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Los Cabos Gets It Right

March 19, 2007 By: Mark Rogers Travel Agent

Resort destination continues controlled growth in the hotel sector

Los Cabos is one of Mexico's success stories. It continues to roll along, posting yearly increases in visitor arrivals, avoiding hurricanes and social unrest, all the while fine tuning its resorts, golf courses and attractions with an eye to responsible development. Cabo San Lucas, Mexico

Apple Vacations has been sending clients to Los Cabos since
1985. "We've seen Los Cabos grow into a more high-end destination, with
great golf courses and upscale spas," says Mark Noennig, vice
president/general manager of Apple Vacations. "One of the biggest changes
is the growth of the all-inclusive product, which it didn't have initially, and
which our customers really like." This is reflected in Apple's Vacation
Satisfaction Questionnaire, which is distributed on the return flight. Apple's
clients rated Los Cabos an "excellent" destination, and 80 percent
say that they would definitely go back for a return trip. Airlift to the
destination isn't a problem. "We've added charter product, but a lot of
the growth has been on the scheduled air side, which allowed Apple to

Los Cabos is actually comprised of three destinations at the
tip of the Baja Peninsula:
the tourist town of Cabo San Lucas to the west
of the tip, the colonial town of San
to the east and a 20-mile Tourism Corridor
linking the two towns, where most of the region's finest oceanfront resorts are

Cabo San Lucas is known for its rock formations

"One of the things that makes Cabo so special is its
weather; we don't have a rainy season," says Francisco Silva, general
manager, Dreams Los Cabos Resort & Spa. "Our location is also a big
plus. We have numerous direct flights from Los Angeles,
Phoenix and Houston,
and we have great connections from Atlanta and Chicago."

Carriers flying into Los Cabos include Aero California,
Aeromexico, Alaska Airlines, American Airlines, US Airways West (America West),
Continental, Delta, Frontier Airlines, Mexicana and United. Apple Vacations
charters include USA3000 out of Detroit, Champion Airlines out of St. Louis and
Sun Country out of Minneapolis and Dallas.

Most visitors arrive by air, although Los Cabos is also a
significant cruise port, with regular calls from Silversea, Crystal and
Seabourn cruise lines.

Los Cabos received 1.3 million tourists in 2006, a record
for the destination, up from 1.2 million in 2005. It's important to remember
that the institution of the Western Hemisphere Travel Initiative in January
requires U.S. visitors
traveling by air to show a passport on their return to the U.S. This
requirement will extend to cruise passengers in 2008 and land travelers in 2009.

View from a Penthouse at Villa La Estancia in Los Cabos

The Los Cabos International Airport is slated for an
$18,225,000 expansion that will ultimately increase its arrival and departure
capacity by 50 percent. The 2005-2009 Master Development Plan announced by
Aeroportuario del Pacifico includes the construction of a taxiway parallel to
the existing runway, expansion of airplane parking platforms and the
construction of new gates. With these enhancements, the airport will ultimately
increase its arrival and departure capacity by 50 percent and make it easier to
handle the arrivals of private jets; Los Cabos has the second- busiest airport
for private jets in Mexico
(the busiest is Mexico City).

"Some flights to Los Cabos are seasonal," says
Antonio Vera, vice president of marketing for the Los Cabos Convention &
Visitors Bureau. "We have to work with airlines to have the same number of
flights in the summer."

Group and incentives are an important market for Los Cabos.
"The top 40 percent of room inventory in Los Cabos is dependent on the
incentives market and groups," says Vera. "This accounts for 55
percent of business to the region."

Vera is plugged into the Los Cabos hotel scene; he's also area
director of sales and marketing for the Hilton Los Cabos Beach & Golf
Resort. "Of Los Cabos' 7,500 hotel rooms, 35 percent are all-inclusive;
the rest are European Plan," he says. The all-inclusive Hotel Riu Palace
Cabos San Lucas, is currently undergoing an expansion that will bring its room
inventory up to 1,200. "The expansion of Riu will fill the destination's
need for all-inclusives; I don't see more built in Los Cabos," says Vera.
He also observes that there's room for five more hotel developments in the
20-mile Tourist Corridor and, in his words, "That's it."

Being at the tip of a peninsula, Los Cabos can only grow so
much. Growth is now moving up the peninsula and to the East Cape, which begins
east of San Jose del Cabo and extends north along the Sea of Cortes
to Los Barriles and Rancho Buena Vista. The Los Cabos tourism community is in
general agreement that expansion up the peninsula adds to the appeal of Los
Cabos by offering visitors greater diversity and enhanced travel options.

Increasingly popular are day or overnight trips to the towns
of Todos Santos and La Paz.
On the Pacific side, the Mexican Government has designated Todos Santos a
"Pueblo Mágico" or Magic Town, the first in Baja Sur. Pueblos
are off-the-beaten path treasures that are often overlooked by
tourists. Todos Santos is only an hour's drive from Cabo San Lucas. With the
increase in visitors, Todos Santos now has a number of fine restaurants, art
galleries and boutique hotels.

La Paz,
northeast of Los Cabos, is a tranquil port city with lots of local color as
well as historic attractions. "It's currently a two-hour drive to La Paz;
this will be cut to 90 minutes when the new four lane highway construction is
completed," says Vera. As far as Apple Vacations offering vacations
further up the peninsula in La Paz,
Todos Santos and Loreto, Noennig says that the company is limited by the hotel
product. "For us, hotels need to have 300 to 400 rooms, and all-inclusive
properties have to be part of the mix," he says. Noennig predicts Los
Cabos will continue to grow as a market for Apple. "We've seen growth out
of the Midwest and northeast. It's a nice
alternative to the Caribbean."

Last year Mexico
dealt with its share bad press coming out of Oaxaca,
Nuevo Laredo, Mexico
City and Acapulco.
"Los Cabos remains unaffected by these incidents," says Vera. He
notes that the Baja Peninsula, being separated from mainland Mexico by the Sea of Cortes,
affords it an isolated setting and distance from issues that have affected
other parts of the country.

In 2006, the big news on the attractions front was the
opening of Cabo Dolphins, a first for Los Cabos. The cost for a 60-minute
dolphin swim is $165. Cabo Dolphins is paying a hefty 20 percent commission to
travel agents: Make reservations for your clients with Mark Watson, the
company's sales director ([email protected]).

Agents in search of educational opportunities have several
to choose from. The Los Cabos Tourism Board partners with Destination Ventures
to offer travel agent seminars. It also participates with the airlines and
wholesalers servicing the destination through trade shows and fam trips for
agents that provide an in-depth view of the destination. This year Los Cabos
hosted its first annual Los Cabos VIP Summit, welcoming airline partners,
wholesalers and top-performing agents to the destination. The exact date for
the second VIP Summit hasn't been set, but it will be held in the December 7-15
window. The Los Cabos Tourism Board is seeking discounted air for invited agents
who sell Los Cabos; hotel accommodations will be provided free of charge.

Los Cabos Tourism Board: 866-LOS CABOS,

On the Horizon

The new development of Puerto Los Cabos will be a 1,900-acre
community in San Jose del Cabo comprised of three miles of beachfront property.
It will include a 535-slip marina capable of handling boats ranging in size
from 30 feet up to 240-foot mega-yachts. This is significantly larger than the
300-slip marina in Cabo San Lucas, although Puerto Los Cabos won't be a port of
call for cruise ships. By mid-2008, the marina, shop, restaurants and two
18-hole golf courses (one designed by Jack Nicklaus, the other by Greg Norman)
are expected to be completed. The complex will also include four top-brand
hotels that should be finished by mid-2009. According to Vera, talks are
underway with Four Seasons for one of the builds.

Pacific Monarch Resorts Inc. projects a September opening of
Cabo Azul Resort & Spa. Award-winning designer Dodd Mitchell will appoint
the property's 332 one-, two- and three-bedroom villas, as well as its
signature restaurants, spa and wedding chapel. Expect flaming fire sculptures,
playful waterscapes and artful interiors. Cabo Azul will have an oceanfront
tri-level infinity swimming pool and a five-story open-air church positioned to
attract the destination wedding market.

The Villa Group is preparing to open Los Cabos' largest spa
facility at its enclave of villa-style resorts: Villa La Estancia, Villa del
Arco and Villa del Palmar. When the spa opens in late spring, advance bookings
for appointments will be able to be made via the company's web site. The Villa
Group's three Cabo San Lucas properties collectively offer 845 one-, two- and
three-bedroom villas, studios and penthouse suites, available for rental and
commissionable to travel agents.

After a multimillion dollar renovation, the Melia Cabo San
Lucas has been rebranded the ME Cabo, making it the third property within the
ME by Melia portfolio of hotels and the second of the new brand's properties in
The 150-room ME Cabo has a 7,036-square-foot spa. Guests have free access to
the Nikki Beach Club, which features a restaurant, poolside day beds, live
music and entertainment.

Later this year, Casa del Mar will premiere the first
Guerlain Spa in all of Mexico.
In additon, insiders say that Starwood Hotels & Resorts is seriously
looking at developing a resort on the East Cape; Mayan Palace,
a brand from Mayan Resorts, is confirmed for construction in this comparatively
undeveloped area.

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