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Tianguis Roundtable: Mexico Primed for Growth (VIDEO)June 1, 2015 By: Ruthanne Terrero
|Larry Chestler, Sun Country Vacations; Federico Moreno-Nickerson, Classic Vacations; Ruthanne Terrero, Travel Agent magazine; Duke Ah Moo, Pleasant Holidays; Jeff Clarke, Travel Impressions; Colette Baruth, AMResorts; Tim Mullen, Apple Vacations; Gerardo Llanes, Mexico Tourism Board; Rick Karnes, La Macchia Enterprises; John Caldwell, MLT Vacations and Joe Pike, Travel Agent magazine.|
Travel Agent magazine drew top tour operators, hoteliers and the Mexico Tourism Board together at Tianguis in March to discuss trends, market dynamics and the country’s very bright future for tourism.
Joining us were Gerardo Llanes, chief marketing officer, Mexico Tourism Board; Duke Ah Moo, VP, product, partner relations and e-commerce, Pleasant Holidays; Colette Baruth, VP of sales and marketing, AMResorts; John Caldwell, president, MLT Vacations; Larry Chestler, president, Sun Country Vacations; Jeff Clarke, president, Travel Impressions; Federico Moreno-Nickerson, director, product development, Caribbean and Mexico, Classic Vacations; Tim Mullen, president, Apple Vacations; and Rick Karnes, VP, destination and government relationships, La Macchia Enterprises (the holding company for The Mark Travel Corporation, which owns and manages Funjet Vacations, Blue Sky Tours, United Vacations and Southwest Airlines Vacations, among others).
The roundtable was moderated by Ruthanne Terrero, VP/editorial director of Travel Agent and Joe Pike of Travel Agent. Following is a condensed version of the discussion.
The dynamic discussion kicked off by asking participants how their business overall is faring this year in all markets. All reported favorably, not surprising in this improved economy.
Federico Moreno-Nickerson said Classic Vacations is seeing a surge of business wherever the dollar is strong and that Mexico in particular is booming. “The reality is that it’s concentrated in the top four beach destinations,” he said.
For Pleasant Holidays, said Duke Ah Moo, “the shining stars are Mexico, the Caribbean and Europe. Mexico would do even better if we had more hotels open in Cabo, but overall I think this is going to turn out to be a very good year. We’re only three-and-a-half months into it but generally speaking it’s a great year for travel.”
AMResorts is seeing an earlier booking curve than it had been in the past, said Colette Baruth, perhaps because weather was so bad last year, and people wanted to get a jump on their planning. Better yet, they’re spending more. “Not only are we seeing solid business, we’re also seeing the ADR go up. People are shopping more selectively for the type of vacation experience that they would like to have,” she said.
MLT Vacations is seeing that early booking trend and also sees Mexico, the Caribbean and Europe as the hot spots, said John Caldwell. The strength in Mexico is being fueled in part by more airlift by MLT’s parent company, Delta Air Lines, which has grown flights by 20 percent to 24 percent. “That allows us to grow quite quickly. In January, we had the best month MLT Vacations has ever had, and we’re off to a really good start for 2015. Our early bookings into 2015 are coming in at triple digits, so that’s real exciting,” he said.
“Mexico is the one destination that is surpassing all of our markets.”
—Jeff Clarke, Travel Impressions
Apple Vacations’ major product is the Caribbean and Mexico, and in 2015, “it’s seeing significant increases for passenger travel,” said Tim Mullen. “Revenue is up. Passenger numbers are up, and the margins are up on a per passenger basis. Mexico is leading the way, followed closely by the Dominican Republic.”
Another highlight for Apple Vacations is a continued, significant sharp increase in group travel for 2015. “That’s made up mostly of families and destination weddings. Extended family travel is a big part of our group product,” he said.
Jeff Clarke concurred, noting that 2015 is off to a great start for Travel Impressions. He said low fuel prices have added a lot of disposable income to the market. “As Tim mentioned, we’re seeing a lot more family and destination wedding business come on every year, which is very good. Because of the strong dollar, travel to Europe is very strong right now and it’s up across many destinations within Europe,” said Clarke.
Domestic travel is also up, however, he noted, as is Asia.
“We love the marketplace right now and hope it continues because the consumer is spending,” he said, noting that the consumer is shopping much more than they ever have. “It used to be they were going to five websites to shop before buying a vacation. Now it’s up to eight. That causes a lot of challenges in the travel agent community, to be able to keep up with what the consumer is coming in and asking them about.”
Mexico and the Caribbean are also the sweet spots for Sun Country Vacations, said Larry Chestler, noting that “a new flexible group product called Travel Pack, has become quite popular. We’re seeing great strength within our vacations brand for room categories and also group demand.”
Rounding out the introductions, La Macchia Enterprises’ Rick Karnes echoed that Mexico and the Caribbean are strong, and that the destination wedding business is doing well. Europe is also on the upswing. “Our Southwest Airlines Vacation brand is doing very well because of the expansion to Mexico and the Caribbean from Southwest. Funjet is doing well, too. United Vacations is the strongest carrier to Mexico, and we’re doing well with them,” he said.
MEXICO: “Growth” Is the Word
Digging particularly into Mexico, Travel Agent’s Ruthanne Terrero asked for details, specifically what’s working and what the current travel patterns are. Caldwell noted that Delta had a 24 percent increase in capacity to Mexico and is extending its winter service into the summer this year. “So, there’s continuity with the schedule going in and there’s seasonal Saturday service from 20 destinations throughout the summer from throughout the U.S.,” he said. Traditional markets like Minneapolis and Detroit are growing nicely, said Caldwell, but Delta’s network is growing as well in Atlanta, JFK, Seattle and Los Angeles.
Bringing Cabo back so quickly “was a classic example of everybody working together.”
—Tim Mullen, Apple Vacations
“Our Aeromexico Vacations brand is also doing quite well,” he told the group, noting that last year the brand had about a 10 percent growth, and this year it’s on track for a 35 percent growth. “A lot of the destinations that they serve are traditional, such as Cancun. But they also serve Acapulco, Puerto Vallarta, Cabo, and some of the interior destinations within Mexico out of markets like JFK, Dallas and Los Angeles. That gives us a great blend for MLT Vacations to tap into Mexico. We’re seeing both brands growing very, very well.”
|Federico Moreno-Nickerson, Classic Vacations; Duke Ah Moo, Pleasant Holidays and Colette Baruth, AMResorts.|
Chestler said that Sun Country Airlines has also added capacity to all of its Mexico destinations. It’s also launched service to Manzanillo this year. As far as bookings go, Sun Country Vacations has seen stronger support from the travel agency community. “We’ve been cultivating relationships with agents to a greater degree and working to meet their needs,” he said.
For Travel Impressions, “When we measure the metrics of our business, whether it’s passenger growth or average spending per day or the booking window, Mexico is the one destination that is surpassing all of our markets,” said Clarke. He owes that in large part to the growth of Mexico’s all-inclusive resorts, as well as the very high quality offering they’re presenting. “It’s all about not being nickel-and-dimed,” he said. He also noted that travel agents have found they can “make more money selling this product than they do on the cruise side. And you’re seeing more of cruise-only agencies really get much deeper into the land product, which is very good, from our perspective. There’s no longer a reason to be either land-only [or] cruise-only. You’re crazy if you’re going to let your customer go somewhere else to buy their next vacation if it doesn’t fit what you’re selling.”
Apple Vacations can easily quantify its increase in Mexico so far this year; it’s up 15 percent across the board, said Mullen. “Our charter seat sales are up and our scheduled seat sales are up, particularly with Delta. Our land-only is also up, so all three sections of our business are up significantly.”
Karnes reiterated that additional available flights are bolstering Mexico business and that he’s looking forward to adding new destinations and new flight origins to his offerings. “Cancun and the surrounding area is our largest seller,” he noted.
Ah Moo of Pleasant Holidays echoed that additional flights are opening up new markets. “For example, Alaska Airlines recently announced new flights out of John Wayne Orange Country Airport to Cabo and Puerto Vallarta, which is great. We’re seeing quite an increase in business to Puerto Vallarta and Riviera Nayarit because the demand for Cabo was so strong but the available inventory for hotel rooms was limited. So we’ve seen our clients continue to go to Mexico, but perhaps choosing an alternative destination like Puerto Vallarta or Nayarit,” Ah Moo said. Pleasant’s advance booking, especially for the Christmas and New Year’s period is up 35 percent year over year.
Puerto Vallarta, which had been struggling in years past, “is in a very solid position this year,” said Baruth of AMResorts. “In fact, our ADR in that destination, including futures for this year, is up about 16 percent.”
Cabo, which was hit by Hurricane Odile last September, is also faring well. Consumer perception of the destination appears to be strong and travel agents seem to have no fear of selling it. In fact, Odile appears to have been “only a hiccup,” said Baruth. “We’re seeing great business come in and we’re seeing strong requests come in for future business as well.”
All told, AMResorts, which has hotels throughout Mexico under multiple brands, is bullish on the destination’s future. “I feel as if Mexico is arriving in the path of a very strong sweet spot across all destinations,” said Baruth, noting that there’s been a consumer shift in that travelers are looking to do something different from the usual sun and sand vacation, and Mexico serves that trend well. “It’s very competitive from a price-point perspective and it’s friendly.”
Stay tuned to www.travelagentcentral.com for more highlights from our Tianguis roundtable all week, including new hotel product in Mexico, a look inside the Los Cabos recovery and more on communicating in a crisis.