Tianguis Roundtable: Strong Dollar, Airlift Drive Mexico Travel

Travel Agent recently held a roundtable at Tianguis Turistico in Guadalajara, Mexico  with travel industry leaders. The gathering was moderated by Ruthanne Terrero, VP/Editorial Director of Travel Agent magazine.

The roundtable participants (shown above, left to right), included: our co-host, Rodrigo Esponda, regional director for North America, Mexico Tourism Board; Tim Mullen, president, Apple Vacations; David Hu, president, Classic Vacations; Michael Schmeltzer, president, American Airlines Vacations; Jack E. Richards, president & CEO, Pleasant Holidays; Mark Benson, vice president, USA leisure product & sales support/Flight Centre USA and GOGO Vacations; John Caldwell, president, MLT Vacations; and Kevin Froemming, EVP & chief marketing officer, Playa Hotels & Resorts (Hyatt Ziva and Zilara).


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Ruthanne Terrero: Rodrigo, the tour operators at the table are saying that business to Mexico is not only great but that it’s increasing every year. What’s making that happen?

Rodrigo Esponda, Mexico Tourism Board: I think there’s been great consistency with the Mexico Tourism Board and the Ministry of Tourism and within the whole industry sector. There is a group of business owners in Mexico, all related to the tourism industry, who have been providing key feedback to the president and that has been filtering down to everybody. There’s a very good collaboration in the private-public sector and in the public sector, and among the states and the destinations.

The political parties are working very well with the cities and with the federal government; nobody is looking to say, “Because you belong to a specific party, which is not mine, we will not work together.”

It’s the same with the public/private partnerships, if somebody has a good business project that needs to be supported and needs to be given some incentives in terms of taxes or regulations, that’s being worked through at all levels.

That’s one element. The second element is the partnership that we have outside of Mexico and that’s with all of you. You’ve been supporting Mexico throughout the years, through the good and the bad times.

Kevin Froemming, Playa Hotels & Resorts: There’s no one that has a better relationship with a major airline carrier [than the Mexico Tourist Board], so, I think, that’s a major factor in overall stability.

Ruthanne Terrero: Let's ask the tour operators to provide an insight in to their business. David?

David Hu, Classic Vacations: People are continuing to travel because they still see the great value, inventory and product in Mexico. This includes small incentive groups, destination weddings and family travel. Group situations are continuing to grow and a lot of that is powered by the all-inclusive concept. Once you’re there, you’re done. So, it’s the simplicity of selling coupled with lower airfares and a stronger dollar that allows for a confidence that lets people say, “We can book this far out.”

That’s helping us drive some nice growth into Mexico this year. It’s powering a lot of our forward bookings. FIT will settle itself down for us; we feel very confident that it will come back in a nice manner.

Mark Benson, GOGO Vacations: For us, Mexico is very much about partnerships with regard to working with the tourist board and the projects and the ad hoc things we can do, and in terms of the way we work with our suppliers. There’s never a butting of heads at all. And, when I think of Mexico, in terms of our growth and our business, what’s very important is the customer experience here. Sometimes we forget about that. If we go back to the discussions about Cuba and the demands of the American customer, Cuba is not going to be the customer experience that 95 percent of our American customers want. One thing about the customer experience in Mexico, whether you’re in a three-star or a five-star hotel, is you can take [the experience] to the bank. That’s one of the most exclusive and unique things about Mexico across the board.

Jack Richards, Pleasant Holidays: For us, Mexico is really about the air service and the proliferation of luxury resorts. We run two brands, Pleasant and our luxury brand, Journese. We’re focused primarily on four- and five-star hotels in Mexico that are selling exceptionally well with the currency rates, and with the prices being down, airlifts are up, and the hotel rates are moderate. It’s a good growth story where the luxury product has really evolved over the last several years into a world-class product that includes spas and dining, and not just fly-and-flop anymore. These people are coming for experiential vacations and they’re getting it here. The cuisine is probably one of the best in the world and particularly here in Guadalajara. We’ve seen an evolution of Mexico over the last five years and they’ve done a great job.

One area we need to talk about is pre-clearance from Mexico to the United States because we don’t have it. A lot of competing destinations have it; that is a key differentiator.

Michael Schmeltzer, American Airlines Vacations: We started flying to Merida recently, so that’s a new destination for us. It really has that cultural feel that you were just talking about, Jack. We’ve also started point-to-point service into Cancun and it has started off really well for us. So, we kicked off to Cancun from Kansas City, Pittsburgh, Raleigh and Nashville; that’s a big change for us.

Within Mexico, we’ve seen more and more product coming in from partners all across the board, so we have much segmentation now. That’s really helping us. Travel agents and their customers are seeing that they can get all these different products at one destination.

Tim Mullen, Apple Vacations: We’re very bullish on Mexico not because we have to be, but we are. The macroeconomics is beyond question. There are so many Americans who have passports, and the number is growing. There are many Americans that haven’t been to Mexico and that’s growing. And, the value for the product is growing. The all-inclusives are matching the demands of the American market. Americans want good food, good quality of restaurants, a variety of restaurants, big guestrooms and good entertainment and activities. They’re willing to pay for that.

Over the last few years, we’ve seen the emergence of quality all-inclusives. The hotels have invested more money per available room keeping the American market in mind. They have also invested in employing more personnels per available room. They’re building bigger restaurants, à-la-carte restaurants. The days of the buffets five days a week and two days à-la-crate are gone. The Americans want à-la-carte every night and the hotels are responding to that demand. We’re seeing a proliferation of quality with upscale five stars and all inclusives doing very, very well. I don’t think they’ve reached the ceiling at all.

In terms of development, everyone asks me, “When is enough enough?” Every year, it’s never enough. It’s not perfectly equal, but the airlift over two or three years matches the growth of the hotel development. For Mexico, it’s a very good harmony for future development.

John Caldwell, MLT Vacations: We’ve been very busy as Delta has expanded greatly into Mexico and, of course, with Aeroméxico’s penetration into the country. One thing we’re focusing on, and it’s really exciting, is this great product everybody’s putting together. The four-and-a-half star, five-star resorts are now representing 35 percent of our business. A lot of that is coming out of this nation; there’s a lot of product here and that is fabulous. Over 60 percent is four star and above for us in terms of our revenue right now. Our customers are demanding that. We’re able to deliver that in Mexico which is really exciting. The better the product gets, the more demand comes in for it. To Tim’s point, years ago, it was the buffet experience, but, now, it’s a five-star experience and people are willing to pay for it.

The other thing that we’re looking at is origin markets. There seems to be a demand for Mexico out of the west coast, from Los Angeles to Cancun.

There’s also an incredible amount of demand for summer coming out of places like New York and Los Angeles. Traditionally, in the summer, in the Midwest, everybody is going to the lake, but on the west coast and east coast, people are still interested in going down to Mexico.