Dreaming...Anyone know of any good dive deals in Cozumel?

[cozcharlie]

You guys seem to have a short memory. It shouldn’t be at all surprising to most long-time México visitors that many prices are set in dollars for both stability and as a convenience to customers. I really doubt Europeans and Canadians were complaining about it when their currencies were strong


In the early 1970s the exchange rate was around 12.5 pesos to the dollar according to Wikipedia (had to look it up since I can’t remember that far back ). Now it is around 23,000 pesos to the dollar based on the original peso The 23,000 is not a typo. People seem to forget that Mexican inflation got so bad that they had to divide by 1,000 pesos back in the 1990s (dropped the last 3 zeros off any existing bank notes and switched to issuing notes called “nuevo pesos” for a few years. . They waited until the old money stopped circulating and then dropped the “nuevo” off the bank notes but we are still essentially using nuevo pesos. Even since the nuevo peso was introduced back in the 1990s, the peso has gone from 3 pesos per dollar to a peak of over 25.

They were obviously having to adjust prices very frequently back then . Mexico never hit hyperinflation, but it was pretty bad. Annual inflation was over 100 percent a couple of times in the 80s and was over 30 percent a couple of times in the 90s Try quoting dive packages 6 months out in a medium to high inflation environment


As someone noted , a decent chunk of the costs of running a dive shop correlate with the US dollar (fuel, engines , parts, scuba equipment etc). While fuel is tricky due to Mexican politics/regulations and oil’s own supply demand cycles it will generally correlate with the US dollar price of crude over long periods of time. Engines, parts and scuba equipment clearly will track US dollar price of those goods.

A lot of the other costs on the island will track closer to US dollar (on a lag) than places in Central Mexico due to the tourist industry and the ex pat community. This basically means inflation in Cozumel is likely to be higher than in Mexico as a whole when the peso is weakening. . Real estate in particular will go up in pesos terms if the peso weakens—many of the listings are in US dollars because both the expats and wealthy Mexicans are not foolish enough to think of value in nominal pesos given history. Peso denominated rents will follow the peso price of real estate on a lag. If rents go up then usually then employee salaries will also need to go up on a lagged basis because employees need somewhere to live if they are going to work on the island (or Quintana Roo for that matter). Bottom line is that even peso denominated dive operation costs will partially lo follow the US dollar over time.

Just to be clear I am not as in favor of the almighty dollar as I sound , it is just probably the best external anchor available and there are a lot of reasons to use an external anchor given Mexico’s history and Cozumel’s links to the tourist trade. The Euro, Yen and Renminbi would all be candidates as external anchors but theIr individual cons generally outweigh the pros. Theoretically you could use a basket of currencies but that is too confusing for both the operators and the clients

Economic history of Mexico - Wikipedia

 

[Ministryofgiraffes]

"cozcharlie, post: 9018153, member: 93068".

Just to be clear I am not as in favor of the almighty dollar as I sound

Economic history of Mexico - Wikipedia

you should be. It’s the strongest currency in the world.

I should also reiterate that this is not about it being an ‘American thing’ it’s about it being a ‘not really equal At the same ratios for everyone outside that country’ thing.’

I have the same opinion about Americans having to pay more that Europeans when diving in non euro based countries charging euros. Etc.

 

[ggunn]

.

Just to be clear I am not as in favor of the almighty dollar as I sound

Economic history of Mexico - Wikipedia

you should be. It’s the strongest currency in the world.

You left out a square bracket in your quote tag.

 

[ggunn]

Respectfully....but your Euro example is my point...that’s the point I’m making, not akin to the Mexican example. I honestly think you actually agree with me, but you don’t realize it....as long as you are referencing a date after Spain adopted the Euro...although you must be as Spain and Italy adopted the euro at the same time, so the Euro was actually Spain’s currency. But the USD is not Mexico’s currency.

the whole basis of the issue is that everyone’s (non US) dollars are worth less because the operation is charging fees in a foreign currency. Not their domestic currency. If the USD shifts north against the Peso and the CAD.. Canadians will have to now pay more to buy the dive, where as, if they were paying in pesos ( the actually currency of the country) the price would have been the same as before because the CAD hadn’t dropped agains the peso. Americans would get more ‘dive for their dollar’ because their currency is stronger, but the rest of the divers wouldn’t have to pay more because the USD is stronger... because we aren’t diving in the USA. The actual cost of the dive hasn’t increased for the dive op. They are just charging non Americans more for it.

it’s actually a whammy for you guys as well because if the greenback strengthens by 20% agains the peso, you should actually be getting 5 dives for the price of 4 at that point, but you aren’t, the dive operation is just pocketing that extra 20% when they covert all the money to pesos to pay their dive masters/suppliers/Mexican taxes etc.( obviously works the other way of the USD weakens against the peso, but in a 20 year spread that has never materially happened to the extent that it would negate them charging in dollars...you can bet that if the USD dropped 80% they would start charging in pesos pretty quickly!)

Regarding the Euro reference: if you are referencing a time before Spain adopted the euro, yes it would have also gotten more expensive for Spaniards to vacation In Italy and pay in lira , albeit perhaps not at the same ratio as the forex differential for you agains the USD Or vice versa. Because you are both converting your currency to the domestic currency of Italy.

It's not a matter of agreeing or disagreeing, it's a difference in frame of reference. From a US$ perspective, the Canadian dollar has lost value. From a Canadian dollar perspective, the US$ has gained value.

If Cozumel diving were priced in Canadian dollars, it would get cheaper for us if the US$ climbs against the Canadian dollar. I have no idea how much of a typical Cozumel dive shop's expenses are in US$, but it does seem to me that there is a potential windfall for them when the peso falls relative to the US$ in the set of expenses they incur in pesos if those expenses stay the same. That's a big IF, of course because dollars are a big part of the Cozumel economy and they affect local prices.

My example of Italy is valid. When the euro gains on the dollar (or the dollar loses ground to the euro, which is of course the same thing), goods and services in Italy get more expensive for me but not for Spaniards because they are on the euro as well. It's my choice to go there or not, the same as it is for you and Cozumel. The fact that dive shops' prices are in dollars vs pesos is irrelevant; if they had to charge in pesos they would just raise their prices as the peso falls and the price to me would still stay the same. As a matter of fact, I pay most of my dive shop bill in pesos, and that price goes up every time I visit the island.

 

[ggunn]

You guys seem to have a short memory. It shouldn’t be at all surprising to most long-time México visitors that many prices are set in dollars for both stability and as a convenience to customers. I really doubt Europeans and Canadians were complaining about it when their currencies were strong

I have a 2000 old peso note in a dish on my dresser. I would scan it and post the image but that may be illegal.

 

[DandyDon]

In the early 1970s the exchange rate was around 12.5 pesos to the dollar according to Wikipedia (had to look it up since I can’t remember that far back ). Now it is around 23,000 pesos to the dollar based on the original peso The 23,000 is not a typo. People seem to forget that Mexican inflation got so bad that they had to divide by 1,000 pesos back in the 1990s (dropped the last 3 zeros off any existing bank notes and switched to issuing notes called “nuevo pesos” for a few years.

Old coot here remembers 12½ MXNs to the USD. It stayed at that official rate from at least the early 1960s if I remember correctly. Then there were big problems and changes. We had some young Mexican nationals that visited my part of the county every summer and did off jobs for locals until cotton ginning season, and I remember trying to explain to one of them in the early 1980s how the Peso crashed. He didn't believe me, but they had a radio so I guess it made the Spanish speaking news as well. They periodically mailed USPS money orders home by regular mail.

 

[Ministryofgiraffes]

It's not a matter of agreeing or disagreeing, it's a difference in frame of reference. From a US$ perspective, the Canadian dollar has lost value. From a Canadian dollar perspective, the US$ has gained value.

If Cozumel diving were priced in Canadian dollars, it would get cheaper for us if the US$ climbs against the Canadian dollar. I have no idea how much of a typical Cozumel dive shop's expenses are in US$, but it does seem to me that there is a potential windfall for them when the peso falls relative to the US$ in the set of expenses they incur in pesos if those expenses stay the same. That's a big IF, of course because dollars are a big part of the Cozumel economy and they affect local prices.

My example of Italy is valid. When the euro gains on the dollar (or the dollar loses ground to the euro, which is of course the same thing), goods and services in Italy get more expensive for me but not for Spaniards because they are on the euro as well. It's my choice to go there or not, the same as it is for you and Cozumel. The fact that dive shops' prices are in dollars vs pesos is irrelevant; if they had to charge in pesos they would just raise their prices as the peso falls and the price to me would still stay the same. As a matter of fact, I pay most of my dive shop bill in pesos, and that price goes up every time I visit the island.

But the Italian example would only be the same if the Italians were still using the lira and the Spanish were still using the paseta ...AND the Italians were charging for dives in Spanish Pasetas as opposed to Italian lira.. if the USD was the currency of Mexico, this discussion would have never started.

I’m not saying any of your reasoning about the increase or decrease of the USD etc is invalid...I’m just saying that it is not an equal equation for all international divers in that specific locale. With the Italian example of the ‘Spanish being the Americans pre euro’ it doesn’t invalidate my point, it actually makes my point, just with different nationalities...

this seems to be evolving into some sort of perception that I think it’s outrageous or it has to change immediately etc etc. Which was never my point. My point initially was that it’s unfortunate that Mexicans charge for dives in USD as currently due to exchange rates we are getting a double hit...it would be the same unfortunate situation for the Americans in Italy as the Spanish etc etc. Which is why I reiterate...I think you actually agree with me but you are just not quite getting the initial statements..

 

[ggunn]

But the Italian example would only be the same if the Italians were still using the lira and the Spanish were still using the paseta ...AND the Italians were charging for dives in Spanish Pasetas...

I’m not saying any of your reasoning about the increase or decrease of the USD etc is invalid...I’m just saying that it is not an equal equation for all international divers in that specific locale. With the Italian example of the ‘Spanish being the Americans pre euro’ it doesn’t invalidate my point, it actually makes my point, just with different nationalities...

I get it. I really do. If the price of a dive stays the same in US$ and the Canadian dollar loses value vs. the US$, it costs you more of your dollars, and you do not like that. Of course it's not equal for all nationalities; their currencies vary in relative value at different rates. But whether or not it's the local currency is irrelevant; if the price of a dive were in pesos and stayed the same, as the exchange rates of the Canadian dollar and the US$ fluctuate relative to the peso and if the Canadian dollar does not gain as much on the peso as does the US$, in the number of our respective dollars spent on a dive, we would still dive "cheaper" than you even though it cost us both the same number of pesos. Whew. Sorry for the long sentence.

 

[Ministryofgiraffes]

Yes, but the amount per dive would change for Everyone who isn’t Mexican, not just the non Americans...which was the initial point!

 

[Snoweman]

Yes, but the amount per dive would change for Everyone who isn’t Mexican, not just the non Americans...which was the initial point!

I still contend that if diving costs 2,000 pesos one day, and the next day there's a 10% drop in the value of the pesos to the US dollar, then soon afterwards the dive price would be 2,200 pesos.