Room service: Mexico's hotel market is taking off, especially in niche businesses.

Imagine climbing a pine-tree covered mountain or birdwatching on a deserted island. Now imagine doing all that without having to spend the night in a tent, or even outside at all. Sounds like your cup of tea? It is for guests at Hoteles Mision, Mexico's third-largest hotel chain. Traditionally a luxury-chain operator, Hoteles Mision spent US$224 million in 2004 building 28 hotels large and small across the country for those looking to enjoy a little nature without giving up the comforts of city life.

The new hotels, a project known as Mision Motor Inn, are on the outskirts of places like Laredo, Tabasco, Chetumal, Oaxaca and Nogales. Each complex has a pool, restaurant, bar, gas station and 160 rooms with daily rates at $60 per person. Construction on all the new hotels will end in 2006.

That's great news to Veronica Maza, who has spent seven years putting up with an uncomfortable tent. "I love ecotourism, but in Mexico the comfortable hotels are generally far away from places where you can do sports such as canoeing or skiing," Maza says. "When you have to battle up and down mountains, at the end of the day all you want is a nice, hot bath and to sleep in a bed."

Hoteles Mision's expansion plan is not just for ecotourists like Maza but will serve other niches as well. The 26-year-old company will spend an additional $60 million on two luxury, beachfront hotels in the cities of Guayamas and Puerto Penasco, in Sonora state, not far from the U.S. border near Arizona. That investment also covers the construction of a third hotel at the port in Manzanillo, 1,000 kilometers west of Mexico City. The company hopes these investments draw tourists from the nearby United States.

Although tourism along Mexico's border grew a healthy 11.5% to 4.3 million people during the first half of 2004, the government projects that figure could double in just two years. A study by the Colegio de la Frontera Norte university in Baja California finds that more than half of the people living in San Diego, California, have never been to Mexico, which is right in their back yard.

In addition, two-and-a-half-hours away from the border in the U.S. states of Texas, New Mexico and Arizona live between 20 million and 30 million potential tourists, says Francisco Madrid, Mexico's undersecretary of tourism. The secret, Madrid says, lies in "creating an attractive package that is just around the comer, one with a different culture, and one that can help us improve [economic] conditions along the border."

Hoteles Mision expects that, like in the United States, the Mexican industry won't stay dependent on five-star offerings alone. Instead, the tourism industry is attacking different niches, says Martin Lara, a hospitality industry analyst at the U.S. risk-ratings agency Moody's.

Only ninety minutes by highway from landlocked Arizona, Puerto Penasco in Mexico is that U.S. state's closest beach. It's also where most of the U.S. tourism money is flowing, says Roberto Zapata Gil, chairman of the Hoteles Mision. Tourists are tending to travel more by car than by air, he says, which makes northern Mexico an attractive destination. Tourists on the highway also spend more in Mexico than their airborne counterparts.

'Air traffic brings us passengers that stay in the country for seven days," says Zapata. "Tourists who come by highway stay in the country around 15 days and spend twice as much while shopping." Of all foreign travelers coming into Mexico, 75% do so by airline and 25% on the ground, according to the government.

The number of foreign visitors in 2004 was small compared with those in countries like France or Spain, which welcome 65 million visitors a year, says Zapata. And Mexico's growth in international tourism in 2004 has come from piggybacking on global growth and post-Sept. 11 security concerns, not necessarily Mexico's tourism policy. "The European market for the Middle East looked for new destinations because of the lack of security. It wasn't the result of some campaign from within the country," says Zapata, who is also the vice president of Mexico's Confederation of National Chambers of Commerce and Tourism.

High interest. Mexico is, nevertheless, the eighth-most-visited country in the world. During the first half of 2004, the tourism sector took in $5.56 billion, a 14% increase over the same period a year earlier, according to the Central Bank The number of international tourists during that period reached 10.2 million, 11% more than in 2003.

For tourism to generate real economic benefits for Mexico, more public officials must get involved in creating long-term plans and credit incentives for the sector, industry leaders say. Banks have begun to consider the sector's potential, and they have created financial services specific to the business. Nafinsa, a state-owned development bank, and Banorte, one of the larger private banks in the country, have $35 million in credit lines available for tourism companies. Many domestic companies in the industry have listed on the Mexican Stock Exchange, too, for project financing.

Mexico as a whole stands to gain, according to hotel operators. Each new hotel room can create at least six new jobs, directly and indirectly, while one hotel leads to 960 jobs.

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