started, events were canceled… I had to adjust a bit online to products that were marketable in these times.”
We spoke shortly after the January mid-month payday. Vélazquez indicated the street- prime parking spots, but few cars. No lines at once-popular restaurants.
“Right now, none of us are spending… There’s a lot of discouragement, a lot of fear. People who didn’t believe in Covid before are seeing lots of cases… ten parents of my friends have died since the pandemic started. It’s horrible… It doesn’t seem like 2021 will be a great year. It’s a tough year with lots of challenges and we’ll have to be very creative to survive. We’ll see.”
“It’s been a complicated year, for everyone I think, and for those, like me, who depend on tourism, even more so,” said Armando Galindo, owner of the Argasa Leather Factory. “Last year in April, almost everyone left. Americans, Canadians, all of them. The economy really stopped here in Mazatlan. This year looks to be pretty difficult too. I don’t think many of us will last much longer.”
He is hoping for business to pick up as more people get vaccinated, and notes that Mazatlan and Sinaloa have seen less cases of Covid-19 than other areas of Mexico.
He says he depends on tourism directly, selling his leather goods in the Golden Zone and indirectly, because he also makes suits for banda musicians–but now, with events shut down, fewer musicians are buying.
“It’s not clear if we’re going to last much longer… Independent businesses like mine, we depend on and survive from foot traffic… We can’t get credit, we can’t get support. It’s very complicated, it’s too much. Paying rent, insurance, wages, has been very, very difficult.”
Galindo is known both for his leather work and musicians’ clothing, with famous Mexican musicians like Los Recoditos, El Original and El Coyote among his clients. He gets orders for his colorful, sharply cut suits from groups both in Mexico and the US, which has helped support his leather business in the absence of tourists. The Mazatlán-Durango highway has also alleviated the economic pain to some extent by bringing domestic tourists from Chihuahua, Nuevo Leon and Durango, Galindo said, though historically he depended more on the purchases of international tourists.
He has considered changing to a cheaper location, away from the Golden Zone and switching to selling only musicians outfits, but speaks with great pride of his pre-pandemic success selling high-end leather goods. “I’ve worked leather all my life. My dream is to have a larger business selling leather, and sell musicians’ suits on the side. So I’m hanging on as long as I can… it’s a sad situation.”
The real estate sector has been less impacted. Despite the global economic crisis and the difficulties facing the tourism industry, Mazatlan continues to be a focus for real estate investment.
“I think Covid has been a watershed moment for investment. It is clear that despite the pandemic, the impact has not been as bad as one might have thought,” said real estate agent Denisse Millán of Diamond Real Estate.
“Mazatlan has beautiful beaches and it’s affordable, it is not as expensive a beach town as Cancun or Puerto Vallarta. Plus people here in Mazatlan are warmer and friendlier. So Mazatlan is an attractive place for investing in property, “ said Millán. “It looks to be a good year in terms of development, property investment and visitation. As long as the numbers [of Covid cases] do not shoot up again or businesses have to shut down again, I think it will go well for us. Basically, we have to take care of ourselves. To be careful.”
Last year, Millán said, January began well. Things began to look less certain in March, as businesses closed and finding renters became more difficult. When non-essential businesses closed, the economy really slowed down. Sales in April and May were subdued, since then sales and development have been more or less normal. A few construction projects saw delays due to reduced personnel to comply with health and distancing measures. And a number of Americans, particularly the older generation, have sold residences and returned to the US. There has also been a reduction in ex-pats renting seasonally.
In the last two years, there have been more than 100 construction projects, including hotels, condos, houses and housing developments. In 2021, there are already 12 projects confirmed, mainly in tourist areas like the Malecón, the Golden Zone and Cerritos. That is a bit less than were planned last year at the same time, she said, but still a good number, with more projects expected throughout the year.
“Mazatlan is as beautiful as ever. Downtown, the Malecón, the beaches, these are things that are still here. They are not going anywhere,” said Millán.
The Sinaloan state government reported monthly increases in jobs registered with the National Social Security Institute (IMSS) at the end of 2020.
“With the vaccine available, I am confident that Sinaloa will begin to recover, we are seeing it month to month. Since September we have seen improvements every month and December was no exception in job growth…” said Javier Lizárraga Mercado, the Sinaloa Secretary of Economy. “This is a sign of [economic] recovery in the face of Covid-19.”