On December 29, 1973, the Mexican Congress passed creating Fondo Nationa de Turismo (Fonatur) and eliminating two existing trusts–INFRATUR (the Trust for the Promotion of Tourism Infrastructure), administered by Banco de Mexico, and FOGATUR (the Trust for the Guarantee and Promotion of Tourism), administered by Financero Nacional. The mission of the new agency was to promote new development and raise the necessary capital for it through foreign and domestic investment. Its current budget is over US$6 billion per year.

During its history, Fonatur has developed five mega beach resort areas–Cancun, Ixtapa, Los Cabos, Loreto, and the Bays of Huatulco. While highly touted by Fonatur’s press releases, the actual results are controversial. Here is a summary of the analysis by John Youden, a realtor based in Puerto Vallarta and an expert on tourist development in Mexico (http://vallartarealestate.wordpress.com/2010/02/26/litibu-as-success-but-for-who/):

Cancun

Cancun is the development that Fonatur celebrates as its major success. Once only a handful of fishermen lived on a sandy peninsula isolated from the rest of the world. Today, Cancun sports 144 hotels with 26,550 rooms. Its airport, now becoming a major hub in the region, rises like a mighty Maya temple of grey concrete and girders, fringed by colorful tropical blossoms. And thanks to Fonatur, over 400,000 people live and work in a modern city complete with the latest stores, including Ace Hardware and Wal-Mart.
"Cancun is a symbol of success," said John McCarthy, Fonatur’s former director. "To date, the government's large-scale ventures into resort building have transformed whole swaths of Mexico's coasts." But visiting a large city that boasts its own Wal-Mart apparently is not a draw for all tourists; the destruction of mangroves and the natural barrier beach has caused dramatic erosion of the beaches and upscale travelers have moved south towards Tulum and Playa del Carmen and beyond, along what is called The Rivera Maya.

The story of Cancun, however, is darker than Fonatur admits.  Here is an excerpt from a July 2011 Special Report by FNS News describing the interplay of narco and mob money and tourism development:

In contemporary times, the narco-tourism connection was highlighted in the fateful career of former Quintana Roo Governor Mario Villaneueva, who wound up extradited to the US on  drug trafficking and money laundering charges.  

While aggressively pursuing large-scale tourism development in Cancun and the Riveria Maya, the politician was allegedly facilitating and protecting shipments of hundreds of tons of cocaine for the Juarez Cartel back in the 1990s.  

A US indictment accused Villanueva of laundering almost $19 million in drug proceeds through Lehman Brothers in New York and accounts in Switzerland, the Bahamas, Panama and Mexico, including some under the names of British Virgin Islands shell corporations.

At the time of Villanueva’s 2010 extradition, US Attorney Preet Bharara accused the Mexican politician of turning Quintana Roo into a “virtual narco-state” where state infrastructure and law enforcement were sold to “one of the world’s most dangerous mafia enterprises.”

In a column, Mexican journalist Lydia Cacho wrote how former tourism industry officials told her that nearly half of the massive hotel development in Cancun, the most favored spot of US tourists visiting Mexico, occurred thanks to dirty money.

“The construction and operation of hotels and tourist services, whose purpose is to hide the origin of the illicitly obtained money, as well as the identity of its owner, is a silenced matter,” Cacho wrote. “There is a fine mesh that unites politicians and money launderers who could be involved in drug trafficking, human trafficking and contraband.”

Ixtapa

 As Cancun began to flourish, Fonatur concentrated on developing its second destination–Ixtapa, which ironically is only thirty minutes north of Barra de Potosi. This development of a dozen highrise hotels looms over Playa del Palmar, a two-and-a-half-mile long arc of fine sand that curves around Palmar Bay. A landscaped boulevard, with speed bumps every few feet to ease visitors into the pace, runs between the highrises and an 18-hole Robert Trent Jones golf course, complete with exotic birds and two alligators that live on the fifth hole. But development in Ixtapa has not met Fonatur’s goals. When it was completed in 1975, Ixtapa had 11 hotels. Thirty five years later, it has grown to 13 hotels with 3,652 rooms and low occupancy rates, boosted only by deep discounting. The locals who were displaced to make way for the resort hotels are still waiting to be fully paid for the lands that were seized.

A report by the International Community Foundation described the situation in nearby Zihuatanejo this way: 

Zihuatanejo, a coastal town north of Acapulco, is considered an emerging tourist destination and is the site of one of the first large-scale resort projects, Ixtapa. To date, tourism growth has not resulted in upgraded services, infrastructure, or revenue for local businesses. Yet, the Guerrero state tourism ministry declared over $1.7 billion in tourism dollars in 2006, much of that from cruise passengers.

In fact, Zihuatanejo has struggled to maintain service levels. There is no modern landfill there, swirling wastewater is blocked from being carried out to open water by a halfcompleted rock jetty, and traffic has increased. There were 400 cases of dengue fever in Zihuatanejo in 2007. In a newspaper poll, only 5% of local residents were in favor of a cruise port. Local protests stopped the construction of the rock jetty in 2006, but the damage is already done.

Los Cabos

As Fonatur’s third destination, Los Cabos began with 10 hotels offering 544 rooms. Today, it has 54 hotels–five times as many– with 5,722 rooms. Many of these properties fall into the super luxury category with rooms going for upwards of $800 per night. And greens fees of more than $125 are the highest in the country. Within easy reach of flights from the US West Coast, Cancun has a flood of tourists on package deals and like Las Vegas, without the gambling, has turned desert into gold.

Litibu

One of Fonatur’s recent projects is Litibú in Riviera Nayarit. Last year the agency boasted that “the project is now fully completed… and has been so successful that it has sold all the hotel parcels.” What they fail to say is that of the ten hotel parcels only three were developed to the point that they could start construction; one of those stopped in mid-stream due to bankruptcy and the other two are condo-hotel projects that are proceeding slowly if at all. The reality is that Litibu is an expensive disaster that displaced locals and destroyed villages to make way for it and it now sits as a half-finished ruin. So much for Fonatur's planning.

Here is a presentation in Spanish with photographs that shows the immense "white elephants" that Fonatur created at Litibu: 

Bays of Huatulco

After Cancun, Cabo and Ixtapa, Fonatur next turned its attention to Huatulco, a string of magnificent untouched bays and beaches south of Puerto Escondido, which it dubbed the "tourism wonder of tomorrow."

When Fonatur built its sprawling villa to show off Huatulco to investors, the number of people making a living there was about 1000. Much like Barra de Potosi, life was simple and fishing provided a humble living for the people who lived in dirt-floored palapa houses. They farmed small cornfields and spend much of their day paddling in and out of the beautiful bays catching fish. With few worldly possessions and fewer realistic options to resist, they jumped at the chance for hard cash when Fonatur arrived and offered them cash for their waterfront lots and to relocate them inland.

Unfortunately, after over twenty years, tomorrow has yet to arrive for Huatulco. The locals were removed from all nine bays. Phase I in 1988 called for the development of the bays of Santa Cruz, Tangolunda and Chahue. But only the first two have been developed with a marina in Santa Cruz, as well as a park and villas. The resort’s golf course flows down to the shores of Tangolunda, which also has several hotels.

Originally expected to be completed by 2018, with 30,000 hotel rooms, the less than 50 percent occupancy rate at Huatulco’s current hotels forced the project to slow way down. Today, 17 hotels with 1,800 rooms are operational. Even the former Club Med closed up shop and has now been sold to another hotel chain To save face in light of this folly, Fonatur decided to keep more of the land as a natural reserve; little consolation to the locals who lost their lands.

Here is a link to an article in Proceso about fraud by Fonatur in Huatulco:

http://www.proceso.com.mx/rv/modHome/detalleExclusiva/82508

Current Fonatur Projects

Fonatur’s two biggest pending projects are the development of Loreto Bay and the Escalera Nautica, a string of 22 marinas, to be dotted along the shores of the Sea of Cortes between Baja California and the State of Sonora.

Loreto Bay

Loreto Bay, to be developed in nine stages and targeted to U.S. and Canadian tourists, was planned to have 5,000 villas, 980 condominiums, 6 boutique hotels with 1,500 rooms, a golf course, a shopping center, spa and a medical clinic, but after building five small hotels with 138 rooms and a golf course, the project virtually sat idle until recently.

The Escalera Nautica

The Escalera Nautica, or nautical route, is very much like the former mission route established by Spanish missionaries in the 16th Century. Instead of inland religious missions, the route will consist of marinas along the Pacific and Sea of Cortes coasts, followed by the same along the Sea of Cortes coasts of the States of Sonora and Sinaloa. While missionaries built the original missions one day’s travel by horse or cart from each other, the Escalera’s marinas will be at one day’s travel by boat, or about 120 nautical miles apart.

The plan, which has been kicking around since the early 1970’s, calls for 22 full-service marinas, 10 of them new. Of the 12 existing, seven will be improved and five have been judged adequate. The 10 new marinas will be located on sites with natural shelter, or bays, a feature the peninsula has in abundance. Five of these are to be in Baja California, three in Baja California Sur, and one each in Sonora and Sinaloa.

Additionally, the plan calls for an 84-mile highway route for towing boats from one side of the peninsula to the other, which will allow boat travelers quick access to either body of water for those without time or interest in sailing around the tip of the peninsula. Further, the plan calls for improving the road between Mexicali and San Felipe to allow bigger-boat towing rigs from the U.S. crossborder access to the Sea of Cortes.

Mexican officals believe that once completed, no less than 52,000 American boat owners will set sail to those destinations and a good number will permanently moor in the various marinas. Moreover they estimated that 76,400 boats would be cruising Baja coastlines by 2010 and that by 2014 there would be 5.4 million nautical tourists. If the size of that armada seems far-fetched, it reflects the kinds of projections that Fonatur creates to justify its projects.

Fonatur’s Track Record

Looked at objectively, Fonatur’s record is replete with failures. It makes Soviet central planning look brilliant. Aside from the wholesale destruction of rare and pristine habitat and dislocation of traditional people, the projects have been over-sold and under-performed. Most of its projects were undertaken based on fanciful projections and once built or half-built, they have languished. Meanwhile Fonatur has moved ahead to replace another of the dwindling number of Mexico’s unspoiled beaches and estuaries with an out-of-date mega resort where success is measured by having a Wal-Mart.

Here are links describing some some Fonatur projects:

Los manglares, en amenaza continua

http://www.greenpeace.org/mexico/es/Noticias/2011/Febrero/Los-manglares-en-amenaza-continua/

Litibú - Nayarit: el fracaso de otro Centro Integralmente Planeado (CIP) por Fonatur 

http://www.greenpeace.org/mexico/es/Noticias/2009/Marzo/litib-el-fracaso-de-otro-cen/

Riviera Nayarit – Fracaso de FONATUR

http://rivieranayaritnuestra.blogspot.com/2009/03/desarrollo-no-sustentable-ni.html