The "sun, sea and sand" tourism industry is showing signs of exhaustion in the region. The strong price competition in the all-inclusive system led to non-desired results, such as overexploitation of the natural environment, contamination, and scant chaining with the local economy.

Volatile and crisis-sensitive demand and the low profit margins of mass tourism have hurt companies, says the ECLAC report Foreign Direct Investment in Latin America and the Caribbean 2008.

In response, the major companies have embarked on massive upgrades of their facilities in order to capture higher-income segments of demand.

New mega-projects that combine high-level hotels and with real estate that include marinas, golf courses and spas have spread throughout Mexico, the Dominican Republic, Panama, Costa Rica and northeast Brazil.

These mega-projects bring together construction companies, real estate developments, financial entities and international hotel chains, generating greater interaction among companies of different sizes, origin and activity, local capabilities and employment, states the ECLAC report.

Mexico is the world's tenth tourism destination (over 21 millions international visitors in 2007), and the most important destination in Latin America and the Caribbean. Mexico received US$12.9 billion in tourism-related income in 2007, being that country's third most important source of income after oil and remittances.

As Mexico's tourism industry began losing competitiveness (dropping from the seventh to the tenth top tourist destination from 2000-2007), all-inclusive models started to integrate multi-purpose hotel and real estate mega-projects that include condominiums, time-sharing complexes, vacation homes, marinas, golf courses and health centers.

Over a million United States citizens have purchased second homes in Mexico, either as part of time-sharing schemes or as owners.

The Dominican Republic is the top tourism destination in the Caribbean, with foreign direct investment (FDI) in the tourism sector representing almost 20% of total income from 1993-2008. Between 2004-2008, this sector received nearly US$2 billion in FDI.

In Cuba, over a third of the companies with foreign investment are in tourism-related activities, primarily hotel management. In both of these Caribbean nations, most investment has come from Spanish hotel chains.

During the last few weeks of 2008 and beginning of 2009, says the ECLAC report, the price of real estate in the Caribbean's main vacation destinies fell, in some cases, by 40%.

In Central America, the number of tourists increased by 4.1 million to 7.5 million between 2000 and 2007. Tourism became an important source of income for Costa Rica, Guatemala, Panama and El Salvador. Costa Rica and Panama took the lead with mega-projects including hotels, vacation homes and leisure facilities such as golf courses.

In spite of its enormous natural potential, Brazil has been unable to fully lock into international tourist circuits because of its distance from markets of origin, access infrastructure constraints and higher relative costs.

However, northeast Brazil is experiencing a rapid tourism and real estate boom, which could mean the construction of nearly 50,000 vacation homes for foreigners during the next eight years, with an investment of some US$7.5 billion Euros.

The global financial crisis and the effects of the A (H1N1) influenza have been a severe blow to the expectations of investors and the performance of the tourism sector, notes the ECLAC report.