Mexico’s Luxury Lodging Segment - Opportunity for Growth

The luxury hotel market in Mexico has been somewhat overshadowed by other market segments. Here we shed light on its potential.
Richard Katzman

Mexico’s ancient Mayan pyramids and Aztec temples, fusion of European and Meso-American cultures, and exotic subtropical forests and beaches are among its chief enticements. Travelers from the United States, Canada, Europe, and Latin America annually descend en masse upon iconic destinations such as Acapulco and Cancún. Over the past 15 years, Mexico’s economy has risen on the shoulders of structural economic changes and a steady trend of foreign direct investment. Tourists are drawn to hotels of all sorts, including European Plan and all-inclusive resorts operating under domestic and international brands. Business travelers likewise visit a wide selection of properties tailored to their needs.

Tourism to Mexico has been on the rise, and while the worldwide economic decline may temper growth in the short term, tourism levels are expected to rebound with the economy. In 2008, Mexico received 22.6 million international tourists, a 5.9% gain from 2007, in over 10,400 hotels accounting for more than 430,000 guestrooms. The domestic market also drove a significant demand for hotels in Mexico in 2008, with 62 million domestic tourists, a gain of 1.4% over 2007.

Bearing in mind the size of the market and the high level of traffic, it might be surprising to learn that Mexico has a well-established and growing luxury segment. As economic and market conditions evolve, this segment will offer significant business opportunities for developers, investors, and hotel chains.

An Established Market with Room to Grow

The luxury lodging market in Mexico is well established, yet generally receives less overall attention than larger, more visible market segments. Mexico’s lodging market consists of more than the large all-inclusive hotels that cater to families and spring breakers. Select luxury hotels in Mexico have garnered recognition in the United States as premier leisure destinations for affluent travelers and celebrities. Nonetheless, the broad, diverse array of luxury hotels in Mexico, as well as the potential for growth in this segment, remains largely unsung.

The following list of selected existing luxury lodging supply gives a picture of what Mexico currently has to offer. In terms of the total number of hotels, the luxury segment appears substantial. Yet these hotels comprise an inventory of less than 4,300 rooms, a number well below that of other luxury markets worldwide.

Selected Luxury Lodging Supply in Mexico

Property Location
Key Count
Luxury Collection Hacienda Santa Rosa Santa Rosa
Luxury Collection Hacienda Uayamon Uayamon
Luxury Collection Hacienda Puerta Campeche Campeche
Luxury Collection Hacienda San José Tixkokob
Hacienda San Gabriel de Las Palmas  Amacuzac
La Casa Que Canta Zihuatanejo
El Hotelito Desconocido  Careyes
Luxury Collection Hacienda Temozon Temozon Sur
Quinta Real Huatulco Huatulco
El Tamarindo Golf Resort Puerto Vallarta
Hotel Esencia Playa Del Carmen
The Tides Riviera Maya Riviera Maya
Casa de Sierra Nevada, Orient-Express San Miguel de Allende
Las Mañanitas Cuernavaca
El Careyes Beach Resort Acapulco
Quinta Real Zacatecas Zacatecas
Esperanza Los Cabos


Capella Ixtapa Ixtapa
Rosewood Las Ventanas Al Paraíso  San José Del Cabo


Orient-Express Maroma Riviera Maya
The Tides Zihuatanejo Zihuatanejo
Quinta Real Acapulco Acapulco
Quinta Real Guadalajara Guadalajara
Zoëtry Paraíso de la Bonita Cancun
Camino Real  Oaxaca
Ceiba del Mar Puerto Morelos


Rosewood Mayakoba Playa Del Carmen
Mandarin Oriental Playa Del Carmen
Grand Velas Nueva Vallarta
Quinta Real Monterrey Monterrey
Four Seasons Punta Mita Bahia de Banderas
One&Only Palmilla San José Del Cabo
Occidental Royal Hideway Resort Playa del Carmen
Le Meridien Cancun Cancun
JW Marriott Mexico City
W Mexico City Mexico City
Marquis Los Cabos Los Cabos
Four Seasons Mexico City Mexico City
Ritz-Carlton Cancun
Fairmont Mayakoba Solidaridad

Most of the hotels listed above operate on a European Plan, with the exception of a few all-inclusive properties. European Plan hotels have a common association with the luxury segment, as the majority of luxury hotels in North America are European Plan properties. We have therefore chosen not to include a comprehensive list of all-inclusive luxury hotels because the focus of many hotel brands and developers is to build European Plan hotels. Also note that many of Mexico’s luxury independent or boutique hotels, especially in the colonial cities, operate with ten guestrooms or less. While such properties offer excellent lodging alternatives, we’ve focused our list on properties with more than ten rooms. Several larger independent and chain-affiliated hotels offer high-quality lodging and add to the rich diversity of the market, but are not consistently cited as luxury hotels in third-party publications and do not therefore appear in our list.

Geographic and Product Diversity

Luxury hotels in Mexico are concentrated among three types of locale: along the country’s vast Pacific and Caribbean coasts, in key business centers, and in the diverse landscapes of Mexico’s interior regions. Certain markets, including Los Cabos and the Riviera Maya, have numerous luxury hotels. The following map illustrates the geographical distribution of luxury hotels throughout Mexico.

(1) Rosewood Las Ventanas Al Paraíso, One&Only Palmilla, Esperanza, Marquis Los Cabos (2) El Tamarindo Golf Resort, Grand Velas, Four Seasons Punta Mita, El Hotelito Desconocido (3) Quinta Real Zacatecas (4) Quinta Real Monterrey (5) Quinta Real Guadalajara (6) Casa de Sierra Nevada, Orient-Express (7) Four Seasons Mexico City, Las Mañanitas, JW Marriott, W Mexico City (8) Hacienda San Gabriel de Las Palmas (9) Luxury Collection Hacienda Santa Rosa (10) La Casa Que Canta, The Tides, Capella Ixtapa (11) El Careyes Beach Resort, Quinta Real Acapulco (12) Quinta Real Huatulco, Camino Real Oaxaca (13) Luxury Collection Hacienda Uayamon, Luxury Collection Hacienda Puerto Campeche (14) Luxury Collection Hacienda San José (15) Luxury Collection Hacienda Temozon (16) Zoëtry Paraíso de la Bonita, Ritz-Carlton, Le Meridien (17) Orient-Express Maroma, Rosewood Mayakoba, Tides Riviera Maya, Ceiba del Mar, Fairmont Mayakoba, Hotel Esencia, Mandarin Oriental, Occidental Royal Hideaway Resort

Mexico is a prime location for luxury hotels, with people coming from all areas of the world to experience the country’s rich attractions. There is a broad correspondence between a luxury market’s location and the origin of its patrons. For example, the Pacific coast of Mexico receives large numbers of travelers from the western United States and Canada, with the Caribbean coast receiving high volumes of travelers from Europe and the eastern U.S. Domestic travelers also play a powerful role in driving Mexico’s luxury lodging market. Luxury hotels are primed to host domestic meeting and group business, as well as affluent travelers seeking a getaway.

A Diverse Luxury Offering

As in the United States, individual properties in Mexico are often classified as luxury based on their average rate. Select luxury properties in Mexico are able to achieve average rates ranging from US$400 to US$700. One notable hotel achieves an average rate in excess of US$1,000.

However, in Mexico’s lodging industry, average rate is not the sole determinant of a luxury designation. Certain domestic and international brands are recognized as luxury hotels in Mexico, even if their average rates are somewhat lower than those noted above.

Luxury classification is also influenced by location. The vast coastlines of Mexico pose as premier oceanfront locations for luxury hotels, and colonial cities provide a unique and historically rich experience for hotel guests. These distinct locations provide a different set of criteria for the classification of luxury properties.

In beach destinations and select locations in the interior, properties developed within amenity-rich master-planned developments also enjoy a luxury status. Examples of common amenities for luxury resorts include oceanfront views, full-service spas, private plunge pools in each guestroom, 18-hole championship golf courses, and fine-dining restaurants. For hotels located in colonial cities and in the country’s interior, a luxury property may be defined as one with strong historical associations or a unique architectural design.

As with luxury hotels the world over, a high level of service is a factor indispensable to the luxury designation in Mexico.

More Development to Come

Mexico’s proximity to the United States and Canada, its many attractions, and a favorable exchange rate add up to solid positioning for mid- to long-term demand growth. Improved infrastructure and airline service will further aid the expansion of Mexico’s luxury lodging market.

Given the strong interest in luxury travel to Mexico from the U.S. and Canada, and the tendency of U.S. and Canadian travelers to stay at brands they associate with a certain market positioning, there is a premium opportunity for new branded developments in this market. Top brands such as St. Regis and Park Hyatt are already slated to enter the market, and many other highly reputed brands are actively exploring entry in many different formats.

Luxury chains seeking to enter or expand their presence in Mexico will find several means of doing so. They may seek to acquire and reposition existing properties with particularly attractive features, or approach new-build situations on free-standing sites or within master-planned resort-residential communities. Mexico is at the vanguard of such development, spurred by talented local and international developers seeking to capitalize on the country’s appeal to tourists and second-home purchasers and retirees. While current economic conditions have had an impact on the market, mid- to long-term prospects remain promising, and the likelihood of a strong return on investment for luxury hotel projects in Mexico is high.

HVS Mexico City works extensively on consulting and valuation assignments for hotels and resorts throughout Mexico, Central America, and the Caribbean. Please visit us at to learn more.

Richard Katzman is Managing Director for HVS Mexico City, which was established in 2007. He has been active in Mexico and other Latin America countries since 1992. During this period, Richard formed Grupo Inmobiliario Inova, a real estate advisory boutique that merged in 2001 with Insignia/ESG, then among the most prominent real estate service companies in the world. In 2003, following the merger between Insignia/ESG and CB Richard Ellis, Richard elected to reestablish an independent platform prior to joining HVS in 2007. Richard was born and raised in Mexico City. He completed his undergraduate studies at Cornell University, School of Hotel Administration, and received his MBA from The Wharton School. He is fluent in English, Spanish, French, and Portuguese. Contact Richard at +52 55 5245-7590 or


  1. Nelson PardeiroApr 3, 2009

    Dears, It will be interesting for you to include at your list, one of the best considered "Boutique Hotel" in Mexico, part of an exclusive selected "SLH Hotels of the World" in the country, located in Guanajuato capital of the states of Guanajuato, (city declared World Heritage Site). Regards,

    • Thank you for advising us about your luxury property. We work in small and large markets throughout Mexico and highly value local insight. Boutique hotels like the Villa Maria Cristina are a key feature of the hospitality and tourism scenes, especially in historic places like Guanajuato. This article is meant to bring the luxury segment to the attention of developers and investors, and should be helpful to all boutique and luxury hoteliers in Mexico. Our list features only a selection of luxury hotels, but we may be updating this article in the future with additional properties. In the meantime, please let us know if you would like to discuss our insight into your hotel's operation or your market.

  2. douglas kingApr 4, 2009

    Is there a market for medical tourism in Mexico, and if so where might be the best locations?

    • Mr. King, Medical tourism, especially the fields of dentistry and plastic surgery, is a growing trend in Mexico. Numerous upscale resorts, as well as health and wellness destinations, are inviting for patients recovering from plastic surgery treatments. Some of the medical procedures and facilities that have brought heightened levels of medical tourism to the Asia Pacific region have not yet become available in Mexico. This was a popular topic of discussion during the ARDA conference I attended a few weeks ago in Orlando. Developers and local authorities are looking into the ways in which this type of tourism can increase in Mexico. Factors that influence the trend in Mexico are the rising cost of health care and insurance in the United States, and the increasing demand from individuals looking for alternatives to medical procedures. An associate in our London office recently wrote on this topic (without specific emphasis on Mexico but touching on the trend in Latin America): Please let me know if you would like to schedule a time to talk about this in specifics, such as locations for potential development. Laura

  3. Russ SlotnickApr 14, 2009

    Hi Guys, Are you looking at the same reports and occupancy rates that I am? From my perspective, most construction projects have stopped. Most ADR's and OR's fall flat right about now. I know that we need to remain optimistic, but to talk about new properties coming into the marketplace, St Regis and Park Hyatt, is silly since they will not even begin construction until the economy rebounds. I'll tell you why, Setai, Miami Beach $139.00 a night, how about Il Lugano FT Lauderdale at $99.00 per night, Grand Esmerelda, in Playa del Carmen at $59.00 per night AI. These resorts on the drawing boards will remain there until construction loans loosen up here in the US.

    • Russ, Hi Russ, Thanks for the comment. I'm amazed that a room at the Setai can be had for $139 a night? That’s an incredible drop from their ADR last year when I was in the market. As far new developments in Mexico, funding is still available and properties are still under construction. The St. Regis opened a short time ago and the Park Hyatt in Mexico City is planned to open in coming months. As with any new construction in this economy, activity has slowed compared to previous years but deals are still going through. Please let me know if you would like to discuss occupancy or average rates in a particular market, or how the economy has impacted Mexico compared to the United States.

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