Why is Playa Del Carmen so expensive?

If you have not been to Playa Del Carmen before, it can be noticeable more expensive than other parts of Mexico. Even compared to some other countries, it can be costlier. It is so noticeable that we refer to Playa Del Carmen as the ” Monico of Mexico” because it is a city state that is different from the surrounding area. So why is Playa Del Carmen expensive? That is what we will explain in this article and give you a backstory to many of the reasons things cost the way they do here.

Playa Del Carmen is located in what is called the Riviera Maya. The area stretching from just below Cancun and down to Tulum is considered the Riviera Maya. This hyperactive tourist area draws millions of people each year to visit. And with those people, come millions of dollars and millions of expectations of a great vacation. People will usually splurge on vacation and go out to that fancy restaurant, buy that nice gift for themselves, and go for a nice hotel. Because the downtown of Playa Del Carmen is about 90% tourism related, all of these tourist options are available. So, unlike a normal city which has a diverse business base and represents more of want locals use in the town, Playa Del Carmens downtown is a tourist playground which offers everything a visitor would want on a vacation.

Note: Even though the downtown is not all of Playa Del Carmen, prices for everything in Playa is higher when compared to areas outside the Riviera Maya.

Higher standard of services in Playa Del Carmen

If we look back 20 years ago, Tulum was hardly anything. You could go to the beach and get a thatched (palapa) hut for $20 USD a night. It only had a shared bathroom and that was it. But as places get more popular, more people start coming, and often times they are not adventurous as their predecessors and want more services and have higher expectations and budgets. This has happened in Tulum and Playa Del Carmen.

In the past decade, Playa Del Carmen has grown 103%. Much of that growth is from Mexicans coming to work in the tourism industry. This is just to highlight the fact that over the past decade, tourism has also grown enough to support the doubling the population of Playa. All of this change has brought higher end hotels, fancier condo buildings, and an overall change in Playa for more luxurious items.

Businesses also know that being the BEST of anything means you get a lot of recognition and free advertising. For example, when people visit Playa Del Carmen they often ask, “What is the best restaurant in Playa Del Carmen? or hotel or shopping”. So being labeled the best, means there is a built-in market looking for that. So, many of the upper end business all try to be better than the competition, this leads to nicer places and higher prices.

Location location location

Because property values are so high, property owners always have to analyze if they should sell, build something bigger or just wait longer to make more money in the future. This means that small independent business that offer charm and low prices often get squeezed out of the market. Owners of buildings can charge higher rents because of demand, then business owners put those expenses in the services they sell. That is one big factor as to why things often cost more in Playa Del Carmen. But wait, there is more! Different types of businesses also have individual circumstances. Below we mention several categories of services you might use while on vacation in Playa Del Carmen and we tell you some other interesting reasons why Playa is expensive.

Why tours cost what they cost

Most tours and excursions from Playa Del carmen costs around $90-$150 USD. These prices include parks like Xcaret and tours to Mayan ruins. So why are the tours prices the way they are? There are some factors that most visitors are not aware of. Below are some of the reasons you pay so much for a tour.

Tourist transportation needs to have a special license and there are special requirements for drivers. These standards keep tourist safe and offer a high level of service.
Transportation times and tolls. One of the most popular tours is to Chichen Itza. It takes a minimum of three hours to get there. That is at least six hours of driving. Another factor is the toll highway. The first toll that allows you to drive to Valladolid, costs around $40 USD for a car to go round trip on the highway. Then there is gas and maintenance of the vehicles.
Employment costs. We have higher and lower seasons here in the Riviera Maya. this means that sometimes tours and guides are busy and other times, not so busy. Employment laws require to keep workers all year and not fire people when it is slow and hire when it is busy. This means that owners have to figure in these costs over the whole year.
Entrances to places. Tours often have multiple stops. This means paying entrances to ruins, cenotes and parks. For example, many cenotes charge 150-500 pesos per person and the entrance to Chichen Itza alone is nearly $35 USD. So, a decent price of the tour price is just for the entrances to some of the tour spots.
Paying the rent. Those tours that are sold in hotel lobbies and on 5th Avenue need to pay rent. This is another cost the tour providers need to pay.
Commissions. People selling tickets, most of the time work on commissions. This can be about 10% of the tour price.

So, when you add up all the payments, the tour providers are not making that much. This is a little more detailed look at why tours are expensive and all the people that get a piece of the price of a tour.

Why many restaurants are expensive in Playa

The cost of going out to eat lately in Playa Del Carmen is going up. It seems like almost a 20-25%jump in prices. The most recent reason is inflation in costs of products. But before inflation, here are the other reasons why things cost more in Playa Del Carmen.

Rents on 5th Avenue are the most expensive real estate to rent in Playa Del Carmen. Restaurants can pay 20,000-60,000 pesos or more for a month’s rent. That is a lot of tacos and margaritas to sell just to pay the rent.
If a restaurant is air conditioned (which is sort of rare in Playa) they might be paying as much as rent on the electricity. Electricity gets very expensive when you use large amounts, and the warm temperatures don’t help either.
Even though there are high and low seasons in Playa Del Carmen, restaurants are required to keep staff throughout the year. This means in low season you have a lot of extra workers and not enough work. This can hurt the bottom line of the restaurant and it passes that cost onto customers.
There are expensive liquor licenses and other fees that restaurants pay that can add up.

How are costs for hotels in the area?

This is one area where you might be pleasantly surprised. This is one sector that is not that expensive (compared to other similar places in the world, not compared to Mexico). Playa Del Carmen offers a wide range of accommodations and price points. The least expensive is a dorm bed for about $12 USD a night and going up from there. Because Playa Del Carmen is such a tourist town, there are many hotels and this combined with all the other options, give a lot of options and competition.

There are however several times a year when hotel prices shoot up. Around Christmas/New Years and Semana Santa or Easter time are the two busiest times in Playa Del Carmen. Hotels will often double or triple hotel prices because there is a lot of demand during these times.

Why are rents and vacation rentals so expensive in Playa Del Carmen?

If you have been in the rental market, you will notice that rent prices are up! The average night in Playa Del Carmen for an Airbnb/Vrbo has gone up to $117 a night (according to AirDNA) and monthly vacation rentals are also more expensive. Below are a few of the factors.

Many short-term platforms are now fully taxed in Mexico and fees on the platforms have gone up. The added costs are being added to the rental prices.
Playa Del Carmen and some other nearby towns often have the highest occupancy rates in Mexico.
The level of quality and amenities is rising in Playa Del Carmen. The number of new condos with very nice rooftop pools, good design, and fully equipped has increased. Looking back just 10 years ago, the average condo was more basic. now we have whole new areas of condos that are bigger buildings and offer more to people staying there.
Playa Del Carmen offers a lot to many types of people. Digital nomads, families, couples and single people all find Playa fun and easy to get around in the downtown. This means that there is a fairly good demand of people looking to stay in Playa. This has driven up prices to some extent.
Most non vacation rentals do not include services like water and electricity. This is because these services can be expensive and vary depending on the renter. If they do include them, since these things cost a lot, the rent is adjusted accordingly.
If you go through a broker or rental agent, these people get a commission. Owners therefore have to budget this into the rental prices.

For more reasons why rent is so expensive in Playa Del Carmen, see our article here.

Is it all bad news about the cost of a vacation in Playa Del Carmen?

Not really. It is noticeable now more so because of food prices, but other than that, Playa Del Carmen is costlier because it offers so much. Often people comment about how they don’t like Playa Del Carmen anymore because it has become so commercialized. We then suggest places that they might like that reminds them of the old Playa like El Cuyo, Holbox, or Xcalak. The next thing they say is something to the effect of ” “But it is far from the airport”, “There are not enough restaurants there”, ” There are no good hotels there”. The same thing they complain about in Playa is the things they expect in other places. It is hard to find that balance of natural beauty, services, and everything that people want in one location.

Playa Del Carmen is more expensive than most places in Mexico and is getting more expensive in general. But Playa Del Carmen does offer a lifestyle and so many opportunities to enjoy yourself on vacation here, that you won’t think as much as the price because you are enjoying yourself.

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