The new year has started off a little slower than expected in Los Cabos this year.
According to local officials, the occupancy of Los Cabos resorts and hotels achieved 75 percent so far this month. However, that is lower than what was expected for the start of the new year.
There are a couple of financial headwinds that tourists will have to overcome to enjoy a vacation getaway to the beach resort tourist hotspot of Los Cabos.
Those are the rising hotel room rates due to limited supply, a strengthening peso, and rising prices at local restaurants.
Hotel Rooms on The Rise
Those who studied economics in college may remember that when demand increases and supply stays the same, there is an imbalance in the marketplace. Prices then rise until the balance is maintained again.
That’s what is happening in Los Cabos right now. There is an increase in demand for hotel rooms and the supply of rooms has not kept up with the demand. So, prices are on their way up. Way up in fact.
Hotel rooms in Los Cabos are now over $400 per night on average. That’s easily double what the average room rate was in Los Cabos just a couple of years ago.
Travelers need to get used to the higher room rates and be used to paying more for their accommodations in the beach resort destination.
Stronger Peso Needs More Dollars
According to the President of the Board of Directors of the Los Cabos Hotel Association, Mauricio Salicrup, there were a number of challenges facing the hospitality industry in Los Cabos this year.
In reports about the issues, he often cites the depreciation of the dollar against the peso as the one that worries him most. That makes a vacation getaway to Los Cabos appear more expensive to travelers from the United States.
Two years ago, the dollar was worth a little bit more than 20 pesos to the dollar. Today it is worth less than 17. That means that the dollar is instantly worth 15 percent less than two years ago. For tourists, their vacation getaway to Los Cabos is 15 percent more expensive.
Now that might not sound like a big deal. But if you consider a budget of $1000 for a trip to Los Cabos, that means it would cost a traveler $150 more than two years ago. For many visitors, that’s a big deal.
Restaurant Price Hikes
Recently, several of the restaurants in Los Cabos acknowledged that the price of the typical meal basket, propane and electricity are on the rise, and they will need to pass on the increases to the tourists visiting the area.
Those increases could range anywhere from five to twenty percent price hikes on meals and beverages just to cover some of the increased costs of nearly 100 percent that the restaurant owners are facing.
Restaurants have pledged that they will make the price hikes gradual as to not shock travelers to the area with the higher meal tickets.
However, many of the restaurant price increases may lead tourists towards more vacation stays at all-inclusive resorts, which are not expected to increase prices as much because they make money on other services and products as well.
Tips For Travelers
Taking a vacation in Los Cabos is going to be more expensive this year, with several financial headwinds facing travelers to the area.
Increased prices for hotel rooms and meals will mean vacations will cost more. Pair that with less value for the dollar, and the issue only compounds.
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