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Destructive Creation: Hurricane-Related Risk and Opportunity for Mexican Hotel/Resort Investments

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Listed:
  • Shane Taylor Dav Lynn
  • Pago Lumban-Tobing
  • Patricia Jovane

Abstract

The risk posed by hurricane events in Mexican tourism zones is assessed and hotel/resort development trends after catastrophic events are analyzed. Risk profiles are developed for major hotel/resort zones of Mexico based on 150 years of storm-track data which are plotted using GIS buffering. Yucatan resort centers have a very high frequency of hurricane events with a higher number of category 4 and 5 storms. Hotel data for tourist zones confirm the severe impacts to business following hurricane events. Although personal damages and losses are incalculable, disaster- related destruction can be the catalyst for redevelopment schemes. Wilma’s impacts in Cancun (2005), show that tourist arrivals/room occupancy fell considerably but gave impetus to a renewed round of tourism-related development which spurred recovery. Weather-related phenomena pose specific risks to real estate investment and hotels/resorts are especially vulnerable given the short- lease nature of contracts and the overall seasonality/volatility of demand. Climatic conditions will likely worsen in future and the greater density of coastal development, implies that these risks will intensify. More optimistically, these events have shown to be catalysts for renewal and update of stock.

Suggested Citation

  • Shane Taylor Dav Lynn & Pago Lumban-Tobing & Patricia Jovane, 2007. "Destructive Creation: Hurricane-Related Risk and Opportunity for Mexican Hotel/Resort Investments," LARES lares_2007_t015-lynn, Latin American Real Estate Society (LARES).
    • Handle: RePEc:lre:wpaper:lares_2007_t015-lynn
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    References listed on IDEAS

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    1. Céline Charvériat, 2000. "Natural Disasters in Latin America and the Caribbean: An Overview of Risk," IDB Publications (Working Papers) 6793, Inter-American Development Bank.
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    More about this item

    Keywords

    Hotel/Resort Development; Hurricanes; Mexico; Opportunity; Risk;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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