Mexico to slap cruise passengers with tourist tax starting this week

New York Post

3 days ago

Cruise passengers docking in Mexico will be forced to cough up a tourist tax starting this week as government officials blast major cruise lines for not paying their fair share into local communities.
Industry giant Royal Caribbean, along with other cruise operators, has fought hard against the plan, arguing it drops off passengers who patronize Mexican businesses.
Starting Tuesday, cruise passengers will face a $5 fee – which will jump to $21 over the next three years – when their ship stops at a Mexican port. It will be added to the cost of the cruise.
3 Starting Tuesday, cruise passengers will face a $5 fee when their ship stops at a Mexican port.
Edgar Photosapiens – stock.adobe.com
That's been negotiated down from a $42 tariff initially proposed by the Mexican government.
The new tax stacks on top of port fees that cruise lines have already paid for years, averaging $28.85 per passenger in Cozumel, according to an analysis from the Florida-Caribbean Cruise Association.
About 3,300 cruise shops are expected to stop in Mexican ports this year, bringing about 10 million passengers with them, according to the FCCA.
Many airlines already fold a Mexican tourist tax into the cost of plane tickets.
'The Mexican government's perspective is: 'OK, fine, you bring prosperity. But you need to pay accordingly, like other tourists pay when they come via an airplane,'' Rubén Olmos Rodríguez, who has participated in the tax talks and runs advisory firm Global Nexus, told the Wall Street Journal.
Local business owners, however, have raised concerns that the tax could discourage tourists from booking cruises that stop in Mexico.
'We, as business owners, were very concerned, because Cozumel lives on cruise tourism,' said Carmen Joaquín, who owns a duty-free shop and serves as president of Cozumel's business coordinating council.
The new tax has heated up tensions between the Mexican government and Royal Caribbean, which is planning to build a massive private resort in Mahahual, a Mexican seaside village.
Royal Caribbean did not immediately respond to The Post's request for comment.
3 A Carnival cruise ship in a Mexican port.
Mariakray – stock.adobe.com
For months, the cruise operator has tangled with local officials over taxation, hiring and local investment requirements, as government officials pressure the company to employ more Mexican workers and use more Mexican products across its supply chain.
Royal Caribbean is expected to make millions from its Perfect Day Mexico resort, which will feature the world's longest lazy river, as well as a huge swim-up bar, party cabana and sombrero-themed slide.
The 200-acre resort, expected to open in 2027, will be able to accommodate about 15,000 people a day, according to analysts from Stifel.
Local Mahahual business owners are fearful that the Disneyland-like resort will prevent cruise passengers from spending money at local businesses.
'It sounds like they want to keep all the cake for themselves,' Amelie Gautier, a restaurant owner in the area, told the Journal.
3 Royal Caribbean is expected to make millions from its Perfect Day Mexico resort.
Wollwerth Imagery – stock.adobe.com
Royal Caribbean estimates it will cost around $292 million to buy the land needed for Perfect Day Mexico, and boasted that the project will create more than 1,000 construction jobs and employ more than 2,000 people, according to a company representative.
The new tax on cruise passengers is expected to weigh on Royal Caribbean's earnings, though the resort could still add more than $125 million annually to earnings before interest, taxes and other items, according to Stifel analysts.
Mexican President Claudia Sheinbaum saw the tourist tax as a way to lower the nation's budget deficit without having to slash social programs.
But it has worsened relations between cruise operators and local Mexican officials, who at one point disinvited Royal Caribbean executives from a meeting, according to the Journal.
Michele Page, chief executive of the FCCA, said the industry and the Mexican government are trying to 'get our relationship back on track.'
The trade group is seeking a meeting between the chief executives of major cruise lines and Sheinbaum.