» Estadística

Reconstrucción de la cadena virtuosa turística:

Caso Mazatlán

Publication of:

www.amdetur.org.mx

Romárico Arroyo, New President of AMDETUR

Educational Cooperation Agreement Between CONALEP and Amdetur

MayJune

2012

»Enterprise 2012 Business Outlook

»Industry Timeshare Industry Grows in Venezuela

» Statistics

Rebuilding the virtuous chain of tourism:

Case of Mazatlán

Digital

Romárico Arroyo, New President of AMDETUR

Dear Friends,I would like to say how satisfying is for me to participate, as President of AMDETUR, in the development and growth of the vacation ownership industry, particularly at such an important moment in its history as today.

As we all know, this phase of change taking place around us is an extraordinary opportunity to redefine and apply actions that will give a new boost to the evolution not just of our segment but of tourism in general, and I am very excited to contribute my own know-how and experience to the process.

I’d like to thank you all in advance for the ideas and cooperation I know you’ll provide, and I’m confident that the work we will do together in the next two years will lead to the results we propose to achieve.

Cordially,Ing. Romárico D. Arroyo Marroquín

Romárico Arroyo is Vice-president and Member of the Board of the Sunset World Group, an important hotel chain with over 20 years

of positioning in the Mexican Caribbean through its brands: Sunset Royal, Sunset Lagoon, Sunset Fishermen, and Hacienda Tres Ríos, which is completely focused in the environment protection and is publicly recognized as a national model for sustainable tourism development.

Mr. Arroyo held positions of high responsibility in the Federal Government, such as Joint Director of the Ministry of Water Resources and the National Water Commission. Undersecretary of Basic Industry and Mining Industry at the Secretariat of Energy, Mines and State-Owned Industry, and Secretary of Agriculture for Ernesto Zedillo’s government.

He was General Director of the National Trust Fund for the Development of Tourism (Fonatur), after its founder, Antonio Enríquez Savignac, where he helped to foster the development of the modern Mexican Tourism Sector with the creation of the “Comprehensively Planned Destinations” of Cancun, Ixtapa, Loreto and Los Cabos, as well as other support instruments such as financing, trust mechanisms for foreign investments in restricted areas, hotel chain restructuring, promotion of Timeshare and Vacation Club projects, as well as bilateral negotiation for air transport, among others.

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» AMDETUR

May / June 2012 02

» AMDETUR

Carlos Trujillo Balmaseda, Executive President of Amdetur

The word Amdetur in itself means leadership, not just in the domestic sphere but internationally. It means prestige, quality, effort, constancy and dedication by everyone who has been involved in it, in one way or another, over its 25-year history.

For me, having been invited to participate in Amdetur means many things, but above all it is a tremendous responsibility. I am grateful to the Board of Directors of Amdetur for accepting my appointment as Executive Present particularly Romárico Arroyo, because of the trust he has placed in me.

There are many challenges for the industry at the moment, but I am confident that with the concerted efforts of all our Associates, the Directors and the solid team at Amdetur, led by Rosy de Jesús Lugo, we can attain the goals that we set for ourselves as an Association.

Finally, I am very certain that Amdetur is, as it should be, an inclusive organization that incorporates all the new modes and forms of marketing and sale of our tourist products, provided the companies are

Carlos Trujillo has a degree Business Administration program (with honors) and almost 20 years of experience in the industry.

He has been active in the Associations of Ixtapa and Quintana Roo and was Chairman of the Tourist Marketers Committee of Mexico City. He has been involved in Amdetur for some time now, having been a member of the Organizing Committee of the Annual Convention for the years 1998 and 1999, and more recently the 2011 Convention, which took place in Cancun. He has been an active member of ACLUVAQ since 2000, and was also a member of the organizing committee of this Association’s 20th and 25th anniversary celebrations, as well as a fundamental presence in the first and second Americas Forum On Marketing and Sales for Vacation Clubs.

Since 2005 he has been a member of the International Association CARE. In his professional experience he has worked with RCI, Club Regina, Sol Meliá, Omni, CircleOne by Blue Bay, La Rinconada and Pacífica, among others, where he held a number of positions as Chief Executive Officer, Project Director, Marketing Director, and Business Development Director.

serious and duly consolidated. That is why one of the main challenges will be expanding the base of Associates, with due regard to the principles and bylaws of this Association.

I welcome the input of all the members of Amdetur, so that together we can lay the foundations on which we will continue to work.

Among the activities covered by the agreement are: creating educational materials to support the teaching and learning process, reviewing the content and skills that will be imparted in the curriculum, and setting up professional internships so that young people can receive training in a variety of Mexican tourist destinations--and in other countries, for students with the best academic averages. Students will also be able to complete their national social service requirements through work in companies in this industry.

The agreement also establishes principles for jointly planning and organizing research activity, conferences, exchange of publications, seminars and courses.

“With this agreement, we have taken the first step forward toward a very important goal, because we have established the basis for cooperation, information sharing and technical assistance in the tourism field, which will make us more effective in our educational endeavors,”

said Wilfrido Perea Curiel, General Director of CONALEP, “and this in turn will mean more highly trained professionals and better opportunities for our students.”

AMDETUR President at the time, Juan Vela Ruiz added, “Each of the activities planned under this agreement will be carried out within a specific work program, which will allow us to measure and control in detail the procedures, methodology and responsibilities of each institution.”

Educational Cooperation Agreement Between CONALEP and AMDETUR

On November 17, 2011, the National College of Professional Technical Education (CONALEP) and AMDETUR signed an

educational cooperation agreement, for the development and implementation of study programs designed especially for the Professional Technical Bachelors Degree in Tourist Hotel Services given by that educational institution, as well as specific training courses for the professionals who work in this industry.

This agreement paves the way for joint efforts between the two organizations, intended to ensure that graduates receive training in keeping with the realities, challenges and requirements of our industry today.

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» AMDETUR

Signing of the Agreement with CONALEP (left to right): Tomás Pérez Alvarado, Secretary of Academic Development and Training; Ramón Picazo Castelán, General Secretary; Wilfrido Perea Curiel, General Director; and Juan Vela Ruiz, AMDETUR President at the time.

Timeshare Industry Grows in VenezuelaBy Rafael Guerra DazaExecutive President of CAMYTCOM, Venezuela

Timeshare first emerged in Venezuela in the mid-1980s, pioneered by the state of Falcon, where the Morrocoy Nautical Complex began selling four-week packages, but without exchange possibilities. In the same decade, two other resorts began to sell weeks: Margarita International Resort and Casas del Sol, on Isla de Margarita, the country’s most popular tourist destination. Thus began the expansion of a model that has been warmly received, and today consists of:

• Around 87 resorts managing Timeshare products, 67 of them affiliated with RCI and

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» INDUSTRY

approximately 11 with Interval International, providing a broad range of exchange options.

• 32 Resorts active in sales, and around 15 in some phase of market insertion.

• More than 135,000 contracts sold, representing a market penetration close to 14%.

• Approximately 30,000 new sales in the last three years, with an average cost of US $6,800, meaning a total of around US $200 million.

• Close to 15,000 exchange transactions a year.

• A market covered 75% through the Points model and 25% in floating weeks.

• The most popular domestic destinations for Venezuelans are: Isla de Margarita, the eastern coast of Falcon, and the Andes; their favorite international destinations are Florida, the Caribbean and Mexico.

Rafael Guerra Daza is Executive President of the Chamber of Multi-Ownership and Timeshare (CAMYTCOM) in Venezuela, as well as Vice President of the Higher Counsel for Tourism (CONSETURISMO), which joins together chambers and business associations affiliated with the tourism industry. Director of FEDECÁMARAS (leading organization of Venezuelan businesses); and representative of the Chamber of Timeshare Resort Operators before the Technical Consulting Commission on Multi-Ownership and Timeshare.

Current Drivers of GrowthAlthough at the moment there are no resorts that sell multi-ownership properties, the growth in sales we have seen in Timeshare during the last two years –in the midst of the local economic crisis– has been representative, and has been driven by several factors, among them:

• Foreign-exchange controls introduced by the government 10 years ago were tightened in early 2010, dampening the possibility of tourist travel abroad, since the rates assigned in foreign currencies were too high even for families that earn a good income in Bolivars, while other options are more expensive or even illegal.

• A portion of the Venezuelan middle class has recently been increasing its income, and therefore its purchasing power, becoming the largest consumers of various products, among them tourism and Timeshare.

• The maturity of the market in the supply of tourist products, the increasing professionalism of sales teams and the quality of some products.

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» INDUSTRY

On this point, patterns of consumption among Venezuelans favor Timeshare products, not just because they are familiar with and use it, but because they recommend it in a way that encourages brand loyalty, and this translates into high levels of repeat buyers. This factor explains why 95% of Timeshare properties are purchased by Venezuelans. In fact, it is quite possible that Venezuelans consume more Timeshare per capita than any other Latin American country.

Legal frameworkIn 1996 a law was passed that promotes and regulates multi-ownership and Timeshare products; its regulations were published the following year. This legal instrument gives the Technical Consulting Commission on Multi-Ownership and Timeshare (CTC) the authority to evaluate new projects and recommend their certification, as well as to issue an opinion about the technical aspects of their functioning and operations.

Following a long period of inactivity, the CTC resumed its work in 2010, made up of seven members: four representing the government and three representing business organizations involved in the industry.

In 2008, the Venezuelan Congress passed the Law on Tourism Financing, obliging banks to offer special conditions on lending for investment in tourist activity. As of today, the tourism portfolio has extended 1.2 billion dollars in financing, approximately 70% of which went to tourist lodging. This stimulus is complemented by a tax reduction incentive of up to 75% on income tax, which was in effect until early this year.

For the futureIn expanding toward the future, we know that there are currently nine projects under construction, and six more in the planning phase. Another six resorts have contacted the Chamber of Multi Ownership

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» INDUSTRY

and Timeshare Industry (CAMYTCOM), announcing their decision to begin or resume the sale of Timeshare products; the former in an effort to compensate for the decline in the receiving markets, and the latter encouraged by strong results reported by resorts in the active sales phase.

Although with personal and legal uncertainty, expropriations and confiscations in some sectors of the economy, high levels of risk indexes, the passage of laws that threaten private enterprise and the free market, and the announcement of new policies in this direction, have done much to discourage Venezuelan businesses, some enterprising firms have decided to bet on a more prosperous and secure future.

Trends in the Venezuelan market are favoring Own-Point schemes and inventories of units with 2, 4 and 6-person capacity, some with kitchen facilities and others with all-inclusive programs. There has also been a growing interest in forming multi-destination type clubs, where clients have a variety of options for reserving a stay in the same system in which they acquire their membership. Timeshare is also developing

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at a brisk pace in destinations outside of Isla de Margarita, which means an interesting geographic diversification in the supply of properties.

Finally, the market potential for growth could expand considerably if there is a change in the focus of the public policies. Which would also strengthen bilateral trade relations with the country’s largest and closest neighbors, that are home together to more than 210 million inhabitants and have enjoyed steady economic growth in the last five years.

hereAdvertise

and reach government agencies and leading companies of Tourism and Vacation Ownership

ContactAurora Martínez

aurora@amdetur.org.mxt. 01 55 5488 - 2028 al 31

www.amdetur.org.mx

20,21,22 June 2012Hotel Hilton Mexico City Reforma

GORDON GURNIKRCI President

DAVID C. GILBERTEVP, Sales and Marketing Development

JEFF MYERSExecutive Vice President and Chief Sales and Marketing, Wyndham Vacation Ownership, Inc.

CARLOS PUIGJournalist

www.amdetur.org.mx

May / June 2012 08

» ENTERPRISE

In the international markets, beyond the short-lived climate of turbulence, policy makers will have to balance internal and external issues. It is no exaggeration to say that deciding on the future president of Mexico will not be the only factor that defines the country’s medium and long-term strategies. No matter who wins, his or her administration will have to guarantee considerable leeway for the continuity of economic and monetary policy, and avoid disruptions in macroeconomic indicators. Changes are to be expected on another level, where each candidate is likely to propose his or her own ideas, but long-term investment should not be jeopardized.

Foreign Direct Investment (FDI) in Mexico serves as a good indicator of these trends. Although it declined in the first quarters of 2011 to USD 13.430bn dollars, the decline was more the result of problems with crime and the external crisis than with the electoral scenario. Banco de Mexico had estimated FDI of USD 19.600bn in 2011, and in a recent speech, President Felipe Calderon said it was possible the figure could rise as high as USD 20bn. The final figure will be announced in the first few months of this year, because of the way the information is compiled (in 2010, the latest figures published showed FDI of USD 19.972bn).

This year, Mexico faces elections that will set into action not just political parties but the news media, authorities, business organizations and civil society.

We can expect debate and controversy over platforms and candidates, and the tone of these discussions may even rise above the differences that exist between the proposals. Even though, decision-makers must assess these positions in a balanced way. For this reason, we see this as a year of challenges. Some methods will change, while others will remain stable, but between the two of them there will be new opportunities for entrepreneurs, and the biggest challenge will be bringing about a stronger pace of domestic growth, taking advantage of the good qualities of this country to achieve stability and prosperity for all. In times of uncertainty, it is time to make right decisions.

2012 Business OutlookBy Guillermo García-Naranjo and Roberto CabreraGeneral Managing Partner and General Director of Industries and Market, respectively, KPMG Mexico

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» ENTERPRISE

A growing industryThe Mexican automotive industry is proof that even under adverse conditions, some businesses are more or less affected--or even benefited--than others. The Mexican Automotive Industry Association (AMIA) reported that automotive exports totaled 27 billion dollars in 2010, more than tourism and wage remittances from abroad. Exports to Latin America accounted for 14.5% of the total, and grew 102% over 2010.

As this industry continues to advance, it creates more interesting options for investment. Because of its advantages, many major players have recently announced plans to enter the Mexican market or expand their current operations here. Big companies and numerous suppliers

have announced or are considering significant investment in Mexico. This speaks of a growing industry, one that will continue to serve as a strong export platform and provider for the local market.

ConclusionsEntrepreneurs and decision-makers face daunting challenges in 2012. Besides being an election year in Mexico and the United States, there is persistent concern over violence, the European crisis, and exchange-rate volatility. Nevertheless, Mexico continues to enjoy stable economic indicators and sound public finances. This could set the stage for taking risks and exploiting opportunities that may not be repeated.

Photography: Yucatan.com.mx

Mexican Automotive Industry Association2010

Exports:27,000 mddExports to Latin America:14.5 %

Growth:102%

$

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» ENTERPRISE

Guillermo García-Naranjo, General Managing Partner of KPMG in Mexico. Guillermo has more than 30 years of experience in the Auditing field. For more than 20 years he has served as statutory auditor for many companies in different industries, encouraging the development of businesses and sound corporate practices. Since September 2002, he sits on the Boards of KPMG International and KPMG Americas. Guillermo is an active participant in various associations, like CCPM, IMCP and IMEF.

Roberto Cabrera, Managing Partner for Industries and Market.

More than 30 years of experience in consultancy to leading national and international organizations. Before he came to KPMG, he worked with Andersen Consulting, and then began his own consulting firm. In 1998, IBM bought out his company and Roberto stayed on at its head until 2012. He later joined IBM as Director of Business Integration Services. Starting in 2004 he worked with PeopleSoft as Vice President of Services for Latin America. He has extensive experience in Process Improvement, BI and implementation of business applications.

asesoria@kpmg.com.mxwww.delineandoestrategias.com

@kpmgmexico

kpmg mexico

A future with optionsRate of growth Banco de Mexico considers to be “reasonable.”

The Mexican Stock exchange has been strong despite global volatility.

This will be a tough year for Mexico and the world, but investment indicators are encouraging:

3.5% 815 K

Mexican ElectionsMany policies and strategies may be subject to change, and it will be important to analyze them.

USD 40 billion Placed by Spanish companies in Mexico, attesting to the appeal of our economic system.

International MarketsGlobal markets follow the European trends, and this is making the markets more wary.

Automotive MarketMexican automotive exports totaled 27 billion dollars in 2010, more than tourism and wage remittances.

Foreign InvestmentForeign investment has declined due to factors relating to violence and the external crisis.

ExportsExports to Latin America grew 102% over 2010, reaching 14.5% of worldwide total.40B

Guillermo García-Naranjo & Roberto Cabrera

Formal jobs were created between January-November 2011.

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» STATISTICS

Rebuilding the virtuous chain of tourism: the case of MazatlanBy Louise DavidSoftec Consultant

MMazatlan was one of the first destinations in Mexico to benefit from an inflow of American retirees to Mexico, following the signing of the North American Free Trade Agreement. Starting in 1994, and up until the middle of the first decade of the 2000s, the annual growth in the

number of foreigners residing in Mexico averaged 30 to 40%, which in turn drove a significant increase in the sale of high-end homes in that location.

But because of recent changes in the United States economy and the impact of problems of violence in the region of Sinaloa, starting in 2008, buyers from that country have become more scarce, even when the retirees already living in Mazatlan defend it and want to continue to reside there.

This situation has caused a decline in the level of absorption in this market, as shown in the following graph: at the start of 2009, an average of 49 vacation homes were being sold, but by the first quarter of 2012, the figure had dwindled to 27.

In Mazatlan, Softec reports 43 vacation home projects under development in the first quarter of 2012, with 61% of the units under construction having been sold, within this destination’s inventory, and around 800 homes remaining to be sold at the end of that quarter.

This is why it is vitally important to refocus the efforts to develop real estate in Mazatlan. Today, more than ever, the challenge is attracting tourists and potential homebuyers and gaining their loyalty by taking their different needs into account. It is no longer enough simply to offer the high-grade product that consumers would easily buy in past years.

Average Monthly Absorption per Quarter of Vacation Housing Projects in Mazatlan

Aver

age

Num

ber o

f Hom

es S

old

International studies reveal that a client decides to buy a tourist home after having visited the destination five times, which means tourists must be offered different types of lodging throughout their lifecycle, and effort must be made to meet their expectations when they visit the destination for the first time, in their 20s, so that they want to return at 30 with their partner, again at 40 with their whole family, until they are firmly convinced they want to acquire a tourist property for their retirement.

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Today, challenges facing Mazatlan are similar to those of many other tourist destinations in Mexico. The objective is to rebuild the virtuous chain enjoyed by tourist cities that are attractive for foreign homebuyers

Louise David is head of the urban, demographic and economic analysis department of the real estate consulting firm Softec. Since 2008, she has been working on a doctorate in urban studies at the University of Paris-Est. Her doctoral research analyzes the urban and political impact of foreign real estate investment in Mexico City. .