Business leaders say government recovery plan in Acapulco falls short

November 3, 2023

Acapulco hotel zone after Otis — Leading private sector group Coparmex has said it intends to raise private capital to assist the reconstruction of Acapulco. (Rogelio Morales/Cuartoscuro)

A leading private sector group is seeking to secure funds from international organizations for the response to Hurricane Otis after determining that the federal government’s 61.3-billion-peso (US $3.5 billion) recovery plan falls short of what is required to rebuild Acapulco and other affected areas of Guerrero.

The Mexican Employers Federation (Coparmex) supports the government’s plan, which President López Obrador announced Wednesday, but believes that as much as 300 billion pesos (US $17.2 billion) will be needed for the reconstruction of Acapulco and other municipalities in Guerrero, 47 of which were declared disaster zones.

Acapulco hotel after Otis — An estimated 80% of Acapulco’s hotels have been damaged by the storm. Although tourism is the city’s lifeblood, the government has said reconstruction funding must come from the private sector. (Rogelio Morales/Cuartoscuro)

“We’re pleased that there is support from the federal government, they announced 61 billion pesos, [but] we believe that between 200 and 300 billion pesos will be required,” Coparmex president José Medina Mora said at the organization’s national meeting in Nayarit.

“For that reason we’re already in contact with international organizations that have funds that are precisely for natural disasters,” he said, adding that such resources could be used for “the reconstruction of the coast of Guerrero.”

Coparmex’s estimate that 200-300 billion pesos will be needed to rebuild from the devastation caused by Otis on Oct. 25 is in line with an assessment from Fitch ratings, which said this week that “preliminary economic and insured catastrophic loss estimates for Otis, a category 5 storm, are up to USD16 billion.”

A significant portion of the funds allocated to the government’s plan are to support residents of Acapulco and the neighboring municipality of Coyuca de Benítez. The government is offering loans to businesses, including hotels, but López Obrador has acknowledged that the reconstruction of hotels – 80% of which were damaged – will depend on private investment. Insurance payouts will presumably cover part of the reconstruction expenses.

José Medina Mora, Coparmex president said the group was “pleased” by federal construction funding, but that the group estimated true costs would be several times higher. (Coparmex)

After acknowledging that 80% of hotels in Acapulco sustained damage, Medina announced that Coparmex will assist tourism sector workers to find temporary jobs in “other beach destinations such as Cancún, Puerto Vallarta and Los Cabos” as well as in “city tourism destinations.”

Coparmex represents over 36,000 employers across Mexico, according to its website.

Some businesses affiliated with the organization will donate building materials, according to Medina, while others will be directly involved in the construction work.

The Coparmex chief stressed the importance of collaboration between government, the private sector and civil society on the recovery and reconstruction efforts in Guerrero.

The work to repair the city has begun, though it will take up to 5 years to fully restore the city. (Rogelio Morales/Cuartoscuro)

“The reconstruction of Acapulco and the coast of Guerrero will take a long time. We’re making progress but right now we need to attend to the emergency … [and] get water, food and cleaning supplies [to residents],” Medina said.

Among the other business groups seeking to assist the recovery and reconstruction efforts in Guerrero are those that belong to the Confederation of National Chambers of Commerce, Services and Tourism (Concanaco Servytur).

Concanaco Servytur president Héctor Tejada said in a statement earlier this week that the organization he leads, “in coordination with other business leaders,” will present a proposal to President López Obrador that incudes “work, tax, housing and general measures” aimed at “revitalizing the economy of the region and helping those affected” by Hurricane Otis, the most powerful hurricane to have made landfall on Mexico’s Pacific coast.

With reports from El Financiero and El Universal