MEXICO HAS BEEN struck two hard blows recently, first by man and then by Mother Nature. The peso was sharply devalued by the government in February. Earlier this month El Chichon volcano began a series of violent eruptions, causing fatalities and shutting down airports serving the archeological zone at Palenque because of poor visibility.
Many Mexicans--at least for the short term--are suffering financially and physically as a result of both incidents. But the drop in prices also means that warm, inviting Mexico has become a much more attractive destination for foreign visitors, especially from the prime U.S. market.
Mexico's tourism industry, buffeted on one hand by soaring internal inflation--29 percent--and tight U.S. economic conditions on the other, had been concerned by the deteriorating travel outlook. In addition, oil prices had fallen and Montezuma-land faced a $48 billion foreign debt. Worried Mexicans began funneling their capital out of the country. The devaluation was designed to ease unemployment and improve the balance of payments by making Mexican products (including its tourist jewels) more competitive in foreign markets.
Since tourism is so vital to our Latin neighbor's economy (second in importance after oil), a healthy rise in the number of dollar-waving, sombrero-sporting gringos on vacation could be good news for all Mexicans in the long run. Many of those dollars do trickle down.
"The immediate savings for visitors to Mexico is tremendous," according to Miguel Guajardo, director general of the Mexican National Tourist Council, the government's tourism office.
For the U.S. tourist, a key word is "immediate," but since something usually gets lost in any translation, it pays to be well informed before heading South of the Border. Many lowered prices should remain firm throughout the summer and fall seasons. In other cases, however, the bargains could be diluted in coming months. And it makes a big difference if the hotel rates are quoted in pesos (there have indeed been immediate hefty reductions) or in dollars (where the cash benefits may be harder to discern or even ephemeral).
"The Mexican government does not approve hotel and restaurant rates nor any other tourism-related prices in any foreign currency," Guajardo emphasized.
Dollar rates have certainly been cut, but in some instances the savings result primarily from a decision by hotel management to forego increases previously scheduled to offset higher operating costs. For example, Hyatt International's two Acapulco properties, the Hyatt Continental and Hyatt Regency Acapulco, shaved rates last month as the high winter season was ending, and then set summer season rates through Dec. 22 without adding planned 13 to 18-percent hikes. Fiesta Americana hotels, a Mexican-owned chain of eight properties in Mexico City, Acapulco, Guadalajara, Puerto Vallarta and Cancun, cut all previously published rates 20 percent from March 1 through December. The Sheraton Corporation's hotels in Mexico City and Cancun have dropped rates 27 percent, but a spokesman said "we don't know how long it will be in effect."
Some tour package prices have been reduced dramatically, and both Mexicana and Aeromexico recently announced they won't increase fares on domestic routes.
It's important to remember that while the one-party government constituting Mexico's "guided democracy" wields almost dictatorial power as it controls the political and economic life in that country, there are still some practical and legal limits to its authority.
It has asked employers to raise salaries from 10 to 30 percent in the wake of devaluation, but it also asked businessmen to hold the line on prices. Predictably, some have balked. Prices have already been marked up in supermarkets. In recent weeks the government has temporarily closed branches of major department stores in Mexico City and levied fines for price violations. It ostensibly exercises control over hotel charges with a system of inspectors, but there are loopholes.
Thus the reality of rising costs for goods and labor indicates it's only a matter of time before hotels and other travel-related enterprises will be forced to adjust rates upwards. At this writing, powerful Mexican unions were in the midst of contract negotiations to help workers survive the serious loss of purchasing power suffered when the peso went from 28 to 45 to the dollar. Many raw materials and goods--even foodstuffs--must be imported from the United States and paid for at an exchange rate favorable to the dollar.
Devaluation will not halt inflation and it means Mexico will earn even less for its oil, thus it is not a final solution to the country's problems. Meanwhile, the burgeoning population continues to grow and poverty abounds.
Still, Mexico remains a stable beacon in Latin America and, deservedly, a major destination for American travelers. Though there will be a peaceful change of command in December, when President Jose Lopez Portillo turns over the government to recently elected Miguel de la Madrid (candidate of the country's only viable political party), no one can predict what new pressures may develop.
Clearly, this is an ideal time to enjoy the friendliness, mystery, adventure, history, beauty and beaches of Mexico. No need to feel guilty either--your dollars will buy more and help the Mexican economy while you gain strength to face our own again. Buen viaje!
Rosenberg is travel editor of The Post.