BUSINESSWEEK ONLINE : MARCH 1, 1999 ISSUE
INTERNATIONAL -- SPOTLIGHT ON MEXICO

Betting on the Eco-Tourism Craze...And on Adventure Travel, Too (int'l edition)


There's no grass in the garden at Hotel Eco Paraiso Xixim, and the beach is littered with seashells, seaweed, and starfish. A snake slides off the path at the sound of voices, and an iguana slips off a sunlit perch at a camera shutter's click. This is just the way Verena Gerber likes it. The lead investor in the eco-friendly resort on the Gulf of Mexico has watched the two-year-old proj-ect eat up $2.5 million so far, but she's determined to make it work. ''With this type of money, you could do a block hotel in Acapulco, but we have always wanted to preserve the environment,'' she says.

All over Mexico, small investors such as Gerber are hoping to tap the potential of environmental tourism. Nature and adventure travel are growing worldwide by 30% each year. Mexico's habitats range from desert to mangrove to cloud forest, and the government has set aside more than 100 parks and reserves. Its wealth of plant and animal species make Mexico one of the most biologically diverse countries in the world. But it has lagged behind such countries as Costa Rica and Ecuador in marketing its natural beauty. ''Mexico still operates under the mind-set of what it succeeded with--megatourism,'' says Ron Mader, author of an ecotourism travel guide.

Now, dozens of small operations have sprung up, hoping to capture more of the $8 billion spent by some 20 million foreign tourists a year. Ecotourism accounts for just 5%. ''It's much easier for the government to say they have created 4,000 new jobs with one big hotel than to create the same number in 100 different small hotels,'' says Meliton Cross, who runs an eco-friendly lodge in Cuernavaca, an hour south of Mexico City.

Gerber's 500-hectare project, on the western edge of the Yucatan Peninsula, shows just how challenging it can be to find a market and make a profit from responsible tourism. Occupancy is rising, but only a quarter of the rooms are filled. ''You have to earn money to be self-sufficient,'' she says. The hotel, which treats its wastewater and composts its sewage, is set in the Ria Celestun Biosphere Reserve, a feeding area for the American flamingo and an important wintering site for migratory birds. Cormorants, egrets, frigate birds, and white pelicans skim over the inland estuary, landing by the hundreds at sunset on a tiny island. The hotel has only 15 seafront cabins set on 25 hectares, with plans for no more than 60. Half of the remaining land is left to the mangroves and coastal dunes, while on the other half, hotel manager and biologist Jose Arellano is replanting coconut.

TOO WILLING. Two guides from Celestun, the fishing village down the road, are getting the idea, too. David Bakab and Feliciano Pech set up their own company a year ago, offering bird watching and jungle tours. The fishermen they grew up with don't understand their concern for the environment, says Bakab: ''We want to involve the kids in school, give them a consciousness of the importance of protecting the area.'' Pech, who was himself a fisherman, grumbles that the ones who take tourists out on the estuary are all too willing, if asked, to scare a flock of flamingos into flight for a photo.

If ecotourism is just catching on, adventure tourism is taking off. Five years ago, outdoorsmen Alfonso de la Parra and Waldemar Franco took $100,000 of their own money and set up Rio y Montana, organizing rafting and hiking trips. Now they have 33 guides, and they've poured their profits into their own eco-lodge on the banks of the Antigua River in the Gulf Coast state of Veracruz. The success has spawned imitators. When De la Parra and Franco started, they were one of two companies running trips down the river. Today there are 16.

The trend is beginning to attract big investors. Grupo Posadas, a Mexican hotel group with $215 million in sales in 1997, is investing $12 million to open two resorts next month in southern Quintana Roo, on the Caribbean. Set in the jungle by the Mayan site of Kohunlich, the hotels will offer everything from lessons in Mayan stargazing to scuba diving to jungle walks. Posadas calls the idea ''soft adventure'' and is targeting a high-income yuppie market. The hotel group will have trouble winning over skeptical ecopurists, despite its effort to build eco-friendly hotels, train local guides, and promote the area's untouched surroundings. But it may help put Mexico on the ecotourism map.

EDITED BY HARRY MAURER
By Elisabeth Malkin in Celestun

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