Notitur Digital / November - December 2012

Publication of:

www.amdetur.org.mx

November December

2012

»Industry Timeshare Current status of the industry in the U.S.

Digital

» Enterprise Social Networks and how to create marketing campaigns

» Amdetur Recent news and important events

An Icon of economic analysisand investment trends:Jorge Suárez Vélez

»Statistics Business Analytics, First of 5 Articles: Competitive Advantage for Executives

Exclusivedataon the

industry!

BOARD OF DIRECTORS

CHAIRMAN Romárico D. Arroyo Marroquín Grupo SunsetEXECUTIVE Carlos Trujillo Balmaseda PRESIDENT AmdeturSECRETARY Gerardo Rioseco Orihuela Fiesta Americana Vacation ClubTREASURER Jaime Márquez Vargas / Royal HolidayLEGAL Gerardo Freyre Fregoso DIRECTOR Vera y Carbajal

COUNSELORS Juan Vela Ruiz / Grupo VelasRicardo Montaudon Corry / RCIJuan Ignacio Rodríguez Liñero / RCIKemil Rizk / Royal ResortsMarcos Agostini / Interval InternationalDenis Ebrill / Sol Meliá Vacation ClubJorge Pallas Cáceres / Promotora Cancún Sunset ClubsGustavo Ripol Bermúdez / Presidente Club de ViajesFrancisco Aranda Bezaury / Club Real ResortGibrán Chapur / Palace ResortsJorge Herrera Rivadeneyra / Unlimited Vacation Club

DIRECTOR Rosa de Jesús Lugo Dorantes

NOTITuR

CHAIRMAN Romárico D. Arroyo Marroquín Grupo SunsetEXECUTIVE Carlos Trujillo Balmaseda PRESIDENT AmdeturPUBLISHER Aurora Martínez V.DESIGN KEMCS Diseño y Marketing www.kemcs.com

TRANSLATION Elizabeth Collins Morrison [email protected] FOTOGRAPHY José Mata / www.pbase.com/ppmata AMDETUR Cel. (04455) 1885 8581

ADVERTISING Aurora Martínez V. [email protected]

LOCAL ASSOCIATIONSLic. Patricia de la Peña, Asociación de Clubes Vacaciona-les 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. José Luis Centeno, Aso-ciación de Promotores de Clubes Vacacionales del Estado de Guerrero, A.C. / Lic. Fernando de Leeuw Santiago, Aso-ciación de Clubes Vacacionales de Cozumel, A.C. / Lic. Fernando Madero Irízar, Asociación de Clubes Vacaciona-les de Sinaloa, A.C. / Lic. Claudio Balderrama González, Asociación de Desarrolladores y Operadores Turísticos de

DIgITAl

www.amdetur.org.mx

November December

2012

AMDETuRReCeNT NewS ANd ImpORTANT eveNTS AMDETUR’s most recent activities included two presentations to teachers and students of Tourism Studies; the signing of a Collaboration Agreement with PROFECO; completion of a list of “Ten Commandments” for the provision of Timeshare Services for AMDETUR Affiliated Developers; and participation in the signing of the UNWTO’s Global Code of Ethics for Tourism.

ENTERPRISESOCIAL NeTwORkS ANd hOw TO CReATe mARkeTINg CAmpAIgNSWithout offering a gift as incentive for clients to attend a presentation. A success story from Royal Resorts.

If you would like to receive the electronic version of Notitur in Spanish or English, you can request it at: [email protected]

or download it directly :issuu.com/notitur

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INDuSTRYTImeShARe: CuRReNT STATuS Of The INduSTRy IN The u.S.The economic recession in the United States and many other countries has resulted in a drop in Timeshare sales. Even so, the industry has little by little begun to recover its pace of growth, reaching 2.4 percent in 2011.

FEATuREAN ICON Of eCONOmIC ANALySIS ANd INveSTmeNT TReNdS: JORge SuáRez véLezThe slowdown in China presents Mexico with some interest-ing opportunities, because when that country had to modify its export-focused growth model after a slowdown in demand from Europe and the United States, it was forced to raise wag-es, making it less competitive against Mexico.

FIRST OF 5 ARTIClES / STATISTICS BuSINeSS ANALyTICS, A COmpeTITIve AdvAN-TAge fOR mARkeTINg ANd SALeS exeCuTIveSThis is the first in a series of articles by the consulting firm Track Results, sharing information for sales and marketing executives about the use of strategies like Business Analytics.

http://issuu.com/notitur

AMDETUR’s most recent activities included two presentations to teachers and students of Tourism Studies, continuing its program

of University-Enterprise Liaison Program; the signing of a Collaboration Agreement with PROFECO, and the completion of a list of “Ten Commandments for the provision of Timeshare Services for AMDETUR’s affiliated Developers;” and participated in the signing of the UNWTO Global Code of Ethics for Tourism.

AMDETuR’s Board of Directors Meeting in Puerto VallartaThe Association of Timeshare Tourism Developers and Promoters (ADEPROTUR), hosted the meeting of AMDETUR’s Board of Directors, which was held on September 6 in Puerto Vallarta, Jalisco. The event coincided with a press conference by ADEPROTUR where they shared information and talked about the current status of the regional Timeshare industry.

November / December 2012 01

» AMDETUR

Speaking to representatives of the local news media, Alejandro Lemus, Chairman of ADEPROTUR, said that vacation ownership has been growing rapidly in the zone of Bahía de Banderas, and that in 2011 there were 93 resorts offering Timeshare properties, 19.4% of the total number of Timeshare complexes in Mexico. He also remarked that these developments have a total of 12,389 Timeshare units, and that 35 of them are in the active selling phase.

Because of its efforts, ADEPROTUR’s membership currently includes 90% of the resorts that offer Vacation Ownership in the Bahía de Banderas area, and these have been able to boost their growth through factors like brand prestige, competitive services and facilities, and substantial capacity for investment.

The Vacation Ownership industry has brought 17,250 direct jobs to the region, and an annual

AMDETuR Activities Recent progress and participation in important events

Press conference for the leading news media of Puerto Vallarta and Riviera Nayarit.

Marcos Agostini, Alejandro Lemus, Romárico Arroyo, Ricardo Montaudon, Juan Ignacio Rodríguez, Gustavo Ripol and Carlos Trujillo, during the press conference.

» AMDETUR

occupancy rate of 82%. On average, 3.7 people stay in each unit for an average period of 6.8 days, with 439,033 visitors staying and an average daily spending per person of 150 US dollars.

In the Bahía de Banderas region, 65% of hotels in the 4-star to Grand Tourism categories offer Vacation Ownership, while the occupancy rate in airline seats it represents is 49%.

Accompanying Lemus for the press conference were some of the members of AMDETUR’s Board of Directors: Romárico Arroyo, President of Amdetur; Ricardo Montaudon, President of RCI and Executive Director for Latin America; Juan Ignacio Rodríguez, Senior Vice President


of Business Development for Mexico and Central America at RCI; Marcos Agostini, Senior Vice President of Sales and Resort Services for Latin America, Interval International; Gonzalo Maqueda, Executive Director of Mexico for Interval International; and Gustavo Ripol, CEO of The Club at Presidente.

university-Enterprise liaison Program Thanks to support by AMDETUR and its affiliates for the University-Enterprise Liaison Program, a number of meetings were scheduled and two presentations were already given to teachers and students in Tourism Studies to keep them informed of alternatives for professional development in the Vacation Ownership industry.

The first of these was held on September 26, at the offices of the Higher Tourism Institute (IESTUR) in Mexico City, which was attended by teachers from leading universities and tourism schools in the city and from elsewhere in Mexico. In the opinion of attendees, and as Manuel Niembro (former president of AMDETUR and currently CEO of Asesoría y Promotora Inmobiliaria) pointed out, Vacation Ownership not only offers jobs in the provision of direct services to tourists, but also includes professional career opportunities

Jorge Téllez, President of the Association of Timeshare Developers of Baja California Sur (ASUDESTICO), who attended the presentation; Gonzalo Maqueda, Marcos Agostini, Alejandro Lemus, Romárico Arroyo and Ricardo Montaudon.

Informing teachers and directors of various schools and universities of the job opportunities that exist in the Vacation Ownership industry is part of a new phase in the University-Enterprise Liaison Program.

» AMDETUR


in marketing, management, finance, legal, sales and post-sale services, project development and market analysis, among others.

The second meeting took place on October 23rd at the National College of Professional Technical Education (CONALEP) Alvaro Obregon I, also in Mexico City, attended by more than 50 students of the fifth semester in the Tourism Hospitality program. Because of this institution’s enthusiastic response to the Liaison Program and its gratitude for the support given, Gonzalo Maqueda, Executive Director for Mexico of Interval International and Carlos Trujillo, Executive President of AMDETUR, made a presentation to students, professors and the director of CONALEP on the nature of Timeshare, how vacation exchanges work, and about AMDETUR itself.

Timeshare StatisticsTogether with the National Institute for Statistics and Geography, Resort Condominiums International, Interval International and the Anáhuac Center for Tourism Research at Universidad Anáhuac del Norte, AMDETUR is working together with the Ministry of Tourism (SECTUR) through the Under-Secretary of Tourist Planning, to promote the generation of statistics about Mexico’s Timeshare industry.

Among the goals of this effort are: To create synergies and exchange already existing information, to establish means of coordination and measurement, and to lay out a work plan to prepare and review statistics on matters such as investment, occupancy, and the flow of domestic and foreign visitors in our industry.

A first meeting was held on September 28, in which participants presented the work they had been carrying out, the challenges they face and the needs they foresee in aspects like correlation between the different methodologies and expansion of samples to improve the results, in

Gustavo Ripol, CEO of Presidente Club de Viajes, speaking on mixed operation of tourist resorts.Jorge Ocaranza, CEO of Pacífica, shared the success story of Pacífica Resort Ixtapa throughout its evolution, as well as its challenges and achievements.

order to better structure the scheduling and work program of the project.

Signing of PROFECO - AMDETuR Agreement To guarantee more equity, certainty and legal security between suppliers and consumers of Timeshare, the Federal Consumer Protection Agency (PROFECO) and AMDETUR signed a Collaboration Agreement on October 8th.

» AMDETUR


Among the objectives of this Agreement, which was signed by the head of the Federal Consumer Protection Agency, Bernardo Altamirano Rodríguez, and AMDETUR President, Romárico D. Arroyo Marroquín, are: establishing more streamlined mechanisms for serving consumers, promoting trainings sessions to inform vendors of the new verification model being introduced by PROFECO, and generating information that consumers can use to more effectively exercise their rights.

Top Romárico Arroyo, Chairman of the Board of AMDETUR and Bernardo Altamirano, Head of the Federal Consumer Protection Agency, after signing the Collaboration Agreement.Left Carlos Trujillo, Executive President of Amdetur; Romárico Arroyo, Chairman of the Board of AMDETUR; Bernardo Altamirano, Head of the Federal Consumer Protection Agency; Aarón Jiménez Paz, Associate Director for Services, PROFECO; and Carlos Meneses, General Director for Standard-Form Agreements, PROFECO.

The signing of this agreement also involved the formal incorporation of the “10 Commandments on the provision of Timeshare Services for AMDETUR Affiliated Developers,” which according to Arroyo “it lets consumers know where they can turn, in the confidence that AMDETUR’s affiliates will seek prompt and satisfactory responses to the best of their abilities.”

10 Commandments for the Provision of Timeshare Services by AMDETuR Affiliated Developers*

1INFORMATION AND TRANSPARENCYAll information or advertising published by the suppliers of Timeshare services must be clear, accurate, and objective and avoid misleading or confusing information. Timeshare providers must openly state

and respect the terms and conditions for the provision of the service.

2COST OF THE PROVISION OF TIMESHARE SERVICETimeshare providers must inform clients and prospects of all the costs related to the total cost of their membership, including the Total Annual Costs (TAC), when their transaction is financed.

Furthermore, they must inform clients and prospects of ordinary maintenance fees and any extraordinary fees, and the way they are calculated or determined. They must also inform consumers of the exchange services costs established by third parties at destinations included in their membership.

» AMDETUR

November / December 2012

3 STANDARD FORM AGREEMENTSTimeshare providers must register their standard form agreements with PROFECO before they

begin operations, and these must contain the terms and conditions offered by that provider.

4 RIGHT OF CANCELLATIONConsumers may request a cancellation of the Timeshare service they have acquired, with no

loss of payments made, within a term of five business days, and providers must return all of their payments within a maximum of 15 business days. After the five-day term has elapsed, the provider may apply the contractual penalties established in the standard form agreement for cancellations.

Consumers may not legally waive this cancellation term, and providers may not use misleading advertising to encourage them to do so. Cancellation must be made in writing at the place where the transaction has taken place or at the corporate address of the provider or representative of the company that the provider has indicated in the contract or through registered mail.

5FUNCTIONAL RESERVATION SYSTEMProviders must have a reservation system appropriate to the characteristics of the service

they offer to consumers that enables them to make use of their vacation ownership during the time period established in their contract.

6ALTERNATE LODGINGIf Timeshare providers cannot supply the service for causes attributable to them, they must offer

alternate lodging in the same destination, in a resort with the same or better category and quality as the services they have contracted.

If they cannot supply alternate lodging, vendors must reimburse consumers for round-trip transportation expenses that they may have incurred, within a maximum term of 15 calendar days from the date the consumer has provided written corroboration of these expenses.

7INSURANCEProviders must take out an insurance covering the physical safety and property of consumers.

8TIMESHARE PROPERTIESThe property where the service is provided must be legally entailed for the provision of the

Timeshare service, and its use may not be modified for the duration of the contract with consumers.

9BREACH OF CONTRACT BY SERVICE PROVIDERIf the provider of the Timeshare service fails

to meet any of its contractual obligations, when appropriate, it must pay the contractual penalties agreed upon in the standard form agreement to the consumer(s).

COMPLAINTSConsumers who have some objection or complaint about deficient service by the

Timeshare provider may express these circumstances to the provider, and if they do not obtain a satisfactory response, they may present their claim to PROFECO.

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* All resorts that provide Timeshare service in any of its forms must respect the Official Mexican Standard NOM-029-SCFI-2010, Commercial Practices-Information Requirements for the provision of Timeshare services specified in article 65, section VI of the Federal Consumer Protection Law. Companies that do not provide Timeshare service are exempt from compliance with this Standard.

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Remember that you can find more information about all these topics on our FB page.

Participation of AMDETuR in the signing of the global Code of Ethics for Tourism

During the 94th Session of the UNWTO Executive Council, held in the city of Campeche, AMDETUR participated in the signing of the WTO Global Code of Ethics for Tourism on October 24th. The UNWTO says this Code implies acceptance of basic ethical principles related to sustainable development and, above all, responsible development of tourism, based on respect for human rights and local communities, and with a special emphasis on the battle against exploitation of persons and the environment.

Taleb Rifai, General Secretary of the UNWTO; Gloria Guevara Manzo, Mexican Tourism Secretary; Carlos Trujillo, Executive President of AMDETUR; Fernando Ortega Bernés, Governor of Campeche and his wife.

AMDETUR is convinced of the vital importance -and therefore supports this type of initiatives, backed up with the high level of awareness its affiliates have on environmental protection and defense of human rights. This commitment was reinforced by Ricardo Montaudon of Resort Condominiums International (RCI) and José Chapur of Palace Elite, who also signed in the document.

The event was also attended by the General Secretary of the UNWTO, Taleb Rifai, and the Regional Director for the Americas of the UNWTO, Carlos Vógeler, accompanied by Mexico’s Ministry of Tourism, Gloria Guevara Manzo and by the Governor of Campeche, Fernando Ortega Bernés.◄

https://www.facebook.com/amdetur.asocmexicanadedesarrolladoresturisticos


» ENTERPRISE

Today we all know how important social networks can be in the successful development of any business. In 1973, the

founders of the Royal Resorts hotels became pioneers in the Mexican Caribbean region, exploring not only new horizons but also innovative products that at that time were just taking hold. They were establishing a new business model that would transcend both geographic borders and time, much like social networks are doing in many sectors. At that time Royal Resorts began offering a new product, a Private Vacation Club that would later be called “Timeshare,” with one guiding principle: “Create a product that the founders would like to own and sell it in a way that they would like to be sold to.”

This vision became extremely important for the group because a large part of the initial growth was driven by referrals from early buyers. This enabled Royal Resorts to guarantee up to 75% of

its marketing every year through word-of-mouth recommendation, and that was before Internet, Facebook, or Twitter had ever been invented.

Royal Resorts guaranteed up to 75% a year of its marketing through word-of-mouth recommendations.

At the same time, the original “Royals” established one of the most recognized Resort brands in the world in terms of guest services, prompting many to ask: What is the Royal Resorts secret? The answer is really very simple: if the vacation experience exceeds expectations, the clients themselves become sales people for both the company and the product.

The big question is: How have they created this?

1. Making it a goal to exceed clients’ expectations.2. Treating a client like a family member

Social Networks and how to create enduring low cost marketing campaignsWithout offering a gift as an incentive for clients to attend a presentation / By Jo Hill, Sales Division Human Resources Manager, Royal Resorts

» ENTERPRISE


3. An outstanding product that delivers what it promises!

Our enduring success is not client satisfaction but client loyaltyIt may be easy to find efficient staff, but it is a far greater challenge to find people who are genuinely interested in the client’s well-being. I have had the opportunity to work with a single chain throughout most of my professional career as Sales and Marketing Manager, and it has been a pleasure for me to discover that Royal Resorts management puts into practice something that I learned in my childhood from one of the greatest teachers I have had the pleasure of meeting, Xiquet Sabater Mècre.

In the 1960’s, Xiquet was the owner and director of a hotel on the Costa Brava, Spain, in which there was always a waiting list for reservations, but apart from the waiting list, you needed the recommendation of another guest to be able to get onto the waiting list! And what did he sell? Obviously, the beauty of the Costa Brava, but more than that, he offered genuine friendship, and affection to every individual that crossed the threshold of his hotel, where he personally welcomed visitors in five languages until the last day of his life. Why am I telling this story… because his social network remains alive today and the proof is that I am still talking about Xiquet and his hotel 50 years later.

In the same way, Royal Resorts holds a special place in the hearts of all its’ members. Our Resorts have been witness to new friendships that transcend nationality, language, customs and culture. The stage has been set for love stories between couples that grew up together, on vacation year after year, until deciding that they could spend no more time apart. We have grandparents bringing together their children, grandchildren and now great grandchildren once or twice a year to celebrate family and life.

There are few other places in the world that these members remember so dearly, a place where from the moment they reach the Resort, they hear “Welcome home!” A place where the same maid meets them every year, arranging their belongings just the way they like, or the waiter prepares their favorite beverage, or the Social Activities personnel remember exactly which games their children and grandchildren like to play?

Suffice to say that today, at Royal Resorts; we don’t need a gift as an incentive for our members to take a tour of the property. We invite them for breakfast and update them on how we can continue making their vacations… simply unforgettable.

At Royal Resorts we have understood exactly what makes our world go round…◄

Joanna L. Hill is Sales Division Human Resources Manager for Royal Resorts, with a special focus on creating educational and training material for Marketing and Sales staff. Jo, as she prefers to be called, graduated with honors from the University of Wales, where she received a BA with honors in English and Spanish. Throughout most of her career at Royal Resorts she was the Sales and Marketing Manager, and recently returned to the position she holds today.

Suggested reading: Jeffrey H. Gitomer (1988): Customer Satisfaction is Worthless; Customer Loyalty is Priceless.

Joanna L. Hill


» INDUSTRY

The U.S and many other countries have suffered from an economic recession for the past 5 years. As a result of these recessions,

the Timeshare industry suffered losses in sales and development. However, the market is recovering. The industry is showing modest increases in sales with a growth of 2.4% in 20111, and 1.6% in 20102. Much of the growth in sales can be attributed to flexibility in the product. In particular, the points based products have seen the most growth with about 67% of US resorts currently offering some form of a points based product.

Another market that has remained strong has been sales to existing owners. While just more than half of all Timeshare sales were to new owners, 42% of overall sales were to existing owners3. Owners continue to like the product with one in six owners planning to purchase an additional interval in the near future.

Development has slowed over the past 5 years with very few developers reporting new resorts in construction or planning phases. Most of the industry supply growth in the near future is expected to be through addition of units to existing resorts.

The Current State of the uS Timeshare IndustryBy Betsy Bender Stringam, RRP, Associate Professor at the New Mexico State University

Throughout the recession, Timeshare unit occupancy for US resorts has held strong at nearly 80% which is significantly higher than US hotel occupancies. However, owners are reporting that they are vacationing less often, with less money and for shorter periods of time. Flexibility in interval usage and the increased offerings of rental programs may help to assist these owners.

Increased focus on rental and resale programsAnother product of the economic recession has been an increase in foreclosure, and non-payment of annual maintenance fees across the past five years. As individual interval owners face economic duress their ability and willingness to pay for maintenance fees and or financing decreases. Compounding this is a steady increase in maintenance fees for US resorts over and above rates of inflation in the past 6 years with an increase of 8% reported for 2011, 9% in 2010, and 7% for the years 2006-2009 compounded.

For some owners, changes in life circumstances may affect the usage and perceived value of the interval. The Timeshare interval may be geographically located near an amenity that the


» INDUSTRY

owner no longer enjoys. Owners may not have children or grandchildren at ages that enjoy the nearby theme park. Likewise owners may no longer be able to ski, or enjoy other recreational activities due to increased physical limitations that occur with age. Some owners may have moved further away from the geographic location of the resort.

When an owner is not able to pay the annual maintenance fee, rental of the unit may provide some financial assistance to the owner. Some resorts are beginning to embrace rental programs with rental revenues for U.S. resorts increasing 37% in the past year alone.

The resale market has been confusing at best in recent years. Most U.S. resorts in the sellout phase do not offer resale assistance to their owners4. As a result many owners do not know where or how to resell the interval. Unscrupulous business models have been employed by some companies in the resale market, requiring large upfront fees, with very little resale services.

Further complicating the resale market is the differing U.S. state laws on the licensing requirements for individuals selling Timeshare. As

such there is not a one size fits all solution to the resale process. However there are scrupulous companies and businesses that can assist in the resale process.

Resorts and their Home Owners Associations (HOA’s) need to actively seek out and examine the best rental and resale outlets for their owners. Communication to owners is also paramount. While no one wants to advertise that an individual may be less than satisfied with a product, the HOA needs to step over that perception and let owners know of rental and resale opportunities.

Likewise, research has shown that while most resorts participate in exchange programs, additional education of the exchange process and opportunities could assist resorts in helping owners to find value in the interval ownership.

The industry outlook is positive with new products, occupancy remaining at a healthy steady rate. The

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And reach for government agencies and private companies in the Tourism and Vacation Ownership industries of Mexico and the world.

Contact and informationAurora Martí[email protected]. 01 55 5488 - 2028 to 31

www.amdetur.org.mx

» INDUSTRY

majority of Timeshare executives predict increasing sales this year over last. As more resorts offer rental and resale assistance, delinquencies and foreclosures are expected to decrease.◄

Sources1 American Resort Development Association International Foundation, State of the Vacation Timeshare Industry 2012.2 American Resort Development Association International Foundation, State of the Vacation Timeshare Industry 20113 American Resort Development Association International Foundation, Shared Vacation Ownership Owners Report 2010.4 American Resort Development Association International Foundation, A Survey of HOA Controlled Timeshare Resorts in the United States.

Dra. Betsy Bender Stringam, RRP is the Associate Professor for Hotels and Resorts at the School of Hotel, Restaurant and Tourism Management for New Mexico State University. Prior to her career in academics Dr. Stringam worked in the hotel, resort and restaurant industries at both the corporate and property level. Dr. Stringam currently serves as a member of the Research Committee for the International Foundation of the American Resort Development Association, and as a Research Affiliate of the Alfred P. Sloan Foundation Industry Studies Program.

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» FEATURE

By Paulina Sánchez Gómez Luna/Editor of Íconos magazine

The global economy is in a complex situation. Economic data show that the euro zone is spiraling downward, lacking a real long-term

strategy to resolve its debt crisis, while sluggish growth in the United States–Between 1.9% and 2.4% according to the Federal Reserve System for this year–has also caused an incipient slowdown in the emerging economies known as the BRICs (Brazil, Russia, India and China). According to the OECD (The Organization for Economic Cooperation and Development), the leading index for the Chinese economy dropped to 99.2 in May 2012 from 99.4 in April of the same year, pulling away from its long-term average of 100. Analysts believe poor performance in the manufacturing sector was the main drag on activity in this Asian country.

This outlook has stirred up a certain amount of market jitters, as well as doubts and questions among investors about the impact on the global economy and new investment trends. Here, the best answers come from expert economic analysts. We were given the opportunity to speaking with Jorge Suárez Vélez, an icon in the field, a world-renowned public speaker, economic analyst for CNN international and CNN in Spanish, chairman and CEO of major corporations like ING, and also

Jorge Suárez Vélez An Icon of Economic and Investment Trend Analysis

a writer, whose recent book “La Próxima Gran Caída de la Economía Mundial” (The Next great fall of the world economy), sold more than 10,000 copies in this country in October 2011, topping the bestseller list, and also became one of the most widely sold Spanish titles in the United States.

In this interview, Jorge Suárez explains the European recessive process in detail, along with the slowdown in China and Brazil, and the impact that these could have on the economy of Latin America, and particularly in Mexico. Paradoxically, however, Suárez Vélez believes the situation could present significant opportunities for the country and for the incoming presidential administration headed by Enrique Peña Nieto, provided that pending reforms–particularly in energy and labor–are approved in the short term to accelerate economic growth.

What is the medium-term future of the euro?The euro was born incomplete. Today we see how complicated it is to create a monetary union among countries that are so different, without also creating a fiscal union. What has happened in the last 10 years since the euro’s creation is that countries like Portugal and Spain suddenly had access to credit on privileged conditions, in a strong currency (the euro) and used it incorrectly: to increase consumption, instead of investing. In


» FEATURE

Spain’s case, the country took advantage of this access to credit and developed an enormous base of assets, primarily real-estate properties that were acquired basically with credit, prompting the mother of all deleveragings.

What the government of Spain, and other countries in the same conditions must do, is to correct that leverage. This means the future of the euro will depend primarily on how this process takes place, and whether governments can contend with the social pressures, like high unemployment in Spain (52% of young people under 25 are jobless) that would come to an austerity plan like what Germany is proposing.

But the primordial question is what will happen with the banks, because they were the ones who financed this credit and what we are seeing is a staggering level of loan delinquency. In this sense, I see a serious problem: that the credit is being conferred to the government, not the banks, which were the ones that took on the debt. So it is the public sector that is becoming more indebted.

Paradoxically, the slowdown in China and Brazil could present a significant opportunity for Mexico.

To sum up, the future of the euro depends on three factors: how that deleveraging process takes place, how the region deals with the many social pressures generated by austerity plans in Spain, Greece and Portugal, and who will absorb the debt, whether government or banks. In short, this is a crisis that could last a decade; there are more years of austerity, little consumption and debt ahead of us.

Are countries like Mexico shielded from a possible crisis in Europe and a slowdown in economic activity in China?

There is a level of crisis against which no one is shielded. However, with the slowdown in China, Mexico has some good opportunities because when that Asian country modified its growth model and tried to go from a totally exporting economy to one that satisfies its own domestic market, after the steep drop in demand from Europe and the United States, it was obliged to raise wages–which went hand in hand with increasingly qualified workforce–and thus lost competitiveness against Mexico. This is one reason that an increasing number of American companies are closing up shop in China and moving to Mexico and, to a lesser extent, Central America. On the other hand, this is also a country that is experiencing its largest real estate bubble in history, and its degree of indebtedness is excessive at the provincial and local government level.

What we’re going to see is a marked slowdown in the Chinese economy, so that instead of growing at a pace of 10% a year, this year, for example, it could sink to 7% or 7.5%, its slowest pace in 10 years, directly affecting Brazil, Chile, Peru and Colombia, because of their exports of industrial commodities toward that country.

However, Mexico is more a competitor than a partner with that Asian giant, so the scenario could present an opportunity to increase exports. This is

China, 2012

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» FEATURE

one of the main reasons to be optimistic: Mexico depends not on exports of commodities but on manufactured products, and its strongest trade ties are with the United States. In fact, Mexico is right now in the process of unseating Brazil, formally the star of Latin America, and this process will continue.

The World Bank believes Mexico will grow at a rate of 3.2% in 2012 and 3.7% in 2013. Do you agree with these projections?It all depends on what happens in the United States, our primary trading partner. What we’re seeing today in that country are heavy deflationary pressures and a certain weakness and consumption that could eventually affect Mexico. This year, our neighbor to the north is estimated to grow at a rate between 1.5% and 2%, two troubling trends, because they also have a “fiscal cliff,” which means that if legislators cannot come to an agreement

on how to restructure public spending, a series of automatic spending cuts will take effect. I think that if the Republican Party would have won, there would have been a stronger pace of growth.

Will the markets remain volatile?The effort to confront this fiscal cliff coming up in the next few months in a reasonable and effective way is one of the major challenges for growth in the United States, and to avoid a steep decline in the financial markets or similar to the plunge they suffered with the debt ceiling crisis in 2011. This is what will determine whether Mexico can grow by 3.7%. I believe that all the drivers of growth in the world are slowing down and this creates a lot of volatility. Europe puts on the brakes and lowers its demand for Chinese products, and as a result, that country puts on its brakes and also lowers its import of commodities, which affects Brazil, Colombia and Chile.

What does Mexico need to grow and which are the challenges the new administration faces?One of the things on the table is an energy reform that would deregulate investment in petrochemicals and gas, which would generate a huge investment for the country. The labor reform is another pending issue, which would make the market more flexible and allow people to be hired and fired more easily. There has to be also an educational reform to make our workforce more competitive, and hire qualified people because the country has to modernize, things have to start working. Mexico has to redefine its relationship with the United States in the areas of drug war and immigration.

The only thing keeping governments like Mexico from taking in-depth measures to face an uncertain global climate is fear; fear of making radical and intelligent changes. The opportunities for the six-year administration of Enrique Peña Nieto, under current conditions, are right there on the


» FEATURE

table: Mexico will outperform Brazil, and China will become less competitive. I’m convinced that this is the last opportunity we will have to try to establish the bases for a sounder, more sustained and inclusive growth.

The economy is facing greater challenges: the unresolved debt crisis in Europe, the slowdown in China, and the stagnation of economic recovery in the united

Jorge Suárez Vélez is a renowned economist, financial analyst and speaker. He is founding partner of the firm SP Family Office, LLC, headquartered in New York, and SP Capital International in Panama, providing consultancies in the areas of equity investment to families in Chile, Brazil, Mexico, Peru, Argentina, Venezuela and Panama, and supplies consulting services to firms throughout the region. He has been a speaker on Radio Formula, Radio Red and other stations in Mexico. He has published articles in Reforma, El Economista, Excélsior and El Financiero in Mexico, El Clarín in Argentina, and is a monthly contributor to El Inversionista in Mexico.

States.

What are the opportunities for investment right now?With the slowdown in what are called the BRIC economies, we are seeing the return of various automotive firms to Mexico that could become poles of development and opportunity for the real estate industry. We’re also seeing an interesting demand in the drawback industry zones, manufacturing and port facilities, which could trigger a second wave of development. I believe that once the energy reform is passed, it will enable the country to develop a much broader industrial base, as well as more investment in the industry in both petrochemicals and gas, and will lower energy prices for the industrial sector. ◄

Originally published in the Real-Estate Issues section of Volume 1, Number 22, September November 2012 edition


» STATISTICS

By Jesús Betanzos / Director Latin America Business Development and Consulting, for TrackResults Software.

These series of articles will explain, in simple terms, what the difference is between Business Intelligence (BI) and Business

Analytics (BA). Most importantly, we will address how the vacation clubs and the Sales and Marketing (SAM) executives can use them, as a part of their arsenal of competitive advantages.

For the SAM executives, project directors and mid-level management, the battlefields take place in the following three sectors, which are the ones that impact the most to the generation of revenue (and keeping it). Each sector will have a dedicated article within this series, in which the best Business Analytics tools and performance indicators will be discussed:

1- Marketing (both In-house and Outside).2- Sales strategies.3- Member Services (rescission prevention strategies).

Business Analytics

A different set of skills.

Up to less than a decade ago, the main competitive advantage for the sales and marketing departments had always been their street-smarts marketing skills and sales closing skills, paired with effective management. These skills got backed up by experience, and that has been the winning formula for years.

That was until two major events changed the vacation industry marketplace: The quick evolution of the internet with its mobility and reach among the population, (smartphones, tablets, social media, etc.) and the great recession.

These days, both the technology and the economic challenges have called for the development of

A Competitive Advantage for Sales and Marketing Executives / Part 1 of 5


» STATISTICS

a different set of skills: we’re going to call them “geek skills”, which are mainly skills in four groups:

A) Online marketing skills.B) Web design and programming skills.C) Online reputation management skills (ORM).D) Business Intelligence and Business Analytics skills.

These relatively new skills cannot, and will never be able to, replace the skillset that will always be key to successful sales and marketing operations. These new geek skills are meant to complement and assist in the performance and continuous improvement of achieved results.

As the marketplace competition keeps getting tougher, it is survival of the fittest. Now the fittest companies are the ones investing in technology and in Business Intelligence tools (BI) – and in the people who can use them.

The first three groups are clearly web and technology related, and their main focus is on lead and branding marketing strategies. These are very

well known and most companies already have access to a pool of web development talent.

It is the last group, the Business Intelligence analytics that is commonly undervalued, misunderstood, and ironically, the group that can provide the most relevant information and most value (as in “money making” value) for the Sales and Marketing executives.

Business Intelligence vs. Business AnalyticsMuch hype and confusion has been spread over the past few years regarding these two terms. After comparing dozens of business and marketing technology sources, my research as a consultant in the analytics field has led to the following definitions as the most reliable concepts in today’s business world. These are taken from Gartner’s Glossary webpages, which is the world’s leading information technology and advisory company for businesses (www.gartner.com):

Business Intelligence (BI) is an umbrella term that includes the applications, tools, and best practices that enable access to and analysis of information to improve and optimize decisions and performance.

Business Analytics (BA) are composed of all techniques that help build analysis models and simulations to create scenarios, understand realities and predict future states. Business analytics include data mining, predictive analytics, applied analytics and statistics, and are delivered as an application suitable for a business user. Compared with business intelligence (BI) tools, business analytics solutions come with prebuilt industry content out of the box that is targeted at an industry business process (for example, specific modules that would track a hotel’s front desk check-in to Tour conversion ratios, or a purchase cancellation request module).

Business Analytics aims to answer questions related to what happened, how many, and how often (which is what traditional reporting does), it also answers questions like why is this happening, what if these trends continue, what will happen next (prediction), what is the best that can happen (optimization).


» STATISTICS

Vacation Ownership Clubs are becoming Analytical Competitors

An analytical competitor becomes an organization that systematically and continuously improves its Key Performance Indicators (KPIs) and captures a larger market share by:

A) Increasing the quantity and quality of the tours.B) Reducing cost per tour (CPT).C) Increasing Closing %.D) Increasing the Average Deal Size.E) Increasing the Cash Collection Rates.F) Decreasing the Cancellation Rates.

While some companies in the vacation ownership industry are continuously seeking an improvement

on the above, many remain complacent or limited to 20th century tools. Very few companies have established Business Analytics processes, in order to systematically achieve higher results. Those companies that place simple analytical tools directly into the hands of team leaders, have a distinct advantage over those companies that remain forced to rely on the pure intuition (guesses, hunches, theories, experience and tradition). Therefore, most companies are not being as competitive as they could be.

“An analytical competitor is an organization that uses analytics extensively and systematically to outthink and outexecute the competition.”

http://www.trackresults.com

TrackResults State of the Industry KPIs (Key

Performance Indicators) for the third quarter of 2012:

• Average VPG (net processable) for Eastern Mexico, beach areas:

• Average VPG (net procesable) for Western Mexico, beach areas:

• Average net Closing % for Eastern Mexico, beach areas:

• Average net Closing % for Western Mexico, beach areas:

(in USD. , excludes Penders, Equities, Trade Ins).

Information powered by:

$3,841.50

$4,381.35

29.1%

29.2%


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Analytical competitors are found in a variety of industries: From professional sports to financial services and hospitality industries, Business Analytics is everywhere. Successful companies such as Netflix, Harrah’s Casinos, Amazon, CEMEX and Google, they’re all using the science of Analytics.

Interestingly enough, the vacation industry has been late in taking advantage of this Business Analytics field. Those who embrace this strategy and become Analytical Competitors, will certainly see a positive impact on their bottom line.

Business Analytics offers a proven path, a roadmap to integrate, extract, transform and access business transaction data and convert it into a competitive advantage. The goal of modern Business Analytics is to support better business decision-making by describing, predicting and optimizing results.◄

En el siguiente artículo de esta serie hablaremos sobre cómo el Análisis de

In the next part of this article se-ries, we will focus on how Busi-ness Analytics can help improve your Marketing programs perfor-mance.

After all, it’s a jungle out there.

Jesús Betanzos is Director of Latin America Business Development and Consulting for TrackResults Software. TrackResults consults in the field of Business Analytics for the vacation ownership industry. His email is:[email protected]

Notitur Digital / November - December 2012

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