INFORMATION ARTICLE

Yucatan Peninsula

The Next Riviera: Resort Phenomenon Plus

Not so long ago, Mexico's Riviera Maya was a sleepy stretch of Caribbean coastline. Now every
hotel group wants in on the action. Michael Gross traces the evolution of an "it" destination From
January 2006.

On October 21, just a few weeks after Tropical Storm Stan walloped the Caribbean coast of
Mexico's Yucatán peninsula, Hurricane Wilma blew in, wreaking havoc. Rains and 140 mph
winds left most of the area without electricity, telephones, water, or passable roads, and
government officials estimated that the area would lose $1.5 billion in tourism income. Yet just a
few days later, workers were swarming everywhere and the beach was alive with the sound of
buzz saws.

Torrential storms notwithstanding, a gold-rush giddiness animates the so-called Riviera Maya, the
corridor that starts just below Cancún and stretches south, along the coast, to the ancient Mayan
ruins of Tulum. Mandarin Oriental is hard at work on a new hotel. So is Capella Hotels & Resorts,
a new chain of boutique properties run by former Ritz-Carlton executives. The owners of Tulum's
new Amansala, a boho-chic yoga retreat popular with the fashion elite, are now busy turning
notorious cocaine kingpin Pablo Escobar's former estate into a hotel. And speaking of Ritz-
Carlton, the group is said to be looking for beachfront on which to plant its own flag, as are
Regent and Four Seasons.

That's just the small stuff.

Spanish development and construction company Obrascón, Huarte, Lain has spent the last 10
years creating Mayakoba, a magnificent jungle-and-beach resort a few minutes south of Puerto
Morelos that, when completed, will include hotels run by six name-brand luxury companies:
Fairmont, Rosewood, Banyan Tree, La Casa Que Canta, Viceroy, and one more to be
announced. Mayakoba aims to raise the bar for eco-resorts. After eight years of biological and
hydrographic studies, OHL uncovered a system of freshwater canals and lagoons that had been
hidden for millennia beneath the Yucatán's limestone crust; guests will get around on silent
electric boats, sharing these waters with herons, cormorants, and manatees equipped with GPS
to protect them. The developers estimate that the place will cost a staggering $1.5 billion.
Although the opening of the first hotel, a Fairmont, has been delayed until this spring because of
Hurricane Wilma, it won't be long before guests at each of the properties will be able to avail
themselves of the services of all, including an eco-sensitive Greg Norman golf course, with
cenotes as water hazards.

Indeed, Wilma has been viewed as a mere plot twist in the larger story here, which is about how
hotels have created a world-class travel destination, and how a newly enlightened government
has stepped in to guide them and help them invent a new luxury travel brand.
A mere twenty years ago, when I first visited Akumal, a diving village a half-hour's drive south
from Mayakoba, this coastline was comatose. I ate an $8 grilled lobster in a dirt-floored restaurant
and stayed in a cinder-block hotel, where I left the shower feeling dirty. Nearby Cancún, which
had been created from nothing in the 1970's, was a generic mass-market resort town—a row of
concrete boxes on the beach. Far worse, the reef just offshore (part of the second-largest reef
system in the world) was deteriorating, thanks to poor planning and mistreatment by developers
and overuse by tourists.
Though the stretch below Cancún remained pristine, paradisiacal, and virtually untouched by
tourism, there really wasn't a Riviera Maya then—only the odd strip of thatched beach cabanas, a
handful of dive shops, the Mayan ruins at Tulum, and the national park at Xel-Há, a natural
aquarium for snorkelers. A 1983 guidebook noted that the area did not have "much to offer to

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visitors" and described some of the more desirable accommodations as hip slums.
A current visitors' map, distributed gratis at the airport, lists 87 hotels between Cancún airport and
Tulum—and that statistic is incomplete. By 2025, officials say, there will be 110,000 hotel rooms
on Mexico's Caribbean coast.

How did this thin strip of the country reinvent itself as one of the world's great luxury destinations?
The tale begins with Fonatur, Mexico's 31-year-old national trust for the development of tourism,
which has been responsible for creating the resort areas of Cancún, Los Cabos, Loreto, the Bay
of Huatulco, and Ixtapa. In 1995, when Maroma—the first high-end resort on this shore—opened,
the area was still known as the Costa Maya, or Mayan Coast. But that year, seeking to capitalize
on (and to begin to control) a process that had started on its own, Fonatur undertook extensive
market research on what to call the corridor. According to one story, a prescient visitor, inspired
by the Côte d'Azur, anointed the place the Riviera Maya. The name of that person has been lost
in the decade since, but the title's magical allure has stood up to forces even stronger than
Wilma's winds.

Fonatur's president, John McCarthy, says bluntly that the creation of the Riviera Maya was "really
accidental—it happened by itself."

Actually, it had help from the private sector, or more specifically, José Luis Moreno, who was a
hippie ("I still am," he says) when he came to the Yucatán in 1963. A diver and architect, he
began his career creating schools, houses, and a nightclub, in Isla Mujeres and Cancún. He built
luxury houses in Akumal, a white-sand beach town between Tulum and Cancún; one of his
clients, Pablo Busch, a Mexican underwater archaeologist and hunter, bought 10 miles of land
there, on which Moreno built a hotel (it soon closed). Moreno later built a house on the beach
north of Playa del Carmen. In 1988, after disease killed the coconut palms, Moreno built another
house, and before long the Maroma hotel was born. Soon, other independent luxury properties
followed, including the lavish Paraíso de la Bonita and Playa del Carmen's ultrahip Hotel Deseo.
Like Maroma, they became magnets. "Quality attracts the people who make destinations," says
Samir Saab, whose group Prohotel owns Ikal del Mar, which they managed to build in the jungle
without cutting down the trees. Now, many credit Moreno as the area's pioneer, but the founder of
Maroma, sitting on the terrace of his house on its lush grounds, laughs at that. "It's called
civilization," Moreno says. "You can't stop it."

The Riviera Maya is hardly the first place to have blossomed from nothingness. In 1941, the El
Rancho Vegas hotel and casino was built along a two-lane highway between Los Angeles and
Las Vegas. By the end of that decade, the famed Vegas Strip was established. The birth of tourist
Dubai is another case in point: in 1995, eyeing diminishing oil reserves, its ruler instituted an
aggressive tourism policy, and today more than five million people visit the tiny emirate annually.
Bhutan followed a similar course; in 2004, the government invited Amanresorts and Christina Ong
to build two luxury hotels, instantly remaking the country as the destination du jour for the fashion
and celebrity set.

In each instance, visionary hoteliers—gamblers, really—set things in motion, the government saw
what was happening and began facilitating development, a critical mass was achieved, and,
finally, a second wave of big-brand, big-money hotels arrived to seal the deal. But never has this
happened in quite as startling a manner as on the Riviera Maya.

As a result, some fear there could be trouble ahead for the Riviera Maya, even though the area's
resorts are far better planned and quite some distance from one another. When the government
started selling titles to vacant properties, the coast was quickly bought up—and land prices
soared. Now the pressure to produce profits is as intense as it once was in Cancún.

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"I saw the same picture we are watching today, then," says Moreno, referring to the 1970's and
the Inter-American Development Bank, which had been established in 1959 by the Organization
of American States, and which Moreno says was formed to halt the spread of Communism with
cash. The IDB offered "rivers of money," Moreno says, "on condition it be used to develop private
enterprise." One result was Cancún; built on vacant land, it grew exponentially. Outside Cancún,
where Moreno and a partner owned their beachfront coconut plantation, there was only one hotel
for 20 miles in either direction, and it could be reached only by boat.

Cancún was overbuilt, sometimes illegally, in part because "one of the products of Mexico was
corruption," Moreno explains. Also, hotel owners wanted bigger profits, and the workers who'd
built Cancún "created pressure to generate more jobs." Then, in 1988, Hurricane Gilbert
devastated the region, causing hotels to lose income. Owners started selling rooms cheap;
package-tour operators moved in to help fill them, and Cancún began its relentless slide from a
high-end destination to the setting for Girls Gone Wild.

Four years ago, the Mexican government admitted the error of its ways and asked tourism
officials to create rules and plans that balanced a desire for growth with the need to respect the
environment. "The population is priority number one," Fonatur's McCarthy says. "Sustainability is
more than birds, bees, and fish. You must create wealth and respect the environment and culture
while doing that." Most important for visitors, the new rules placed strict density limits on the
Riviera Maya.

Those rules were already being formulated when world events redrew the luxury map. Post 9/11
many tourists rediscovered Mexico's accessibility from the United States. All-inclusive resorts,
most of them owned by Spanish companies like Iberostar, developed a large presence in the
area. Direct descendants of the package-tour operators who'd filled Cancún's hotels after Gilbert;
they were everything the new Riviera Maya does not want to be. Their big-box properties
flattened the natural landscape and wounded the jungle ecosystem. Worse, to some minds, they
harmed the local economy. Since all-inclusive visitors pay in advance, often in Europe, they
deprive Mexico of desperately needed tax revenues. Such chains sometimes "break the laws,"
Moreno says, and encourage corruption "at all levels."

The new breed of hoteliers saw what the all-inclusives didn't. Maroma's success attracted other
independents and they, in turn, attracted the big hotel groups. Rafael Micha, co-owner of Hotel
Deseo and Básico, thinks a new cycle will begin, with what he calls lone-ranger hotels. "Some
consumers will go to the mall for the big brands," Micha says, but others will go "to the place with
the feel of those who first built this." "It starts and it spreads, and the hidden jewels are still there,
but off the beaten track," says Melissa Perlman, who cofounded Amansala on Tulum's beach
after 9/11. "When I first came here"—in 1995—"it was really sleepy. This is still sleepy." But with
900-pound-gorilla–like concentrations of luxury brands such as Mayakoba filling in the beachfront
to the north, and boutique hotels pulling the party people to Playa del Carmen, Amansala should
be on the beaten track soon.

Today, the Riviera Maya is such a success that the hoteliers of Cancún want to re-brand their city
as part of it and catch some of its glow. That's because the latest iteration of this destination has
proved to be a powerful magnet, attracting not just visitors, not just investment dollars, but also
intelligent developers who have learned from past mistakes. "We took the vision of the
government and tried to evolve it by investing a lot," Juan Aguilar, the executive in charge of
building Mayakoba, says. "We are not Cancún. We realized we can only earn back our
investment by going high-end."

Chris Cahill, the president and chief operating officer of Fairmont, is betting millions that Aguilar is
right. "The difference is density," Cahill says. "When a destination is ruined it's because of heavy,
heavy concentration. I think everyone recognizes the uniqueness of this area and no one wants
to replicate Cancún. I think it will have staying power."

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Mayakoba will have only 1,200 rooms, even though 3,900 are allowed under density rules. With
its different yet complementary hotel brands and an environment that's been carefully planned
and engineered, Mayakoba, says Aguilar, will let "guests feel the jungle," while remaining close to
the man-made—the links, the spas, the bars, the restaurants, the indoor-outdoor showers, the
plasma-screen TV's. It truly is a grand experiment.

On my last night at the eco-conscious hideaway Ikal del Mar, a week before Wilma hit the region,
I had dinner with Dario Flota, head of the Riviera Maya tourist board, which not only promotes the
region but tries to keep the government and private interests in tune. "Our main problem is
social," Flota told me. "Where will workers live? Where will children study and play?" Playa del
Carmen's population is growing by 16 percent a year. The state of Quintana Roo is an economic
engine, producing a third of Mexico's tourism income. A high-speed railroad or a second airport at
Tulum is being considered. Every move Flota makes is questioned. And the Mexican government
is looking ahead and beginning to develop an extension it calls Grand Maya, south of Tulum.
But—ominous music should play here—"the Spanish are already there, buying everything," says
Moreno.

The smart Mexican money is looking even farther down the coast, toward Belize, says Carlos
Gosselin, another Mexican architect who worked on Cancún and years later opened an
independent luxury hotel, Paraíso de la Bonita. The land he bought for that property, just outside
Cancún, cost a mere $1.50 per square meter in 1974. Now it's worth 250 times that, he
estimates, sounding more worried than elated.

"There's no more land in our country!" Gosselin cries. "It's going to be a big disaster."
"We'll run out of world soon," agrees Moreno, who three years ago sold 75 percent of his hotel to
Orient Express in order to expand it. But he isn't giving up on the Riviera Maya, either. "I still have
more land," he says, with a twinkle in his eye. "The Spanish want to buy it but we don't want to
sell. We are going to keep fighting."

Flota, too, worries about the all-inclusives that have corrupted the process, ignoring the rules and
getting away with eco-murder. "They own airlines, tour operators, and local transport," he tells
me. One huge new hotel was recently judged in court to have been illegally overbuilt, yet it
remains open, Flota adds. Still, he is philosophical—and hopeful. "All destinations experience
this," he says as we wash down nouvelle Mexican cuisine with French red wine. "It's part of a
cycle." He gestures toward the beach, vowing, "We will take great care to save this."
Michael Gross is a contributing editor forT+L and the author of 740 Park: The Story of the World's
Richest Apartment Building (Broadway).

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