Mexico Lures International Meetings With VAT Repeal
http://www.btnmag.com/businesstravelnews/global/article_disp...
By Douglas Quenqua
SEPTEMBER 06, 2004 -- The January 2004 repeal of Mexico's value-added tax on international meeting and conference attendees has encouraged meeting
planners to look south of the border for meeting sites. The repeal of the tax, locally known as the Taso Cero?zero tax?initiative, was part of
Mexico's years-long effort to attract more international business travelers. Nine months later, insiders said the VAT repeal is providing a boost to
Mexico's international meetings industry.
The repeal translates into savings of 10 percent for attendees headed to Cancun or Los Cabos, two of the country's most popular meeting destinations,
and 15 percent in every other Mexican city.
"We certainly have seen a boom," said Fernando Compean, president of Meetingplace Mexico and the Mexico chapter of the Society of Incentive & Travel
Executives. "We don't have figures yet because it just started this year, but the growth has been significant."
Professional meeting planners north of the border also report greater interest among clients in Mexico as a destination. "It certainly has made a
difference," said Carol Krugman, president and CEO of Krugman Group International, a St. Petersburg, Fla.-based firm that specializes in staging
events in Latin American destinations. "When you run the numbers of the Caribbean versus Mexico for a client who wants to hold a program at a resort
property, it makes Mexico even more competitive than it already was."
There are those who say the VAT repeal still has further to go. At the moment, it does not apply to incentive travel, something the industry would
very much like to see changed. A bill now pending before the Mexican legislature would remedy that, and Compean hopes that the law will pass.
"Things are going well," Compean said. "I couldn't say yes or no yet, but I would say that having a value-added tax reduction or elimination shows the
importance the legislature is giving to meetings and incentives."
Mexico owes its desirability as a destination to the health of its infrastructure. The country has 38 convention and exhibition centers, 3,000-plus
hotels, more than 80 airports, a favorable exchange rate against the dollar and easy accessibility from the United States.
A trade show held this June in Vera Cruz touted Mexico's credentials and attracted meeting planners from all over the world, many of whom for the
first time learned of the VAT repeal. The Mexican Convention Bureau, created last year by the Mexico Tourism Board, holds seminars around the world
and also hired a public relations firm to wage what Compean calls a "highly aggressive campaign."
It is an effort that seems to have an impact up north. "Mexico has been doing a lot of advertising to get business from the States, and they've put on
a lot of specials and are doing a lot more trade shows," said international meeting planner Linda Mansouria, president of San Francisco-based event
management firm Make it Happen LLC. "If I had a client right now who was looking for a resort destination, I definitely would ask, 'Why not try
Mexico?' "
And despite the new initiatives, some said, obstacles still exist that keep Mexico from realizing its full potential as a destination. Perceptions,
accurate or otherwise, that the country is unsafe or lacking in infrastructure still loom. The Mexican government will have to work to disprove such
impressions to reap the benefits of its new tax initiatives.
"There still are some people who have false perceptions about the desirability of Mexico from the point of view of infrastructure or hygiene?any of
those stereotypical Latin American, but especially Mexican, caveats," Krugman said. "People think that you can't drink the water?well, yeah, you can."
If the reaction to the VAT repeal and the possibility of extending its application to incentive travel is any indication, the message Mexico is
sending may drown out such doubts.
"They are sending a very powerful message to the North American and European meeting planners: 'We understand your business and we will do whatever it
takes to exceed your expectations,' " Krugman said. "Of course, that is what any planner wants, isn't it?"
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