Notitur / July - August 2012

Year XXIV July- August 2012

2012

Official magazine of the Asociación Mexicana de Desarrolladores Turísticos, A.C. amdetur.org.mx

July August

»Statistics Success

in Mexico’s Tourist Destinations

»In this Edition

Their history, their characteristics, and how to maximize their competitive advantages

Rights protected by Article 580 of the Federal Civil Procedural Code

Class Actions in Mexico

»Industry

Vacation Ownership

around

the world

Summary of a recent study conducted

by Oxford Economics for AIF

XXV years of Important Achievements in support of Tourism Industry

Diploma Program in Timeshare, New Momentum for The Professionalization of Our Industry

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EDITORIAL

DEAR READERS: I would like to extend you all the warmest welcome to the 26th Annual Convention of the Mexican Resort Development Association (AMDETUR), an event that is especially important this year because we are celebrating our 25th year as an Association.

The Organizing Committee has done a splendid job at putting together a program of national and international presenters and panelists, who I’m sure will be of great interest and usefulness to our members and guests.

I would like to thank the industry’s authorities, sponsors, presenters and panelists, and very particularly our members for their valuable participation, which has made it possible for AMDETUR once again to hold its traditional event.

The keynote this year is “Working for Tourism in México,” and we will be hearing about current conditions in the tourism industry, how it has been evolving on the whole, and particularly in our segment, which is Vacation Ownership, Clubs and Timesharing, their progress and their challenges.

Our activities have made this the fastest-growing segment of the Mexican tourism industry. We are at a time when there are clear reasons for optimism, because the industry in general has been resuming its growth gradually after a period of considerable difficulty that began in 2009.

Of course, the improvement has not extended to all the segments of the industry, and there are still regions where our members operate that face serious challenges in their recovery. There is much to do in returning to the path of growth, particularly to encourage Mexican tourism to grow more rapidly than it has been in recent years, because it has fallen to below its potential.

We have a set of proposals in the context of the National Agreement for Tourism, particularly the proposal of the Tourism Commission of the National Conference of Governors (CONAGO) and from private enterprise, through CNET. These proposals are all competitive, ambitious, viable, and to a great extent represent the consensus of the industry on how we should move forward.

As for this Association, we must continue participating decisively, united and secure that we are continuing a tradition of success, of commitment to innovation and of coming up to the expectations of our buyers and our guests, principles with which we have already made an outstanding place for ourselves, nationally and internationally.

amdetur.org.mx

Welcome to our convention.

Cordially, Romárico D. Arroyo Marroquín President

2012

BOARD OF DIRECTORS chairman Romárico D. Arroyo Marroquín Grupo Sunset EXECUTIVE Carlos Trujillo Balmaseda president Amdetur Secretary Gerardo Rioseco Orihuela Fiesta Americana Vacation Club Treasurer Jaime Márquez Vargas / Royal Holiday Counselors Juan Vela Ruiz / Grupo Velas Ricardo Montaudon Corry / RCI Juan Ignacio Rodríguez Liñero / RCI Kemil Rizk / Royal Resorts Marcos Agostini / Interval International Denis Ebrill / Sol Meliá Vacation Club Jorge Pallas Cáceres / Promotora Cancún Sunset Clubs Gustavo Ripol Bermúdez / Presidente Club de Viajes Francisco Aranda Bezaury / Club Real Resort Gibrán Chapur / Palace Resorts Jorge Herrera Rivadeneyra / Unlimited Vacation Club Director

Rosa de Jesús Lugo Dorantes

July August

SUMMER 2012

Outlook on the World Vacation Ownership Industry

Summary of the results of a recent study by Oxford Economics, for ARDA International Foundation (AIFA), with information about the number of resorts, units, room nights and trends in our industry worldwide.

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Class Action in México

Class Action –a precept that was signed into law on March 1 of this year, assumes the existence of other types of rights that the law did not previously recognize. This article explains the content of Article 580 of the Federal Civil Procedure CODE (CFPC).

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Notitur President Romárico D. Arroyo Marroquín Grupo Sunset executive Carlos Trujillo Balmaseda president Amdetur PUBLISHER Aurora Martínez V. graphic Design KEMCS Diseño y Marketing www.kemcs.com printer Litográfica JM, S.A. de C.V.

Tel. (55) 5581 8229 y 5582 9370 translation Elizabeth Collins Morrison elizcollins@mac.com photograPhy José Mata / www.pbase.com/ppmata Amdetur Cel. (04455) 1885 8581 ADVERTISING Aurora Martínez V. aurora.martinez@prodigy.net.mx

Amdetur

25 Years of Important Achievements

Over the past 25 years, AMDETUR has made substantial progress in solidifying México’s Vacation Ownership industry, thanks to the hard work of all those who have served as its presidents; official organizations with which it collaborates; and those who provide their support and solidarity day after day.

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Local ASSOCIATIONS

Lic. Patricia de la Peña, Asociación de Clubes Vacacionales de Quintana Roo, A.C. / Lic. Alejandro Lemus Mateos, Asociación de Desarrolladores y Promotores Turísticos de Tiempo Compartido, A.C. (Puerto Vallarta) / Dr. Jorge Téllez Landín, Asociación Sudcaliforniana de Desarrolladores de Tiempo Compartido, A.C. / Ing. Emmanuel Omaña Camín, Asociación de Promotores de Clubes Vacacionales del Estado de Guerrero, A.C. / Sr. Fernando de Leeuw Santiago, Asociación de Clubes Vacacionales de Cozumel, A.C. / Lic. Fernando Madero Irízar, Asociación de Clubes Vacacionales de Sinaloa, A.C. / Lic. Claudio Balderrama González, Asociación de Desarrolladores y Operadores Turísticos de Ixtapa y Zihuatanejo, A.C. Notitur is the official magazine of the Asociación Mexicana de Desarrolladores Turísticos, A.C. (Amdetur) (Mexican Resort Development Association), bimonthly published -with five digital editions and one printed and digital edition per year, for its members and major official tourism organizations in México. Digital versions in Spanish and English are electronically distributed in several countries.

All rights reserved. This publication may not be reproduced in whole or in part without the prior written permission of the publisher. Opinions expressed in this publication are not necessarily those of the editor of Notitur and no responsibility is accepted for lack of precisions in editorial or advertising content. Printed edition hard copies are printed in México. Amdetur: Montecito 38, Piso 32, Offices 11 to 14, Col. Nápoles, México 03810 D.F. Certificado de Licitud de Título No. 3856, of April 19th, 1989. Certificado de Licitud de Contenido de la Comisión Calificadora de Publicaciones y Revistas Ilustradas No. 3172, of April 19th, 1989. Número de Certificado de Reserva otorgado por el Instituto Nacional del Derecho de Autor, Secretaría de Educación Pública, 04-2005030817343600-102. NOTITUR JULY – AUGUST 2012

If you would like to receive the electronic version of Notitur in Spanish or English, you can request it at: aurora.martinez@prodigy.net.mx or download it directly : issuu.com/notitur

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Industry

New Momentum for the Professionalization of our Industry

4

On April 17, the first Diploma Program in Time-sharing was launched in Baja California Sur. The program has been created to provide industry professionals with the ability to handle the actions that management in this industry demands, in a practical and up-to-date manner.

STATISTICS

Success of México’s Tourist Regions

To design the most appropriate strategy and revive the economic development of this country’s tourist regions, following the reduction in Vacation Ownership sales between 2008 and 2010, it is important to know and understand the history and particular characteristics of each destination.

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www.amdetur.org.mx

AMDETUR

25 Years of

Important Achievements Throughout the past 25 years, AMDETUR has made substantial progress in solidifying México’s vacation ownership industry, thanks to the vision and hard work of all those who have served as its presidents, who have faced the challenges that arose in each phase; the official organizations with which we have collaborated in order to provide both consumers and resort developers more sure legal footing on which to operate; and of our members, whose ideas, support, efforts and confidence have marked not only the goals to aim for but the path to achieve them, making this industry stronger every day.

To each and everyone of you, happy anniversary!

Milestones

Some of AMDETUR’s Milestones In Promoting the Industry • AMDETUR’s participation in the negotiations for the Free Trade Agreement between México, the United States and Canada.

• Publication an update of Official Mexican Standards (NOM) for Timesharing, lending greater certainty and security to transactions involving Timeshare properties, to the benefit of the industry and its customers.

• Signing of a Collaboration Agreement between PROFECO and AMDETUR, in order to coordinate actions that support the industry.

• Signing of an Agreement between the Mexican Social Security Institute and AMDETUR, to provide medical service to our members through the Elite Club program.

• The repeal of Rule 3.4.11 of the Miscellaneous Tax Regulations, and the inclusion of its provisions under Article 13 of the Income Tax Law Regulation.

• Designation of AMDETUR before the Tourism Consulting Council, headed by the President of México.

• AMDETUR’s participation in signing the National Tourism Agreement.

Alberto Villada Camerino Founding President 1987 – 1989

Raúl Sánchez Rucobo 1996 – 1998

Fernando González Corona 1989 – 1990

Sergio Montero Querejeta 1990 – 1992

John McCarthy Sandland 1993 – 1994

Luz María Torres González 2002 – 2003

Ernesto Coppel Kelly 2006 – 2007

Juan Vela Ruiz 2010 – 2011

amdetur.org.mx

Eduardo Chabert García 1994 – 1996

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AMDETUR

How can we face the challenges facing the Mexican Vacation Ownership industry today,

and keep it growing?

“The incentive that encouraged entrepreneurs in the Timeshare industry to form Local Associations and AMDETUR was selfregulation. This enabled them to create rules and principles that would guarantee higher returns and a “fair sale.”

“It seems incredible that when it first started out, the image of our industry was not one of the best, and now it has become a renowned, respected, important generator of employment and foreign currency, although we still have much to do because we have to get our tourists back.”

Mario Muro Aguirre (1998) CEO, Dish Caribbean Distributor, Puerto TV Rico, Power TV Corp.

“Reflecting on statistics about our industry can give us an idea of its possibilities for the future; but if we want to optimize our results, we must assume that training is our primordial instrument, which can help us be more competitive and increase our presence in the markets.”

“When speaking about competitiveness, it’s not enough to go on doing what has worked for us in the past. We have to innovate, consider new opportunities, and continually transform our attitudes, taking advantage of constantly-changing technology.”

“I think that among the key goals we need to reach to drive growth in this industry are taking action to improve México’s image abroad of violence; investing in more and better promotion of our tourist destinations, mostly with the support of the destinations themselves; build up destinations that are recognized around the world as icons of this country; train everyone who participates in the industry about the new emerging markets and the new type of tourist that will be arriving in México; and to fortify our laws and regulations to provide our clients with the necessary guarantees, while providing the necessary facilities to adjust ourselves to changes in the industry.”

Jorge Pallas Cáceres (2004- 2005) VP Corporativo, Grupo Sunset “The vacation ownership industry in México has clearly been a huge success, just look at the growth that it’s seen in recent decades. But we must protect what we’ve achieved and evolve in an increasingly competitive world, with clients that are more demanding and experienced. We must seek out marketing strategies where the goal is not just the sell, but the start of a long-term relationship where we promote the quality of our products, our country and our people.”

“AMDETUR should be the formula for remaining united as an industry. We must support it, not just with material resources, but also with our talents, experiences and time. This alignment will lead to fairer laws, regulations and customs that promote its development and defend investors’ interests, as well as those of our associates and clients.”

“We who have made Timeshare our way of life, will always be grateful for the opportunity to support growth and innovation in our industry.”

Manuel Niembro Tapia (1998-1999) CEO, Asesoría y Promotora Inmobiliaria “I was not just President but Founder of AMDETUR, and I have to say that I admire the way our industry has evolved.”

José Carlos Azcárraga (2008 - 2009) CEO, Grupo Posadas

“Today, although we face many challenges, I think one of the most important ways to continue encouraging growth in the industry is marketing. This is a field that has grown increasingly sophisticated, and we have to continue adapting rapidly because it is also our greatest cost.”

“Competition is growing, and buyers are more sophisticated, making it more difficult to reach them, and thus is more important than ever to renew our strategies to get their attention and even imagine and apply new ones.”

Pablo González Carbonell (2000 - 2001) President, Royal Holiday 2

SUMMER 2012

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INDUSTRY IN MÉXICO

New Momentum for the

Professionalization of Our Industry Thanks to the efforts of the Southern California Association of Timeshare Developers (ASUDESTICO), and the collaboration of the Universidad del Golfo de California, the first accredited Diploma Program in Timeshare in Los Cabos, Baja California Sur, was launched as the first of its kind in México and Latin America.

The project took shape over months of hard work, analysis and consultation, led by Francisco Javier Olivares Velázquez, director of ASUDESTICO, with the support of Jorge Téllez Landín, president of this Association, and with the confidence and engagement of the developers who are our members. Having as its main goal to enrich the professionalism of those who work in the Vacation Ownership industry in Baja California Sur, on April 17 the first accredited Timeshare Diploma program not just in this state, but in México and Latin America was begun.

The event was attended by Rubén Reachi, State Minister for Tourism, who praised the initiative to carry out this type of project and support the state, and also reiterated the importance of Timeshare for Los Cabos, noting that it makes up almost 50% of the total supply of rooms. He also said this industry was what enabled the state to maintain an optimum occupancy rate even when tourism declined during economic crisis of 2008-2010.

Also present was Yolanda Razo, president of the Universidad del Golfo de California, the institution that accredits this Diploma; Senior Vice President of Business Development for México and Central America at RCI, Juan Ignacio Rodríguez, the first presenter at this event, speaking on the topic “Tourism Oriented Real Estate;” and Jorge Téllez Landín, president of ASUDESTICO; along with 27 participants in the Diploma Program and press representatives.

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Scope of the Program

Vacation Ownership is constantly changing, and its professionals are required to dominate an increasing amount of knowledge and competencies required for its management, operation and the correct tracking of the processes that go into it. Accordingly, this Diploma Program is aimed at providing participants with the skills they need to take the actions and decisions required in the Timeshare industry, in a practical, up-to-date and professional manner.

All this, from the perspective of management practices, down to the details of the operations that take place in a resort that operates under this model.

Participants will learn about current market trends, so that they can quickly and efficiently carry out the processes involved and can analyze elements that differentiate Timeshare and relate those variables to the application of various methodologies.

The curriculum of this specialization course consists of four modules, covering each of the most important concepts involved in the industry: MOdule I. Tourism Oriented Real Estate Different types of vacation ownership; product evolution; market characteristics and indicators; status of the industry in México and in Los Cabos; technology and social networks applied to the industry; and others.

SUMMER 2012

IN MÉXICO

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2 MODULE II. Legal Framework Laws that regulate Timeshare internationally; Official Mexican Standards it follows; Legal Regulation in México; Municipal Regulations in Los Cabos; role of PROFECO (Federal Attorney’s Office of Consumer); standard form agreements; advertising; CONCILIANET (online platform to process consumers consultations).

MOdulE III. Developers How to create a hotel and timeshare project; permits and construction; financing and backing; operating timeshare services; maintenance fees; exchange company; collections; commercial agency contract; post-sale.

MOdulE IV. Marketing Personnel recruitment; hiring and training of sales personnel; prospecting programs; functions of supervisors and managers; types of converters; management; handling situations during check-in; budgets, sales, outsourcing.

The courses will be given with the participation of renowned industry experts: Alberto Castaños, PROFECO México; Alejandro Carrillo, Grupo Posadas; Antonio Villavicencio, RCI; Carlos Caballero, Sales Managers Commission of the ASUDESTICO Affiliates; Carlos Meneses, PROFECO México; Eduardo Flores, Sheraton Hacienda del Mar; Fernando Azcona, Villa del Palmar; Gonzalo Hernández, Diamante Cabo San Lucas; Jorge Téllez, ASUDESTICO/ Playa Grande; Juan Zamora, Fiestamericana; Juan Ignacio Rodríguez, RCI; Miriam Cortés, ACLUVAQ; Paul Little, Villa del Palmar; Roberto Guzmán, Pueblo Bonito; Roberto Montalvo, Sheraton Hacienda del Mar; and Sergio Calderón, Villa del Palmar.

Actions like these are a clear example of the decisive actions that Timeshare industry leaders have taken to support its evolution and encourage observation of its principles and regulations, as well as to build bases on which it can continue to expand.

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1. During the official opening of the Diploma Program: Rubén Riachi, Baja California Sur Minister of Tourism; Jorge Téllez Landín, president of ASUDESTICO, Yolanda Razo, President of the Universidad del Golfo de California, and Juan Ignacio Rodríguez, Senior Vice President of Business Development for México and Central America, RCI. 2. Jorge Téllez Landín, President of ASUDESTICO, Yolanda Razo, president of the Universidad del Golfo de California, and Javier Olivares, director of ASUDESTICO. 3.Javier Olivares and Jorge Téllez Landín giving recognition to Miriam Cortés.

At whom is this diploma aimed?

• Management professionals in the Tourism industry.

• Graduates of technical degree programs related to the hospitality industry.

• Hotel company personnel who want to specialize in Timesharing.

• Consultants and teaching professionals.

• Professionals from legal, administrative and accounting departments, involved in the Timeshare industry.

• Other professionals involved in the industry.

amdetur.org.mx

5

INDUSTRY

Perspectives on the Global Timeshare Industry

By Adam Sacks / Managing Director of Tourism Economics, Oxford Economics

Global Timeshare Resorts

North America, including the US, Canada, and MĂŠxico, has the highest concentration of timeshare in the world with nearly 2,500 resorts and 261,000 units, representing 46% of all worldwide timeshare resorts and 53% of all units.

Timeshare in Europe encompasses 1,500 resorts and 91,000 units.

At 61 units per resort, timeshare properties in Europe tend to be smaller than in the Caribbean, North America, and Latin America

SUMMER 2012

Europe

Global Timeshare Units

2010

North America (USA) 183,956

North America (non EU) 77,016 Europe 91,156

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Latin America

T

here are more than 5,300 timeshare resorts around the world, including more than 491,000 units. The rooms within these resorts generated 250 million room nights in 2010. As a basis for comparison, this is the equivalent of 25% of all hotel room nights sold in the US in 2010.

Caribbean

Africa

Global timeshare is massive

North America

2010

Timeshare is a dynamic industry that spans the globe. New AIF research, conducted by Oxford Economics, has provided the industry with a detailed understanding of its size, composition, and performance across every world region. An extensive survey of the global timeshare industry has revealed the industry to be formidable in size, diverse in its makeup, resilient through a downturn, and optimistic about its future.

Australasia 3,924 Africa 11,178 Asia 28,350 Caribbean 37,884 Latin America 57,750

with average resort sizes of 154, 106, and 110 units, respectively.

Latin America and the Caribbean host a combined 771 timeshare resorts with nearly 96,000 units. Asia and Australasia are home to 350 and 112 timeshare resorts, respectively. There are 138 timeshare resorts in Africa with over 11,000 units.

In 2010, the global timeshare industry sold 774,000 intervals, representing $14 billion in sales. These interval sales comprise 4.7% of the total inventory of intervals owned worldwide.

Global timeshare is diverse Timeshare is a truly global industry with properties in 120 countries.

Its diversity is not merely geographic—the timeshare experience is heterogeneous. Our survey of non-US timeshare resorts found a broad distribution of product experiences spanning urban, beach, theme park, ski, golf, country/lakes, and gaming. And the timeshare product offered around the world is also multi-faceted. Although the majority of timeshare product is in the form of traditional interval weeks, respondents indicated that the combination of points systems and biennials are just as important. Biennials comprised over 40% of Latin American sales in 2010. Points systems are most important in Australasia, Africa, and Asia.

In addition, timeshare resorts around the world are diversified into other forms of real estate, including condo hotel and whole ownership sales.

Global timeshare is resilient Our three-year analysis of the timeshare industry revealed impressive stability through a global financial crisis. After a 22% drop in global sales volume in 2009, sales held steady in 2010. In some regions, namely Asia and Latin America, sales volume actually increased from 2008-2010.

Through this period, the average timeshare sales price has been more stable, declining just 9%. The average timeshare sales fell to $18,000 in 2010 from nearly $20,000 in 2008. This reflects several factors, including shifts in the mix of product types, some discounting, and differences across regions. For example, prices in the US fell 10% while prices in Latin America and Asia increased 3%.

Occupancy rates also remained strong through the recession period.

Global timeshare occupancy registered 76% in 2010, down just slightly from 78% in 2008. This compares favorably with the worldwide hotel industry whose occupancy rates are now substantially lower than timeshare properties. For example, Asian hotel occupancy rates were 70% in 2008 according to STR Global while timeshare resorts registered an occupancy rate of 68%. However, hotel occupancies in Asia fell to 61% by 2010 while timeshare occupancy rates increased to 70%. The research has revealed similar divergences across most world regions. This is not surprising as more than 60% of available nights are occupied by owners, their guests, or exchange guests.

This has important implications for destinations seeking to achieve greater stability during business cycles—timeshare offers this stability to the tourism industry. amdetur.org.mx

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INDUSTRY

Worldwide Timeshare Sales $US Billion

Global timeshare is an economic force United States North America (Non USA) Europe Latin America

Worldwide, the shared vacation ownership industry supported one million jobs in 2010. Of this sum, industry operations, off-resort vacation expenditures, and capital expenditures generated nearly 471,000 direct jobs. Another 539,000 jobs were sustained through the supply chain (indirect impacts) and as incomes generated by the shared vacation ownership industry were spent (induced impacts).

The global shared vacation ownership industry directly generated nearly $47 billion in direct economic output in 2010 through the activity of corporate, sales & marketing, resort operations, off-resort vacation expenditures, and capital expenditures. The total impact of the shared vacation ownership industry reaches $118 billion when including indirect and induced impacts.

Caribbean Asia Africa Australasia

Global timeshare is forging ahead In 2011, the global timeshare industry outside the US added 9,700 units at existing properties and another 3,900 at new resorts. The largest number of new units was opened in North America, followed by Europe, and Latin America.

Worldwide Time Share Direct Employement ‘000s

United States North America (Non USA) Europe Africa Asia

Looking ahead, the worldwide timeshare industry is continuing to expand. Across the globe, there are currently 132 timeshare resorts under development. When these resorts open, this will expand the base of timeshare properties by 2.5% to 5,457.

Developers outside the US currently have budgeted $747 million for projects in 2012 and beyond. Plans include 11,500 new units with approximately the same number at existing resorts and new resorts. Over 160 new resorts are planned for development in 2012 and beyond.

Latin America Caribbean

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Resort Operations

Sales & Marketing

Corporate

Australasia

SUMMER 2012

INDUSTRY

Background to AIF Global Timeshare Study: • Oxford Economics compiled resort lists from RCI, Interval International, and regional industry associations to create a master, deduplicated list of non-US worldwide timeshare resorts.

• Timeshare is defined to include points, traditional interval weeks, biennials, triennials, trial memberships, fractionals, and private residence clubs.

• The survey of non-US resorts yielded a sample of 26% of all resorts. Worldwide, the total sample rises to 30% when including US resorts.

• US results were incorporated into the global findings based on prior AIF research conducted by Ernst & Young and Ragatz and Associates.

• Results cited are preliminary and adjustments may be made.

• The complete and final results of the AIF Worldwide Timeshare Industry will be published in mid-2012.

Adam Sacks

Adam Sacks is the founder and Managing Director of Tourism Economics, an Oxford Economics company dedicated to quantitatively-based consulting to the tourism sector. Over the past sixteen years, Adam has worked with hundreds of tourism destinations and companies around the world.

He is an authority on measuring the economic impact of tourism activity–both for the broader visitor economy and for specific events and investments. He has conducted a broad range of analysis of tourism investment policies, the effects of proposed entry procedures, tourism taxation, and destination marketing strategies. Adam is a frequent conference speaker on issues related to tourism market analysis. He also has presented tourism impact results to governments around the world. He is a member of the US Department of Commerce Travel &Tourism Advisory Board.

www.tourismeconomics.com

amdetur.org.mx

9

CLASS ACTIONS

Class

Actions in México

By Carlos Román Hernández / Rincón, Mayorga, Román, Illanes, Soto

I

n order to continue our coverage of the issue Class-action lawsuits are relatively a new concept in the Mexican of Class Action Lawsuits that we began in our legal system. They fall under the jurisdiction of the Federal Judicial Branch, and we must still wait to hear the opinion of our judges previous print edition (Winter 2011) of Notitur and that forum itself to measure their impact, which will undoubtmagazine, in this issue, Carlos Román Hernández edly extend to the Mexican Vacation Ownership industry. will provide a detailed description of the various concepts and the way in which recent regulatory What are class-action suits? reforms in México may affect the vacation Previously, México legal tradition provided for the individualization of rights and lawsuits, whether they were naturally respected ownership industry. or required a petition before jurisdictional bodies, taking into account subjective rights, which are those that every person has with respect to others. For example: in a purchase and sale transaction, the seller has a subjective right to demand payment of the price, and the buyer has the right to demand to receive the object sold, with the corresponding obligations of payment and delivery existing between the two parties.

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SUMMER 2012

CLASS ACTIONS

Today, class actions, which have been recognized by Mexican law since March 1 of this year, lead us to consider the existence of other types of rights formerly not recognized by the law, but which clearly exist. Article 580 of the Federal Civil Procedural Code (FCPC) establishes the following: I. Diffuse and collective rights and interests, understood as those that are indivisible in nature, which correspond to a class of individuals, indeterminate or determinable, related by circumstances of fact or by common rights.

II.Individual rights and interests with a collective impact, understood as those of divisible nature, which correspond to individuals that make up a determinable class of parties, related by circumstances of law.

As new concepts in the Mexican legal system, and as a result of that legal reform (Article 578 of the FCPC), a class action suit may be brought in the context of: 1. Relationships entailed in the consumption of public goods or services, or 2. Relationships entailed in the consumption of private goods and services, and 3. The environment.

the performance of a contract, or its rescission, with the consequences and effects stipulated in the applicable legislation.

Membership in an Affected Class The effect that Class Actions have, in contrast to Individual Actions are: 1.- That the members of an affected class may join in the Action in question, according to the following rules: • For Class Actions in the strict sense or homogeneous individual actions, the affected individual can join in the class by expressly communicating its intention through any means, addressed to the representative referred to in article 585 of the CFPC. • Affected parties can voluntarily join the class action during the substantiation of the process, and up to 18 months after the time the ruling has become final and conclusive, or otherwise after the legal settlement has acquired the status of res judicata.

• During this period, interested parties can communicate their express and simple consent to the representative, which will in turn present it to the court. The court will adjudge this admission and –in case, order the start of the settlement incident corresponding to that party.

The affected parties that join the class action during substantiation of the process may file for settlement under the terms provided for in article 605 of the same Code.

Types of Class Action (Article 581 of the FCPC): I. Diffuse action: This is an action that is indivisible by nature and exercised to protect diffuse rights and interests. The legal right pertains to an indeterminate collective, its purpose is to legally claim from the defendant a reparation of the damage caused to the collective, whether by restoring things to the state in which they were before the impact or, otherwise, some substitute act in keeping with the impact on the rights or interests of the collective; without there necessarily being any legal bond between members of that class and the defendant.

II. Class-action in the strict sense: This is an action that is indivisible by nature, and which is exercised to protect diffuse rights and interests. The legal right pertains to a determined or determinable class, based on common circumstances, and its purpose is to legally claim from the defendant a reparation of the damage caused by one or more actions, or to abstain from taking those actions; and to compensate the individual members of the class for the damages suffered. This type of Action results from a common legal bond, which exists by mandate of law between the collective and the defendant.

III. Homogeneous individual action: This is an action that is divisible by nature, which is exercised to protect the individual rights and interests with a collective impact. The legal right pertains to individuals that are grouped together based on common circumstances, and its purpose is to legally claim from a third-party

The affected parties that join the class action after the sentence has become final and conclusive, or the legal settlement has acquired the status of res judicata, must prove the damage caused in the respective incident. From the moment the judge decides on the amount to be settled, the class member that is entitled to the collection rights shall have a year to exercise them.

In the case of a voluntary decision to join the class, a decision by any member to exclude themselves from the class following the citation of the defendant shall be equivalent to a withdrawal from the Class Action, so that party may no longer participate in a class action procedure resulting from/in connection with the same events.

In the case of Class Actions in the strict sense or homogeneous individual actions, only the parties that are included in the class and can prove in the settlement incident that they suffered the damage caused will have the right to be paid out of the sentenced amount.

Class Action and Timesharing The reasons and causes that might give rise to a Class Action suit against any of the Vacation Ownership systems may be: I. Failure to comply with Official Mexican Standard 029 SCFI 2010, which regulates the requirements and the registration of the standard form agreements used in the sale of vacation memberships in Time-sharing.

amdetur.org.mx

13

CLASS ACTIONS

II. Unethical sales practices, in which things are promised that cannot be delivered (income, investments, interest payments or profits, etc.)

III. Failure to comply with provisions of the contract, which regulate reservations by the resort developer or the operator of the lodging establishment.

Carlos Román hernández

IV. Claims for deficient administration of the resorts.

In response to ongoing concerns from many tourist resort developers, the application of self-regulatory policies and better commercial practices, and compliance with standards, makes it possible to reduce the risk of losses from group or class-action lawsuits.

Class Actions may imply a significant contingency for any industry related to consumer products or environmental matters. Avoiding such contingencies by operating in accordance with the law is the best way to achieve a more solid Vacation Ownership industry.

Carlos Román Hernández has been consultant to various State Ministries and a board member of decentralized organizations at all three levels of government–federal, state and municipal. He participated in creating the Official Mexican Standards (and LM) on the Mexican tourism industry, and as a private lawyer and litigator he opened up a new area of law called Tourism Law, in which he works with various companies and organizations in the industry.

BACKGROUND Class Action has its historical origins in the ancient system of common law. In contrast, in countries where civil law follows the Napoleonic system –like México– class actions are a relatively recent development. Brazil adopted them in 1988, and since then they have been introduced to a number of Latin American countries.

Affected Codes and Laws With the modification of Article 17 of the Mexican Constitution, which took effect in 2010, introducing the concept of Class Action into our constitutional law, on August 30, 2011 the Official Gazette of the Federation published a decree on the reform and amendment of the Federal Civil Procedural Code (FCPC); the Federal Civil Code (FCC); The Federal Law on Economic Competition; the Federal Law and Consumer Protection; the Organic Law of the Judicial Branch of the Federation; the General Law on Environmental Balance and Environmental Protection; and the Law for the Protection and Defense of Financial Service Users; establishing the legal mechanisms that made it possible to introduce Class Actions in México.

14

Justification of Class Actions A number of authors, like José Ovalle Favela, member of the International Association of Procedural Law and the Mexican Bar/College of Lawyers, have noted that the end purpose and justification for Class Actions lie in the intent of the State to protect the environment, and to safeguard the interests of consumers against harmful products, deceptive advertising, and abusive practices in clauses in consumer relations, which are interests that cannot be satisfied by means of individual actions and demand appropriate solutions like Class Actions.

Such Actions imply that an individual who does not have the economic means to sue a major company, by joining with others (a minimum of 30 individuals is required) can create a class and by this means have access to a legal procedure on more equal footing with the defendant.

SUMMER 2012

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INDUSTRY

Flexibility Redefined with Launch of Club Interval Gold New Membership and Exchange Program Combines the Best of Vacation Ownership

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nterval International, a prominent worldwide provider of vacation services, has extended its innovative product line-up with Club Interval GoldSM, a points-based exchange service for owners of fixed- or floating-week timeshares. The global program combines all the membership benefits of Interval International and Interval Gold® and offers a more flexible vacation exchange experience.

Club Interval Gold offers week-owners the flexibility to convert their vacation time into points. They can use points to access resorts in our worldwide network, or redeem them to travel as they choose, from a weekend golf getaway to a weeklong family cruise.

Club Interval Gold members can utilize their points to further enhance their vacation exchange experiences in the following ways: • Exchange throughout Interval’s worldwide network of approximately 2,700 resorts.

• Choose ShortStay ExchangeSM to take as many quick breaks (from two to six nights each) as available points allow.

• Search and confirm across various locations, unit sizes, and seasons, and for as many stays as available points allow.

• Combine deposits to increase the points balance and trade up to larger units and/or higher-season vacations.

• Select Interval Options® to apply points toward the purchase of a cruise, spa, or golf vacation.

Members also receive these travel and leisure benefits, which may vary by market:

16

• Getaway Discounts – $25 off the prices of all Getaway vacation rentals.

• VIP ConciergeSM – 24/7 personal assistance for purchasing concert tickets, making dinner reservations, and more.

• Hotel, Dining, and Leisure Discounts – Access to more than 90,000 premium discounts from Entertainment® at IntervalWorld.com.

• Hertz #1 Club Gold® – Complimentary membership that provides expedited car rentals at more than 40 airports around the world.

• Interval Travel® for airline tickets and rates often unavailable to the general public on cruises, hotel stays, and rental cars.

• Member publications including the Interval International Resort Directory (available through complimentary iPhone®, iPad®, BlackBerry® and AndroidTM apps as well), and Interval World magazine.

Club Interval Gold is the latest in a long line of flexible vacation exchange options from Interval. Since 1994, developers who offer points-based clubs have had the opportunity to integrate their products with Interval’s quality vacation network through pointsbased exchange. Club Interval Gold now provides this important flexibility in a turn-key format for developers who have not created their own proprietary programs.

For more information about Club Interval Gold, please contact Marcos Agostini, vice president of resort sales and service for Latin America, Interval International, by phone at 305.666.1861, extension 7087; or via email at Marcos.Agostini@intervalintl.com.

SUMMER 2012

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STATISTICS

Success of México’s Tourist Regions

By: Sergio Dávila y Louise David, Softec S.C.

O

ur country offers an extensive range of attractions in every one of its tourist destinations, because each one of them, in its own way, blends the heritage of pre-Hispanic civilizations, beautiful beaches, the cultural wealth of its cities and the quality of its natural areas, as well as a tourist infrastructure that is up to the most advanced international standards.

México’s most popular beach destinations are Cancún, Acapulco, Veracruz, Mazatlán, Puerto Vallarta and Los Cabos. These are six cities that have also seen the highest rates of level R and RP1 (see figure 1) vacation home sales. All have suffered the repercussions of the global crisis in recent years, and all face the same challenge: recovering from the steep reduction in sales between 2008 and 2011.

Despite these similarities, however, they do not share the same history. Each destination has followed its own path to success, and therefore, designing the right strategy to reactivate economic development means understanding the characteristics and the past of each one of them.

Six destinations, three profiles

The development of each of these six destinations, and the characteristics of their current tourism, reveal different profiles that can be grouped into three categories according to the percentage of foreign tourists that visit, the proportion of five-star hotels in that destination, and the history of the resort in particular (see figure 2).

Although Mexican tourists are also attracted to Cancún and Los Cabos, more than half of the visitors to these destinations are foreign and, in fact, they were developed with a focus on “international tourism.” Meanwhile, Mazatlán and Puerto Vallarta are destinations for combined “Mexican and American tourists,” since one-third of their tourists are foreign Figure 1

Figure 2

Total Sales of Vacation Homes in México (2011)

Profile of destinations according to portions of foreign tourists and five-star hotels (2011) 90% 80% 70%

Other Tourist Destinations 30%

60%

Cancún 25%

50% 40% 30%

Vallarta 15%

20% 10%

Mazatlán 6% Veracruz 7% Los Cabos 7%

18

Acapulco 10%

Los Cabos

Cancún & Riviera Maya

Puerto Vallarta

Mazatlán

Acapulco

Veracruz

% of Foreign Tourists

74%

62%

30%

24%

3%

2%

% of Tourist in Five-Star Hotels

82%

63%

49%

51%

33%

23%

SUMMER 2012

STATISTICS

and their historic development reveals stronger ties with Mexican and American tourists. Finally, Veracruz and Acapulco can be considered “Mexican tourism” destinations, because they attract primarily domestic tourists and are developed based on this market.

To design a strategy for overcoming the current crisis, it is important to identify the specific qualities of each destination, so we can understand the factors that made its success possible in the past, and thus replicate it.

“International tourism” destinations: Los Cabos and Cancún

According to the DataTur Statistical System, more than 60% of the tourists who visited Cancún and Los Cabos in 2011 were nonMexican. These destinations have developed a concept focused on international tourism, offering solutions adapted to these visitors, and their history attests to this.

Los Cabos

In 1948, a group of American actors, led by Bing Crosby, Desi Arnaz and John Wayne, decided to build the first hotel in the zone, called Las Cruces. Later, the cross-peninsular highway, more than a thousand miles long, was completed in 1974, connecting Los Cabos with the Mexican-US border. Thus, the new tourist destination began to receive investments of international capital and the National Tourism Promotion Fund (FONATUR), and would later become the third Comprehensively Planned Center (CPC) created by that organization, to start up operations in 1976. In the 1980s, a marina was built with 380 berths and an international airport was created at San José del Cabo, paving the way for the arrival of more travelers and a diversification of the tourism supply, until today, when more than 60% of Los Cabos’ hotels are five-star and in 2011 alone 2.7 million travelers came to the airport -more than two thirds of them on international flights.

Cancún

The development of Cancún was more the work of Mexican investors and institutions. But from the beginning, it was intended to attract foreign tourists. The city of Cancún was founded in 1970, at a time when Quintana Roo did not have the capacity to house more than 40,000 people, while in the latest census (2010) it had a reported 1.3 million inhabitants. In the early 1970s, Banco de México conducted an evaluation of the best locations in México, and decided on the area where Cancún is now located.

A 21.5-million-dollar loan was taken out with the Inter-American Development Bank, and the development of the destination began.

An international airport was built, opened in 1973, and in 1974 FONATUR opened another of its CPC. The first Cancún hotels went up in the mid-1970s.

The tourism offering in Cancún is designed to meet the needs of tourists of any nationality, with variable purchasing power. Among its hotels, 63% are five-star and many of them offer all-inclusive plans, while the city’s layout and availability of leisure and entertainment activities are up to international standards.

When Cancún became a world-renowned tourist destination, the real estate market benefited from a guarantee of stable value.

In 2008, more than 3,000 vacation homes were sold (see figure 4), and it seems likely that the city’s economy can be revived if it can maintain and promote this international profile, capable of inspiring confidence in travelers seeking tourist offering with high standards of quality.

Figure 4

Sales of Vacation Homes in Cancún

The tourists that at the beginning stayed in hotels in Los Cabos, later began to rent homes and then to buy timeshare or vacation residences. In 2008 –a record year for vacation real estate development in this destination–more than 1,700 R and RP vacation homes were sold (see figure 3). But from that year on, sales have been declining, although they are expected to recover if the region can successfully follow strategy of development and sales focused on the clients that made the destination a success in the past.

Figure 3

Sales of Vacation Homes in Los Cabos

R and RP Vacation Homes Purchased in the Last Five Years

1 R and RP are categories established by Softec based on home value. R stands for “Residential” and RP stands for “Residential Plus.” R category homes have a price between $1.4 million pesos and $3.2 million pesos. RP homes have a value higher than $3.2 million pesos. The study does not include Timesharing or other unspecified modes. amdetur.org.mx

19

STATISTICS

“Mexican and US tourism” destinations: Puerto Vallarta and Mazatlán

These two destinations are older then the “international tourism” destinations, and most of their visitors are either Mexican or North American.

Puerto Vallarta

Figure 5

Sales of Vacation Homes in Puerto Vallarta

This destination first became popular among local and foreign tourists in 1930. By 1954, the airline Mexicana de Aviación opened a route from Guadalajara to Puerto Vallarta, and, bolstered by intense advertising campaigns, began offering Puerto VallartaMazatlán-Los Ángeles flights in 1962. For the first time, Puerto Vallarta welcomed Hollywood’s big stars, national celebrities, and intellectuals from the US, and the international press began to publicize the beauties of the place.

Amid growing demand from tourists, the need for appropriate response by authorities and investors became imminent. In 19651971, the Mexican government promoted the urban development of a modern tourist destination, and in May 1968, Puerto Vallarta reached the category of a city and was extended funding to build up its infrastructure, including the construction of an international airport. Air France opened a flight from Paris-Montreal-GuadalajaraPuerto Vallarta, which brought in European tourists, and in 1973 the big hotels began to go up. By 1985, the intense inflow of tourists and immigrants required, for the former, the construction of new hotels and, for the latter, the development of residential options for employees and executives working in the industry.

Figure 6

Sales of Vacation Homes in Mazatlán

Thus, throughout its history, Puerto Vallarta developed strong ties with both Mexican and American visitors. Promotion by airlines encouraged technical communication, and film and mouthto-mouth communication created sentimental ties, creating a positioning that enabled more than 2,000 vacation homes to be sold in this destination in 2008 (see figure 5).

Mazatlán

2 Lizárraga Morales O., “La inmigración de jubilados estadounidenses en México y sus prácticas transnacionales.

Estudio de caso en Mazatlán, Sinaloa y Cabo San Lucas, Baja California Sur” in Migración y Desarrollo, 2Q 2008.

SOURCES:

http://archivos.diputados.gob.mx/Centros_Estudio/Cesop/ Comisiones/2_turismo.htm http://e-mexico.gob.mx/documents/29752/74275/Estudiogran-vision-del-turismo-en-Mexico.pdf http://www.siimt.com http://www.promotur.com.mx/index.jsp http://atlasturistico.sectur.gob.mx/ http://www.fonatur.gob.mx 20

Mazatlán was one of the first commercial ports on the Pacific coast.

Its strategic location made it ideal for major industries like naval, mining and fishing, which in turn gave rise to the development of a comfortable middle-class to which it owes its neoclassical buildings and eclectic baroque style still evident in its historic downtown. This architectural heritage, together with its beaches and its boardwalk –one of the largest in the world– began to attract tourists at the end of the 19th century. The first hotel in Mazatlán opened its doors in 1830, and today the destination has more than 9,500 rooms. An international airport was built that connected directly to the largest cities of México and Los Ángeles and, furthermore, because of its proximity to the United States, the city became a privileged spot for American retirees, who appreciated its balmy climate and the bounties of city and beach life combined. A study in 20082 revealed that most American retirees that establish themselves in Mazatlán come from California, Washington, and the states that border México, and in general they are middle-class.

Mazatlán built up an offering of cultural activities by organizing events held each year, like its International Carnaval, which in 2012 took place for the 114th time. The destination is thus appealing to both Mexican and American tourists and is known for an original, high-quality tourism offering. Visitors are attracted by its unique SUMMER 2012

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STATISTICS

history and culture, and it is distinguished from Cancún and Los Cabos by its appeal to more well-informed travelers. For all of these reasons, the destination has been so successful that more than 1,000 vacation homes were sold in 2008 (see figure 6).

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 México City.

Conclusions As we have seen, Mazatlán and Puerto Vallarta have a very different profile from that of Cancún and Los Cabos, because the original market for each of them was different. This is something we can also see in “Mexican tourism” destinations like Acapulco and Veracruz, though this does not mean that one destination will develop less successfully than another; Acapulco, for example, brings in more visitors than Puerto Vallarta, but its focus is more on domestic tourists. What all this reveals is that success factors vary depending on the city, and when facing the task of reviving each tourist destination, we must analyze the unique characteristics and past of each of them in order to define the market niche they address and focus efforts on the factors that give them their competitive advantage.

Sergio Dávila has an undergraduate degree in marketing from ITESM CCCM, and works as an analyst in the urban, demographic and economic research department of the real estate consulting firm Softec.

PWC presents forum entitled

“Tourist attraction in México” strategies for innovation; in Cancún.

On May 31, the PWC Cancún office held a forum entitled “Tourist attraction in México: strategies for innovation” for the region’s business community.

Carlos Méndez, Managing Partner-Elect of PWC México, was in charge of welcoming participants, and he had the following remarks: “There is no question that tourism faces some daunting challenges: being an environmentally and socially responsible activity, generating income and dignified, qualified jobs for society; maintaining local customs and cultures; and also being able to reconcile economic growth for this industry and in the country with a substantial improvement in the environmental footprint of companies and participants in the tourism industry.” He continued, “The role of innovation is increasingly important, and that’s why we are interested in sharing our view of the importance of innovation strategies in this industry.”

The moderator in the forum was José Martín Sámano, and other participants included Romárico Arroyo, President of AMDETUR (Mexican Resort Development Association), who spoke on the topic “Basic Guidelines from Private Initiative to promote tourism.”

22

Carlos Méndez, Romárico Arroyo, Alejandro Arvizu and Daniel Arroyo.

For PWC, Alberto del Castillo, Auditing Partner and specialist in IFRS, and Arturo Méndez, Tax Partner, took part in the dialogue on “IFRS and tax benefits applicable to tourism investment.”

The forum’s agenda included a panel of special guests who analyzed the issue of “Strategies for Tourism Development”, made up of Raúl Andrade, Under Secretary of Tourism Planning for the State of Quintana Roo, Francisco Córdova, Chairman of the Business Coordinating Council of the Caribbean and Jonas Niermann, Consulting Practices Director at PWC United States, a specialist in tourism investment.

At the close of the meeting, Luis Martínez, Lead Partner for Clients and Markets, summed up the conclusions of the form.

SUMMER 2012

INNOVATION HONESTY INTEGRITY

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ESTRATEGIAS CJR 4FSWJDJPT "ENJOJTUSBUJWPT Carolina )FSOÈOEF[ (PO[ÈMF[ 1SFTJEFOU / DBSPMBHFODZ!QSPEJHZ OFU NY $BMMF &KJEP *OU , CFUXFFO #MWE -È[BSP $ÈSEFOBT $PM "NQMJBDJPO #FOJUP +VBSF[ $BCP 4BO -VDBT T. 01 - 624 -143 9390 Z 143 9391