The Cancuning of Cabo

Here at land’s end -- where, they say, the sun shines 350 days a year -- gallons of margaritas are poured, migrating whales spout in the Gulf of California, and bronzed and buff tourists lounge poolside at hotels that (for a price) offer every imaginable amenity, from massages under the stars to customized minibars.

But there are clouds on this sunny horizon.

Tourism is suffering. One hears it from the merchants in town, senses it by the empty restaurant tables. Some worry that Cabo San Lucas may be driving away tourists by offering too little for too much.

“People are trying to dress this place up like a ballroom queen and take her out dancing before she’s learned to walk,” says David Halliburton Jr., whose late father, David Sr., opened the Twin Dolphin in 1977. At the time it was one of a handful of resorts in Cabo and along the 20-mile oceanfront corridor between Cabo and San Jose del Cabo, together known as Los Cabos and dotted with luxury hotels. “They’re just jacking their prices up and pretending there’s nothing wrong.”

Before a recent trip to Los Cabos, I contacted Halliburton, who is pinch-hitting as general manager of Twin Dolphin, and asked if he would show me around and introduce me to some longtime residents who could share the history of the area and discuss its growing pains.

I soon learned that environmentalists, concerned about depletion of game fish in what has been dubbed “God’s fish tank,” recently won a battle to restrict commercial fishing to 50 miles offshore. There is organized opposition from a group calling itself Defenders of the Bay to a proposal to build a dock at Cabo San Lucas marina so big that cruise ships, which now must anchor offshore, can come into the harbor to disgorge passengers. (More than 400,000 cruise takers were aboard ships calling last year at Cabo.)

Los Cabos makes a point of wanting to be Mexican, not Miami Beach or Waikiki, yet it is teetering perilously close to both. Wrapped in the arms of a $400-a-day hotel, you can easily forget that you’re in Mexico -- and the desert at that.

The area’s first hotel, the Palmilla, was built in 1956 on the corridor. Guests came by yacht or private plane, landing on a rudimentary airstrip. Where today four-lane Highway 1 takes visitors from Cabo San Lucas to San Jose del Cabo, in the ‘60s there was only a dirt road hugging this coast; the journey took four hours, dodging a cow or two.

The opening of the 1,000-mile transpeninsular highway from California to Cabo in 1973 brought the first wave of tourists, many in RVs. The tsunami came after the 1977 opening of the international airport near San Jose.

Today there are 8,200 hotel rooms, with 9,100 projected for next year -- up from 5,731 only five years ago. In-season rates at one boutique hotel begin at $250, and rates run as high as $5,000 a night for a three-bedroom suite.

Westin is here, as are Auberge and Rosewood. A Ritz-Carlton stands as a great gray hulk, abandoned when economic turmoil hit Mexico several years ago. As many golfers as fishermen now visit, lured by nine courses, including the oceanfront Jack Nicklaus-designed Cabo del Sol, where prime-time greens fees are $262. Increasingly, visitors come not to golf or fish but to be pampered at luxe spas.

To “old-timers” -- and that includes those who have lived here for 20 years -- there’s something of a through-the-looking-glass quality to this. At Minerva’s Bait and Tackle in Cabo, ex-Angeleno Bob Smith, who settled here with his wife, Minerva, in 1978, recalls, “This was just a small village. Everybody knew what time it was because they blew the whistle at the [now-defunct tuna] cannery. That was the only industry.

“We didn’t make any money, but it was a fabulous community. Everybody was here to help everybody. You don’t have that anymore.”

Smith, who operates three charter boats, is among those fighting to restrict commercial fishing. “This used to be a great swordfish area. Now you’re lucky if you ever see one.”

Baja humbugs?

Time shares have become almost synonymous with Los Cabos. Having dodged the airport hawkers who pounce on arriving passengers, I felt victorious -- until at the Avis office my car keys came with a time-share pitch (car discount and free breakfast). “Time scares,” some here call them, and the hard sell abounds.

In town, salesmen pop out of booths. At one, Javier offered us a discount on a booze cruise aboard a pretend pirate ship with mariachis and “all you can drink.”

Even at the newish Pueblo Bonito Sunset Beach Hotel, about 10 minutes west of central Cabo San Lucas, where the small lobby is dominated by a gilded and silvered carving of an archangel and a painting of cherubs and saints in the manner of colonial Mexico, the desk clerk is pitching the hotel’s time shares. (In Los Cabos, time shares piggyback at most hotels.)

At Pisces Real Estate in town, Marco Ehrenberg talks about “the time-share craziness,” which took off in the late ‘80s. “Cabo is one of the most successful time-share places in the world,” says Ehrenberg, also a founding co-owner of El Squid Roe, a raucous and fabled nightspot that after 15 years still packs in the dance-on-the-tables-and-have-tequila-squirted-into-your-mouth-with-a- spray-gun crowd.

Juan Zamora, president of the Timeshare Assn. of Los Cabos, says that four of the area’s 18 time-share resorts are sold out and the other 14 account for “around $140 million” in sales annually, at an average price of $16,000 a week. Time-share sales fell about 25% after Sept. 11, Zamora says, and “now, with the concern about the war, we’re also suffering a little bit.”

Ehrenberg’s wife, Tracy, a transplanted Brit, runs the other family business, Pisces Sportfishing at the marina, booking luxury fishing charters for catch-and-release billfishing for up to $3,500 a day. When the Ehrenbergs arrived, Cabo’s population was 4,800. Today it’s about 100,000 in Los Cabos. “There were donkeys right along the main street, eating out of trash cans,” she says.

Marco Ehrenberg, who is the chamber of commerce’s vice president for tourism, sees the stunning transformation of Cabo as a good thing for the locals but thinks the tourism industry may be overreaching.

“Where’s the service? Where’s the quality of the product?” he asks. “I think we’re going to get an adjustment. Even millionaires expect value for their money.”

In the February issue of Andrew Harper’s Hideaway Report, which caters to the high-end market, Cabo gets a scolding from readers, the editor reporting “lots of Baja humbugs for ‘outrageous,’ ‘unconscionable,’ ‘sky-high’ rates for food, drinks, golf and other amenities.”

Puerto Paraiso, a new trilevel mall at the marina, has 350,000 square feet and plans for 200 shops, but, save for the bowling alley and children’s play center and a multiplex cinema that opened in December, it’s a ghost town, with only a handful of retail occupants. Ruth’s Chris Steak House, Houlihan’s and Johnny Rockets are open. Two more hotels and an adjacent convention center are planned.

Patrick Sanchez, general manager of the Westin Regina on the corridor and vice president for marketing of Los Cabos Hotel Assn., is a self-described “cautious optimist” but acknowledges that the situation is “very challenging.” Last year Cabo room rates were slashed an average of 30%. “That’s the good news, because we are a very exclusive resort and a very expensive resort,” he says. But he is somewhat “alarmed” that group bookings have dropped from 2002 because of Sept. 11, the U.S. economy and uncertainty in the world. “There’s only so much demand for the destination. That could lead to additional discounting.”

A buyer’s market

Projections are for 800,000 visitors to Los Cabos this year. Still, hoteliers are promoting heavily, mindful of last year, when the number of hotel rooms grew at more than triple the rate of air passenger traffic, dropping overall occupancy rates to 50%. The goal now is not to dip below 50%.

Sanchez stops short of saying that Los Cabos is overbuilt but sees problems if supply continues to outpace demand. Mother Nature has imposed one control on the beachfront: a series of unbuildable arroyos that slice through the desert to the sea. The government hopes to impose another, requiring that new developments have facilities to reclaim water and to desalinate drinking water.

“I think we have learned from the rights and wrongs in other destinations -- Cancun, Acapulco, Mazatlan,” Sanchez says. There is talk of requiring new developments to help fund updating of Cabo’s infrastructure -- roads, lights, water and power. Many side streets in Cabo are unpaved, with potholes the size of sombreros.

The construction continues. Scheduled for an April 1 opening is the Marquis Cabo San Lucas, a 232-room corridor hotel with 40 swimming pools. The Pueblo Bonito chain plans to open a boutique luxury hotel in the Sunset Beach area, about 10 minutes west of Cabo, in 2004.

San Jose, once a snoozing 18th century mission town, is definitely waking up and now has more than two dozen hotels, upscale shops, restaurants and art galleries.

Some of Los Cabos’ attractions are natural -- lounging sea lions; whale watching from December to March; the picture-postcard landmark El Arco, carved through the rock where the Gulf of California meets the Pacific. Lovely beaches abound, although many have dangerous drop-offs and undertows.

The action is daylong at Playa el Medano right in Cabo -- kayaking, jet skiing, parasailing, then eating and drinking when the sun sets. The hot spot is the Office, where those at tables set on the beach between tiki torches are fair game for vendors hawking jewelry and serapes.

By day the town is quiet. Cruise ship passengers sip margaritas at open-air restaurants along the marina or peruse the shops, where salesmen stand outside. “You come off the ship?” they ask. There are the usual trinkets and T-shirts and seemingly enough silver jewelry to sink one of those ships.

At J&J; Habanos, Jose Cantu sells Cuban cigars for up to $60 apiece. “The only people I sell to are Americans,” he says, adding, “not legally.” Business is “very bad.”

At the marina, Tony Miranda of Captain Tony’s -- “You hook ‘em, we cook ‘em” -- says, “The tourist business has been very hard for the last couple of years. It’s even worse now.” His wife, Deborah, a Californian, repeats an adage about the economy: “When the U.S. gets a cold, Mexico sneezes.”

When Tony came to Cabo in 1989, he says, it was a friendly, intimate place. “Now it’s very commercialized. Everybody just wants to sell.”

One thing they’re selling is property. It’s a buyer’s market for low-end condos ($50,000 to $200,000), older units with fewer amenities, says Ehrenberg. And, he adds, there is some “adjusting” at the high end. But oceanfront lots are fetching up to $2.5 million. “Beachfront is beachfront, here or in China. The boom is not over yet, but we’re getting more sophisticated buyers. People want value.”

“Value” is a word heard over and over. Most of the fancy hotels were built before Sept. 11, Halliburton of Twin Dolphin says. “People were paying way too much money for everything and charging too much money for everything.” Tourists have been “hammered,” he adds -- top prices, minimal hospitality -- and many have gone elsewhere. “This is the most expensive destination in Mexico, but the big money is leaving town.”

“If the tourists stop coming,” he muses, “they’ll probably have to fire that cannery up again.”

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No shortage of lodgings in Los Cabos

On a recent visit, a Times photographer and I checked out hotels and restaurants in Los Cabos. We chose a variety of luxury hotels to look at, from boutique to old standby to brand new. In San Jose del Cabo we stayed at the 16-room Casa Natalia, and in Cabo San Lucas we tried the Pueblo Bonito Sunset Beach, which opened in 2002, and Twin Dolphin, an old standby. We also peeked at the top-ticket hotels on the corridor, the 4-year-old Esperanza and the 5-year-old Las Ventanas al Paraiso. Below is a roundup of what we found:

GETTING THERE:

From LAX, Alaska, Mexicana and Aero California offer nonstop service and America West and Mexicana offer connecting service (change of plane) to San Jose del Cabo International Airport, about 26 miles northeast of Cabo San Lucas. Restricted round-trip fares begin at $188.

TELEPHONES:

To call or fax the numbers below from the U.S., dial 011 (the international dialing code), 52 (country code for Mexico), 624 (local code) and the local number.

HOTELS:

Casa Natalia, 4 Blvd. Mijares, San Jose del Cabo; (888) 277-3814, fax 142-5110, www.casanatalia.com. In-season rates: rooms $240; suites with private Jacuzzis $375.

I left part of my heart in San Jose del Cabo, where proprietors Nathalie and Loic Tenoux (he’s French, she’s from Luxembourg) welcome guests to their luxury boutique hotel, Casa Natalia, an oasis behind massive wooden doors in a walled, palm-shaded courtyard near the town square.

No sooner had we checked in than someone brought complimentary chips, salsa, guacamole and cold beer to our private bougainvillea-

covered terraces overlooking the half-moon-shaped swimming pool and splashing fountains. Flaming braziers add drama for dinner under the stars, prepared by chef Loic. Rooms, which are named rather than numbered, are accented with colorful Mexican arts and crafts. Complimentary continental breakfast is set outside the door on a little tray table with a bright cloth.

The Tenouxes opened Casa Natalia in the fall of 1999 as an intimate alternative to the mega-room resort hotels.

Pueblo Bonito, Sunset Beach, Cabo San Lucas; (800) 990-8250, fax (619) 267-6698, www.pueblobonito.com. In-season rates: $250-$1,600 (for penthouse suite for eight).

Pueblo Bonito -- up a long, long drive at Sunset Beach, about 10 minutes west of Cabo -- is a work in progress, with heavy machinery scooping away. Phase one has 118 suites; 500 more are planned.

The 50-acre site on the Pacific has lush landscaping, flamingos, parrots and fountains, and it slopes down to a quiet beach (where there are no vendors). Friendly, chatty drivers in red golf carts ferry guests up and down the narrow paths from lobby to oceanfront pool. There’s a shuttle to the two other Pueblo Bonito hotels in Cabo but not to the town center; the last shuttle returns at 10:30 p.m.

All suites have kitchenettes and coffeemakers, though there’s a charge for that little coffee packet. My junior suite ($250 published rate) was entered through the kitchenette and was spacious, with a balcony, partial ocean view and direct view of the hotel owner’s mansion under construction on the beach. The bath was small, shower only.

Somehow the complex doesn’t beckon to me. Perhaps, to be fair, it’s because it is unfinished. Or maybe it was all the emphasis on time shares.

Esperanza, Carretera Transpeninsular, Km. 7, Cabo San Lucas; (310) 453-6212 or (866) 311-2226, fax (310) 453-4845, www.esperanzaresort.com. In-season rates $550 to $5,000 for a three-bedroom ocean-view luxury suite with private pool.

Auberge’s luxurious 56-unit Esperanza, with its palapa-topped casitas and Mexican accents, is on the corridor between Cabo San Lucas and San Jose del Cabo. We were shown Casa Jazmin ($825), with its view of El Arco, balcony with cushioned banquette and Jacuzzi that guests can access directly from their stone and marble bath. Wood-framed sliding doors opened one wall to ocean breezes.

Stone steps over a lotus pond lead to the hotel’s new spa, where private treatment sanctuaries with their own little gardens and pools open off a tranquil patio. Among options: seaweed baths, Corona beer face-lifts and couples’ clay bakes. This is definitely high-end.

Before introducing ourselves, we lunched under a big palapa at Esperanza’s seaside Signature Restaurant, where we were warmly welcomed by staff, who repeatedly thanked us for coming. The day was uncharacteristically cool and cloudy, and someone promptly appeared with two wool ponchos.

Twin Dolphin, Highway 1, Km. 12, Cabo San Lucas; (213) 386-3940 or (800) 421-8925, fax (213) 380-1302, www.twindolphin.com. In-season rates: $350-$545.

Twin Dolphin has its devotees, who tend to regard glitziness as a bit declasse. Rooms and suites have no TVs or telephones, and the furnishings are ‘70s originals. With prices starting at $350, some might find the rooms a bit too basic, but David Halliburton Jr., whose father founded the hotel, says it is “for those who don’t need a fax in the bathroom and a Frida Kahlo print on the wall.”

All rooms have ocean views; the balconies of oceanfront units sit almost in the sea. My balcony at sunrise was a magical place, with waves splashing on the rocks below. I also liked the fact that the open-air design embraces the desert landscape rather than gobbling it up.

One of the best snorkeling beaches, Playa Santa Maria, is five minutes down a dirt path. Early one morning I was the only person there, save for a man repairing his skiff.

Las Ventanas al Paraiso, Carretera Transpeninsular, Km. 19.5, San Jose del Cabo; (888) 525-0483, fax (800) 705-9212, www.rosewoodhotels.com. In-season rates: $575-$3,800 (for a three-bedroom suite).

Approaching the discreetly sign-free gate at Las Ventanas, we were told it was “impossible” for nonguests to enter. But on identifying ourselves, we were taken on a tour by assistant manager Florent Gateau, who explained that people paying Las Ventanas’ rates “expect privacy.”

This Rosewood hotel is exclusive with a capital E. Guests send in their profiles so dietary preferences will be accommodated and minibars appropriately stocked. Four pools are four different temperatures, and guests are pampered by a pool butler proffering CD players, books, cold towels and spritzers.

The decor is Baja Mediterranean, with a pleasing low-key pueblo feel, and suites have fireplaces, large balconies with private whirlpools and comfy wraparound banquettes. For a romantic dinner or a massage under the stars, some have rooftop decks.

WHERE TO EAT:

Las Gardenias, at Gomez Farias and Camino al Hotel Hacienda in central Cabo (no telephone). Inexpensive “joint” favored by locals and knowledgeable visitors. Limited menu includes fish, shrimp or barbecued beef, pork or chicken tacos for about $1.50. Complete lunches $6. Beer and soft drinks. Breakfast, lunch only. Open 8 a.m. to 5 p.m.

Mi Casa, Avenida San Lucas, 143-1933. Pretty Mexican patio restaurant on the plaza in Cabo. Original murals, festively painted tables and chairs. Shrimp broiled with tequila, ceviche, marlin tostadas. Excellent tortilla soup (about $4). Most meat entrees less than $10 at lunch. Lunch noon to

4 p.m. daily except Sunday, dinner 5 to 10 p.m. daily.

Mi Cocina, 142-5100. In Casa Natalia. Superb cuisine in a beautiful courtyard setting. Chef-owner Loic Tenoux prepares international dishes, some with “a touch of Mexican” -- but no French-Mexican or other unlikely fusions. Entrees -- fresh fish, grilled rosemary chicken, baby rack of lamb -- $18-$28. Open daily for dinner.

Pitahayas, Sheraton Hacienda del Mar, Corredor Turistico, Km. 10, 145-8010, reservations suggested. Pacific Rim cuisine in a romantic setting beneath an oceanfront palapa. Candlelight, palms wrapped in twinkling lights, live music and stylish presentation. Appetizers seemed better than dinner entrees, which are mostly in the $20-$30 range. Dinner only.

Twin Dolphin (see above), 145-8191. Fine cuisine in handsome room opening to pool area. New Zealand lamb, Iowa beef, fresh seafood prepared by French chef. Salads of organic greens grown on-site, served with chevre from hotel’s mini-herd of goats. Dinner entrees $16.50-$43. Breakfast, lunch, dinner.

TO LEARN MORE:

Los Cabos Tourism Board/Hotel Assn., (866) LOS CABOS (567-2226), www.visitloscabos.org.

Mexican Government Tourism Office, Mexican Consulate, 2401 W. 6th St., 5th Floor, Los Angeles, CA 90057; (800) 44-MEXICO (446-3942) for brochures or (213) 351-2069, fax (213) 351-2074, www.visitmexico.com.