Executive Summary

Hitting rock bottom

After bottoming out in 2002 and 2003, sales of travel and tourism are expected to recover in 2004. Improvements in the Mexican and US economies will underpin the recovery while expanding credit lines and increased purchasing power will encourage Mexicans to travel again. Players responded by maintaining price levels and diversifying their advertising outside traditional areas.

Few locations dominate Mexican tourism

While experiencing growing competition from Cancun and Los Cabos, traditional beach centres, such as Acapulco and Puerto Vallarta remain the backbone of Mexican leisure tourism. Mexico City, Guadalajara and Monterrey meanwhile serve as the main destinations for business travellers. Plans exist to develop tourism in other areas but initiatives are slow to take hold due to bureaucracy.

Travel agents suffer as airlines struggle

Heavily dependant on flight sales, travel agencies experienced a blow to profitability in 2000 when airlines began to cut commissions. The events of 11 September 2001 further harmed travel agencies, as consumer demand for flights plummeted. In 2000, airlines cut commissions to travel agents in an effort to minimise costs. The impact of 11 September 2001 on the airline industry had repercussions on travel agents, who saw a decline in sales. These issues forced many independent operators out of business and those remaining became focused on serving niches and packages.

Still reliant on US despite attempts to diversify

The decline in US tourists after 11 September 2001 highlighted the fact that Mexico is extremely dependent on the US for its travel and tourism revenues. To diversify its customer base, the National Fund for Tourism (FONATUR) began advertising campaigns in Europe and Asia and developed relationships with wholesalers and tour operators worldwide. While the rewards of the effort are slow to materialise, FONATUR views its strategy as a long-term investment rather than a short-term bet.

Mixed feelings on new tax exemption

In 2004, business travellers attending conventions and congresses became exempt from paying the 2% accommodation tax. Aside from the mountain of paperwork needed to qualify for the exemption, many doubted that this tax exemption would impact sales in 2004 because accommodation sales for congresses and conventions were made months in advance. Additionally, other service providers, particularly car rental and foodservice, complained that they did not receive similar exemptions.

Fugitives of the city, an excellent source of revenues

The Mexican government, in conjunction with private businesses, launched advertising campaigns over the review period aimed at promoting weekend escapes from urban areas, particularly during low seasons. Commercials on national television stressed the benefits of fleeing the city and encouraged mini-holidays with friends and family. Acapulco, Taxco, Tepoztlan, Tequisquiapan and Cuernavaca benefited the most from the advertising campaign as they are located near large urban areas. Improved occupancy rates indicate that the campaign was successful and the government decided to continue to promote domestic tourism.

Unregulated accommodation thrives through bribes

Unregulated accommodation, which falls outside the scope of this report, also has a strong presence in Mexico. However, the value of unregulated accommodation is hard to estimate, as outlets bribe the authorities to survive, and remain unregulated and virtually unknown. Many of these accommodations are small guest houses and motels in urban areas known only to domestic tourists. They are often the location of illegal activities, particularly in the northern region of the country where illegal immigrants meet to cross the border.

Extreme sports need extreme investments?

In Mexico, as in many parts of the world, the popularity of extreme and adventure sports is increasing. Having a young population, Mexico is constantly searching for new and exciting means of entertainment. Rock climbing, hiking and mountain biking are among the extreme sports gaining popularity among young adults. Many of these people are urbanites who leave the city weekly to practice these sports.

With a lack of organisation and infrastructure, these athletes rely mostly on what exists naturally to have a good time. Industry sources claim that campsites can do more to cater to this group. The campsites lack security, road access and bathrooms. Aside from these basic functions, campsites could also add features that appeal to the young adventurers, such as sports facilities.

1. EXECUTIVE SUMMARY

2. OPERATING ENVIRONMENT

2.1 GDP

• Table 1 GDP 1999-2004

2.2 Disposable Income

• Table 2 Disposable Income 1999-2004

2.3 Leisure Expenditure

• Table 3 Consumer Expenditure on Leisure 1999-2004

3. INDUSTRY ISSUES

3.1 Political and Legislative Environment

3.2 Terrorism and Security

3.3 Sustainable Tourism

3.4 Positive Growth Factors

• Summary 1 Positive Growth Factors

3.5 Negative Growth Factors

• Summary 2 Negative Growth Factors

4. DEMAND FACTORS

4.1 Leave Entitlement

• Table 4 Paid Holiday and Public Holidays 2004

4.2 Holiday Taking

• Table 5 Levels of Holiday Taking 1999-2004

15. Demographics

• Table 6 Holiday Taking by Demographic Groupings 1999-2004

16. Length of Trip

• Table 7 Holiday Taking by Length of Trip 1999-2004

17. Seasonality

• Table 8 Month in which Holidays Are Taken 2004

5. TOURISM PARAMETERS

5.1 Incoming Tourism Receipts

• Table 10 Incoming Tourism Receipts % Growth: 2000-2004
• Table 9 Incoming Tourism Receipts: 1999-2004

5.2 Outgoing Tourism Expenditure

• Table 11 Outgoing Tourism Expenditure: 1999-2004
• Table 12 Outgoing Tourism Expenditure % Growth: 2000-2004

5.3 Balance of Tourism Payments

• Table 13 Balance of Tourism Payments: Value 1999-2004

22. Number of Arrivals

• Table 14 Total Arrivals: 1999-2004

23. Mode of Transport

• Table 15 Arrivals by Mode of Transport: 1999-2004
• Table 16 Arrivals by Mode of Transport: % Breakdown 1999-2004

24. Purpose of Visit

• Table 17 Arrivals by Purpose of Visit: 1999-2004
• Table 18 Arrivals by Purpose of Visit: % Breakdown 1999-2004

25. Country of Origin

• Table 19 Arrivals by Country of Origin: 1999-2004
• Table 20 Arrivals by Country of Origin: % Breakdown 1999-2004

26. Per Capita Expenditure

• Table 21 Per Capita Expenditure per Arrival: 1999-2004

27. Number of Departures

• Table 22 Total Departures: 1999-2004

28. Mode of Transport

• Table 23 Departures by Mode of Transport: 1999-2004
• Table 24 Departures by Mode of Transport: % Breakdown 1999-2004

29. Purpose of Visit

• Table 25 Departures by Purpose of Visit: 1999-2004
• Table 26 Departures by Purpose of Visit: % Breakdown 1999-2004

30. Destination

• Table 27 Departures by Destination: 1999-2004
• Table 28 Departures by Destination: % Breakdown 1999-2004

31. Per Capita Expenditure

• Table 29 Per Capita Expenditure per Departure: 1999-2004

32. Number of Trips and Expenditure

• Table 30 Total Number of Domestic Trips: 1999-2004
• Table 31 Domestic Tourist Expenditure: 1999-2004

33. Trips by Mode of Transport

• Table 32 Domestic Trips by Mode of Transport: 1999-2004
• Table 33 Domestic Trips by Mode of Transport: % Breakdown 1999-2004

34. Trips by Destination

• Table 34 Domestic Trips by Destination 1999-2004
• Table 35 Domestic Trips by Destination: % Analysis 1999-2004

35. Per Capita Expenditure

• Table 36 Per Capita Expenditure Per Domestic Trip 1999-2004

5.18 Tourism Spending

• Table 37 Spending on Tourism 1999-2004
• Table 38 Spending on Tourism: % Breakdown 1999-2004

37. Method of Payment

• Table 39 Method of Payment for Tourism Spending: % Breakdown 2003

6. TRAVEL ACCOMMODATION

6.1 Market Size

• Table 40 Travel Accommodation Market 1999-2004
• Table 41 Travel Accommodation Market % Growth 1999-2004

6.2 Sales by Sector

• Table 42 Travel Accommodation Value Sales by Sector: Value 1999-2004
• Table 43 Travel Accommodation Value Sales by Sector: % Value Breakdown 1999-2004

6.3 Outlets by Sector

• Table 44 Travel Accommodation Outlets by Sector: Units 1999-2004
• Table 45 Travel Accommodation Outlets by Sector: % Volume Breakdown 1999-2004

6.4 Hotels by Region

• Table 46 Hotels, Rooms and Beds by Region 2003

6.5 Hotels by Star Ratings

• Table 47 Number of Star Rated Hotels by Region 2003

6.6 Hotels by Ownership

• Table 48 Hotel Sales by Independent vs Chained Outlets: Value 1999-2004

6.7 Internet Transaction Trends

• Table 49 Travel Accommodation Internet Transactions Sales: Internet Transaction Value 1999-2004

6.8 Emerging Products

47. Revenue Rankings

• Table 50 Key Players by Revenue 2004

48. Market Share

• Table 51 Hotel Companies by Market Share 2001-2004

49. RevPAR

• Table 52 Key Hotel Players by RevPAR 2004

6.12 Forecast Sales by Sector

• Table 53 Forecast Travel Accommodation Sales by Sector: Value 2004-2009

6.13 Forecast Outlets by Sector

• Table 54 Forecast Travel Accommodation Outlets by Sector: Units 2004-2009

7. TRANSPORTATION

7.1 Market Size

• Table 55 Transportation Market 1999-2004
• Table 56 Transportation Market % Growth 1999-2004

7.2 Sales by Sector

• Table 57 Transportation Sales by Sector: Value 1999-2004
• Table 58 Transportation Sales by Sector: % Value Breakdown 1999-2004

7.3 Airline Capacity and Utilisation

• Table 59 Airline Capacity by Type 1999-2004
• Table 60 Airline Capacity by Type 1999-2004: % Breakdown 1999-2004

7.4 Airline Sales by Seat Class

• Table 61 Airline Volume Sales by Seat Class 1999-2004
• Table 62 Airline Volume Sales by Seat Class: % Breakdown 1999-2004

7.5 Airline Sales by Distance

• Table 63 Airline Volume Sales by Distance: % Breakdown 1999-2004

7.6 Internet Transaction Trends

• Table 64 Transportation Internet Transactions Sales: Internet Transaction Value 1999-2004

7.7 Emerging Products

60. Revenue Rankings

• Table 65 Key Players by Revenue 2004

61. Passengers Carried

• Table 66 Key Players by Numbers of Passengers Carried 2004

62. Market Share

• Table 67 Airline Companies by Market Share 2001-2004

7.12 Forecast Sales by Sector

• Table 68 Forecast Transportation Sales by Sector: Value 2004-2009

8. CAR RENTAL

8.1 Market Size

• Table 69 Car Rental Market: 1999-2004
• Table 70 Car Rental Market % Growth: 1999-2004

8.2 Fleet Size and Number of Operators

• Table 71 Structure of Car Rental Market 1999-2004

8.3 Sales by Sector and Location

• Table 72 Car Rental Sales by Sector and Location: Value 1999-2004
• Table 73 Car Rental Sales by Sector and Location: % Value Breakdown 1999-2004

8.4 Rental Duration

• Table 74 Car Rental Average Duration by Sector 1999/2004
• Table 75 Average Car Rental Duration: % Breakdown 1999/2004

8.5 Time of Booking

• Table 76 Time of Booking: % Breakdown 2004

8.6 Internet Transaction Trends

• Table 77 Car Rental Sales: Internet Transaction Value 1999-2004

8.7 Emerging Products

72. Mergers and Acquisitions

• Summary 3 List of Mergers and Acquisitions 2002-2004

73. Revenue Rankings

• Table 78 Key Players by Revenue 2004

74. Fleet Size

• Table 79 Key Players by Size of Fleet 2001-2004

75. Average Daily Rate

• Table 80 Key Players by Average Daily Rate for Car Hire 2003

76. Market Share

• Table 81 Key Players by Market Share 2001-2004

8.13 Forecast Sales by Sector and Fleet Size

• Table 82 Forecast Car Rental Sales by Sector: Value 2004-2009
• Table 83 Forecast Car Rental Fleet Size 2004-2009

9. TRAVEL RETAIL

9.1 Market Size

• Table 84 Travel Retail Market: 1999-2004
• Table 85 Travel Retail Sales % Growth: 2000-2004

9.2 Outlets by Sector

• Table 86 Travel Retail Outlets by Sector: Units 1999-2004
• Table 87 Travel Retail Outlets by Sector: % Volume Breakdown 1999-2004

81. Services

• Table 88 Travel Agency Value Sales by Service: % Breakdown 1999-2004

82. Type of Holiday and Destinations

• Table 89 Travel Agency Value Sales by Type of Holiday: % Breakdown 1999-2004
• Table 90 Travel Agency Value Sales by Destination: % Breakdown 1999-2004

83. Exchange Services

• Table 91 Travel Agencies Offering Exchange Services 1999-2004

84. Source of Sale

• Table 92 Tour Operator Value Sales by Source of Sale: % Breakdown 1999-2004

85. Type of Holiday and Destinations

• Table 93 Tour Operator Value Sales by Type of Holiday: % Breakdown 1999-2004
• Table 94 Tour Operator Value Sales by Destination: % Breakdown 1999-2004

86. Sales by Outlet and Type

• Table 95 Exchange Service Value Sales by Outlet: % Breakdown 2003
• Table 96 Exchange Services Value Sales by Currency vs Traveller痴 Cheques: % Breakdown 2003

9.9 Online Travel Agencies

• Table 97 Travel Retail Sales: Internet Transaction Value 1999-2004

9.10 Emerging Products

89. Mergers and Acquisitions

90. Revenue and Market Share

• Table 98 Travel Agents: Revenue Rankings 2004
• Table 99 Travel Agencies: Market Share 2001-2004

91. Revenue and Market Share

• Table 100 Tour Operators: Revenue Rankings 2004
• Table 101 Tour Operators: Market Share 2001-2004

9.14 Forecast Sales and Outlets

• Table 102 Forecast Travel Retail Value Sales: 2004-2009
• Table 103 Forecast Travel Retail Outlets by Sector: Units 2004-2009

10. TOURIST ATTRACTIONS

10.1 Market Size

• Table 104 Tourist Attractions Market: 1999-2004
• Table 105 Tourist Attractions Market % Growth: 1999-2004

10.2 Sales by Sector

• Table 106 Tourist Attractions Sales by Sector: Value 1999-2004
• Table 107 Tourist Attractions Sales by Sector: % Value Breakdown 1999-2004

10.3 Visitors by Sector

• Table 108 Tourist Attractions Visitors by Sector: 1999-2004
• Table 109 Tourist Attractions Visitors by Sector: % Breakdown 1999-2004

10.4 Internet Booking Trends

10.5 Emerging Products

99. Mergers and Acquisitions

100. Visits

• Table 110 Major Tourist Attractions by Visitors 2002-2004

10.8 Forecast Sales and Visitors by Sector

• Table 111 Forecast Tourist Attractions Sales by Sector: Value 2004-2009
• Table 112 Forecast Tourist Attractions Visitors by Sector: 2004-2009

11. KEY STRATEGIC ALLIANCES

11.1 Trends

• Summary 4 Key Strategic Alliances 2000-2004

12. GROWTH COMPANY PROFILES

12.1 Cintra SA de CV

• Summary 5 Cintra SA de CV: Key Facts
• Summary 6 Cintra SA de CV: Summary of Key Events 1999-2004
• Table 113 Cintra SA de CV: Financial Summary 2001-2004

12.2 Grupo Posadas SA de CV

• Summary 7 Grupo Posadas: Key Facts
• Summary 8 Grupo Posadas: Summary of Key Events 2000-2004
• Table 114 Grupo Posadas SA de CV Financial Summary 2001-2004

13. FUTURE OUTLOOK

13.1 Market Opportunities

• Summary 9 Opportunities for Growth and Investment

13.2 Tourism Receipts and Expenditure

• Table 115 Forecast Incoming Tourism Receipts: 2004-2009
• Table 116 Forecast Outgoing Tourism Expenditure: 2004-2009

13.3 Balance of Payments

• Table 117 Forecast Balance of Tourism Payments: Value 2004-2009

13.4 Number of Arrivals

• Table 118 Forecast Visitor Arrivals: 2004-2009

13.5 Number of Departures

• Table 119 Forecast Visitor Departures: 2004-2009

13.6 Travel and Tourism Markets

• Table 120 Forecast Sales by Travel and Tourism Markets: Value 2004-2009

13.7 Developments in Internet Transaction Sales

• Table 121 Forecast Sales in Travel and Tourism Markets: Internet Transaction Value 2004-2009

14. DEFINITIONS