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The Canc?ning of Cabo
http://www.latimes.com/travel/la-tr-cabo2mar02.story
Some worry that the Baja resort's overdevelopment and high prices are driving away tourists.
March 1, 2003
By Beverly Beyette, Times Staff Writer
CABO SAN LUCAS -- Here at land's end -- where, they say, the sun shines 350 days a year -- gallons of margaritas are poured, migrating whales spout in
the Gulf of California, and bronzed and buff tourists lounge poolside at hotels that (for a price) offer every imaginable amenity, from massages under
the stars to customized minibars.
But there are clouds on this sunny horizon.
Tourism is suffering. One hears it from the merchants in town, senses it by the empty restaurant tables. Some worry that Cabo San Lucas may be driving
away tourists by offering too little for too much.
"People are trying to dress this place up like a ballroom queen and take her out dancing before she's learned to walk," says David Halliburton Jr.,
whose late father, David Sr., opened the Twin Dolphin in 1977. At the time it was one of a handful of resorts in Cabo and along the 20-mile oceanfront
corridor between Cabo and San Jos? del Cabo, together known as Los Cabos and dotted with luxury hotels. "They're just jacking their prices up and
pretending there's nothing wrong."
Before a recent trip to Los Cabos, I contacted Halliburton, who is pinch-hitting as general manager of Twin Dolphin, and asked if he would show me
around and introduce me to some longtime residents who could share the history of the area and discuss its growing pains.
I soon learned that environmentalists, concerned about depletion of game fish in what has been dubbed "God's fish tank," recently won a battle to
restrict commercial fishing to 50 miles offshore. There is organized opposition from a group calling itself Defenders of the Bay to a proposal to
build a dock at Cabo San Lucas marina so big that cruise ships, which now must anchor offshore, can come into the harbor to disgorge passengers. (More
than 400,000 cruise takers were aboard ships calling last year at Cabo.)
Los Cabos makes a point of wanting to be Mexican, not Miami Beach or Waikiki, yet it is teetering perilously close to both. Wrapped in the arms of a
$400-a-day hotel, you can easily forget that you're in Mexico -- and the desert at that.
The area's first hotel, the Palmilla, was built in 1956 on the corridor. Guests came by yacht or private plane, landing on a rudimentary airstrip.
Where today four-lane Highway 1 takes visitors from Cabo San Lucas to San Jos? del Cabo, in the '60s there was only a dirt road hugging this coast;
the journey took four hours, dodging a cow or two.
The opening of the 1,000-mile transpeninsular highway from California to Cabo in 1973 brought the first wave of tourists, many in RVs. The tsunami
came after the 1977 opening of the international airport near San Jos?.
Today there are 8,200 hotel rooms, with 9,100 projected for next year -- up from 5,731 only five years ago. In-season rates at one boutique hotel
begin at $250, and rates run as high as $5,000 a night for a three-bedroom suite.
Westin is here, as are Auberge and Rosewood. A Ritz-Carlton stands as a great gray hulk, abandoned when economic turmoil hit Mexico several years ago.
As many golfers as fishermen now visit, lured by nine courses, including the oceanfront Jack Nicklaus-designed Cabo del Sol, where prime-time greens
fees are $262. Increasingly, visitors come not to golf or fish but to be pampered at luxe spas.
To "old-timers" -- and that includes those who have lived here for 20 years -- there's something of a through-the-looking-glass quality to this. At
Minerva's Bait and Tackle in Cabo, ex-Angeleno Bob Smith, who settled here with his wife, Minerva, in 1978, recalls, "This was just a small village.
Everybody knew what time it was because they blew the whistle at the [now-defunct tuna] cannery. That was the only industry.
"We didn't make any money, but it was a fabulous community. Everybody was here to help everybody. You don't have that anymore."
Smith, who operates three charter boats, is among those fighting to restrict commercial fishing. "This used to be a great swordfish area. Now you're
lucky if you ever see one."
Baja humbugs?
Time shares have become almost synonymous with Los Cabos. Having dodged the airport hawkers who pounce on arriving passengers, I felt victorious --
until at the Avis office my car keys came with a time-share pitch (car discount and free breakfast). "Time scares," some here call them, and the hard
sell abounds.
In town, salesmen pop out of booths. At one, Javier offered us a discount on a booze cruise aboard a pretend pirate ship with mariachis and "all you
can drink."
Even at the newish Pueblo Bonito Sunset Beach Hotel, about 10 minutes west of central Cabo San Lucas, where the small lobby is dominated by a gilded
and silvered carving of an archangel and a painting of cherubs and saints in the manner of colonial Mexico, the desk clerk is pitching the hotel's
time shares. (In Los Cabos, time shares piggyback at most hotels.)
At Pisces Real Estate in town, Marco Ehrenberg talks about "the time-share craziness," which took off in the late '80s. "Cabo is one of the most
successful time-share places in the world," says Ehrenberg, also a founding co-owner of El Squid Roe, a raucous and fabled nightspot that after 15
years still packs in the dance-on-the-tables-and-have-tequila-squirted-into-your-mouth-with-a-spray-gun crowd.
Juan Zamora, president of the Timeshare Assn. of Los Cabos, says that four of the area's 18 time-share resorts are sold out and the other 14 account
for "around $140 million" in sales annually, at an average price of $16,000 a week. Time-share sales fell about 25% after Sept. 11, Zamora says, and
"now, with the concern about the war, we're also suffering a little bit."
Ehrenberg's wife, Tracy, a transplanted Brit, runs the other family business, Pisces Sportfishing at the marina, booking luxury fishing charters for
catch-and-release billfishing for up to $3,500 a day. When the Ehrenbergs arrived, Cabo's population was 4,800. Today it's about 100,000 in Los Cabos.
"There were donkeys right along the main street, eating out of trash cans," she says.
Marco Ehrenberg, who is the chamber of commerce's vice president for tourism, sees the stunning transformation of Cabo as a good thing for the locals
but thinks the tourism industry may be overreaching.
"Where's the service? Where's the quality of the product?" he asks. "I think we're going to get an adjustment. Even millionaires expect value for
their money."
In the February issue of Andrew Harper's Hideaway Report, which caters to the high-end market, Cabo gets a scolding from readers, the editor reporting
"lots of Baja humbugs for 'outrageous,' 'unconscionable,' 'sky-high' rates for food, drinks, golf and other amenities."
Puerto Para?so, a new trilevel mall at the marina, has 350,000 square feet and plans for 200 shops, but, save for the bowling alley and children's
play center and a multiplex cinema that opened in December, it's a ghost town, with only a handful of retail occupants. Ruth's Chris Steak House,
Houlihan's and Johnny Rockets are open. Two more hotels and an adjacent convention center are planned.
Patrick Sanchez, general manager of the Westin Regina on the corridor and vice president for marketing of Los Cabos Hotel Assn., is a self-described
"cautious optimist" but acknowledges that the situation is "very challenging." Last year Cabo room rates were slashed an average of 30%. "That's the
good news, because we are a very exclusive resort and a very expensive resort," he says. But he is somewhat "alarmed" that group bookings have dropped
from 2002 because of Sept. 11, the U.S. economy and uncertainty in the world. "There's only so much demand for the destination. That could lead to
additional discounting."
A buyer's market
Projections are for 800,000 visitors to Los Cabos this year. Still, hoteliers are promoting heavily, mindful of last year, when the number of hotel
rooms grew at more than triple the rate of air passenger traffic, dropping overall occupancy rates to 50%. The goal now is not to dip below 50%.
Sanchez stops short of saying that Los Cabos is overbuilt but sees problems if supply continues to outpace demand. Mother Nature has imposed one
control on the beachfront: a series of unbuildable arroyos that slice through the desert to the sea. The government hopes to impose another, requiring
that new developments have facilities to reclaim water and to desalinate drinking water.
"I think we have learned from the rights and wrongs in other destinations -- Canc?n, Acapulco, Mazatl?n," Sanchez says. There is talk of requiring new
developments to help fund updating of Cabo's infrastructure -- roads, lights, water and power. Many side streets in Cabo are unpaved, with potholes
the size of sombreros.
The construction continues. Scheduled for an April 1 opening is the Marquis Cabo San Lucas, a 232-room corridor hotel with 40 swimming pools. The
Pueblo Bonito chain plans to open a boutique luxury hotel in the Sunset Beach area, about 10 minutes west of Cabo, in 2004.
San Jos?, once a snoozing 18th century mission town, is definitely waking up and now has more than two dozen hotels, upscale shops, restaurants and
art galleries.
Some of Los Cabos' attractions are natural -- lounging sea lions; whale watching from December to March; the picture-postcard landmark El Arco, carved
through the rock where the Gulf of California meets the Pacific. Lovely beaches abound, although many have dangerous drop-offs and undertows.
The action is daylong at Playa el M?dano right in Cabo -- kayaking, jet skiing, parasailing, then eating and drinking when the sun sets. The hot spot
is the Office, where those at tables set on the beach between tiki torches are fair game for vendors hawking jewelry and serapes.
By day the town is quiet. Cruise ship passengers sip margaritas at open-air restaurants along the marina or peruse the shops, where salesmen stand
outside. "You come off the ship?" they ask. There are the usual trinkets and T-shirts and seemingly enough silver jewelry to sink one of those ships.
At J&J Habanos, Jos? Cantu sells Cuban cigars for up to $60 apiece. "The only people I sell to are Americans," he says, adding, "not legally."
Business is "very bad."
At the marina, Tony Miranda of Captain Tony's -- "You hook 'em, we cook 'em" -- says, "The tourist business has been very hard for the last couple of
years. It's even worse now." His wife, Deborah, a Californian, repeats an adage about the economy: "When the U.S. gets a cold, Mexico sneezes."
When Tony came to Cabo in 1989, he says, it was a friendly, intimate place. "Now it's very commercialized. Everybody just wants to sell."
One thing they're selling is property. It's a buyer's market for low-end condos ($50,000 to $200,000), older units with fewer amenities, says
Ehrenberg. And, he adds, there is some "adjusting" at the high end. But oceanfront lots are fetching up to $2.5 million. "Beachfront is beachfront,
here or in China. The boom is not over yet, but we're getting more sophisticated buyers. People want value."
"Value" is a word heard over and over. Most of the fancy hotels were built before Sept. 11, Halliburton of Twin Dolphin says. "People were paying way
too much money for everything and charging too much money for everything." Tourists have been "hammered," he adds -- top prices, minimal hospitality
-- and many have gone elsewhere. "This is the most expensive destination in Mexico, but the big money is leaving town."
"If the tourists stop coming," he muses, "they'll probably have to fire that cannery up again."
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Anonymous
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I have been warning people about this for 7 yrs now, cabo has 10 more good years left and then its over.
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Stephanie Jackter
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I know it's a rip. Except for a few little side trips from La Paz, I've always avoided Cabo San Lucas. My greatest sadness was seeing San Jose del
Cabo, which was once a very Mexican Pueblo with a lot of ambiance, turn into a place where the locals now have that "how to fleece a nasty tourist"
look.
I must admit, though, my kids are sitting here about to faint with joy at the idea of a hotel with 40 pools. I'm sure we'll wind up checking the
Marquis out just for the novelty.
As far as the prediction that Cabo will die within ten years, I wonder why you maintain that, " Anonymous"? Do you see other Mexican resorts dying
too, or is it a reflection of this story's particulars?
I also see Cabo dying, but in more like thirty to fifty years than ten. The reason I see that happening will not be overfishing or overcharging for
room rates, but the very abuse of the limited water resources (like the 40 pools that are giving my kids such a cheap thrill).
People who live in Cabo are squandering ancient and non-renewable water resources and not thinking a thing of it.
They talk about all those bargain condos at 50 to 200K. Imagine what a bargain they'll be before this century is out when they're abandoned because
the water is gone. I've imagined the Cabo strip with tattered curtains hanging outside the broken windows of abandoned luxury hotels.
Unless desaliniation is made a dam site cheaper than it currently is, the Gran Baja will eventually be in good company with the new Marquis and many
others. It's a matter of time.-Stephanie
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JESSE
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Steph,
Anon was me, i wasnt logged in, but i do think Cabo is near its all time high, many years ago people would go down there and get back promissing they
would get back soon, these days most tourist are not finding Cabo so charming any more, and many are simply saying they didnt like it, so its a matter
of time before they exahust the pool of turistas.
Cabo is Cancun 10yrs ago, the next big thing is in the east cape or Loreto.
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Stephanie Jackter
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Good editorial response to LA Times article by Gringo Gazette editor, David Flores
http://www.gringogazette.com/southern/march10_2003/page2/
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JESSE
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Great article Steph, those fools down there are killing the Chicken that lays the golden eggs.
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BajaNomad
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It's not like CSL wasn't a great place with lots of locals welcoming and friendly to tourists 10 years ago.... it was.
It's just that money easily corrupts, and Cabo fell into that trap instead of avoiding it.
[Edited on 3-14-2003 by BajaNomad]
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