MEXICO MARKET UPDATE

FY 2013

Mexican Economy

For the second consecutive year, Mexico’s economy grew 3.9% in 2012

Inflation came in at just 3.57% in 2012, well within Banco de Mexico’s objective. This year, inflation is expected to fall comfortably within 3%

Average exchange rate in 2012: $ 13.17 MP = $1.00 USD

Mexico is currently enjoying a resurging of popularity in the financial world. Its positive aspects are being highlighted and the negative of violence, put into perspective.

Source: American Chamber of Commerce - Mexico

The Mexican Traveler to the US

Mexicans continue to travel and to increase their spending in the U.S.

• Visitors from Mexico spent USD $ 10.1 billion in the U.S. in 2012, an increase of 9% compared to 2011. For the first time, Mexico has breached the 10 billion barrier.

• With 14.5 million visitors, Mexico is the second most important market in visitation to the U.S. after Canada. This figure represents an increase of 8% compared to 2011; surpassing the 2000 record of 14.3 million.

Source: International Trade Administration, Office of Travel and Tourism Industries

Social Media in Mexico

In 2012 the number of Internet users in Mexico reached 45.1 million, 71% of them also access the Internet through mobile devices in addition to a PC or Laptop. Access through mobile devices increased from 26% to 48% in 2012.

47% of Internet users in Mexico access social media to follow a commercial brand. The main reasons to follow a brand are: to obtain promotions (52%), they identify with the brand 44%), someone recommended the brand (20%), to complain (11%) .

45% of Internet users in Mexico have been influenced by social networks to make a purchase decision.

Source: AMIPCI Asociación Mexicana de Internet (Mexican Internet Association)

Main social networks used in Mexico: Facebook (90% of users), YouTube (60%) and Twitter (56%).

90% of Internet users in Mexico are registered in Facebook: 87% access on a daily basis and 45% do so through a smartphone.

Social Media in Mexico

Source: AMIPCI Asociación Mexicana de Internet (Mexican Internet Association)

Mexico Airline News

Low cost Mexican carrier Interjet has invested 3.2 billion dollars in the acquisition of forty new aircraft. The airline has also launched a new exclusive program for business travelers, InterCorporate, which offers these travelers special benefits that adapt to their needs. Interjet launched three new routes to the U.S.: New York, Las Vegas and Orange County.

According to statistics provided by Mexico’s general Civil Aviation Agency, Volaris was the leading Mexican carrier with an average occupancy rate of 84% during 2012, which is superior to its competitors’ average. Volaris received the “Socially Devoted” award from Socialbakers (for Facebook and Twitter accounts). This low cost carrier recently announced new routes to Phoenix Sky Harbor from Mexico City and Guadalajara starting Fall of 2013.

Aeromexico carried 14.8 million passengers in 2012, a 3.3% increase over 2011, driven by a 5.3% jump in international traffic and 2.6% rise in domestic loads. Average load factor was 76.6%, according to Mexico’s National Aviation Authority. The airline has also invested eleven billion dollars in 100 new aircraft. Aeromexico agreed to a code share partnership with Alaska Airlines in December 2012.

Sources: Periodico Viaje, Periodico Invertour, www.volaris.com and www.interjet.com

Air Service to Arizona

From Mexico City: AeroMexico operates daily service into Phoenix Sky Harbor International Airport with one stop in

Hermosillo. US Airways operates two daily non-stop flights into Phoenix and will add a third frequency during high season. Low cost carrier Volaris will launch a flight

three times a week starting the fourth quarter of 2013.

From Guadalajara: US Airways operates three daily non-stop flights into Phoenix. Low cost carrier Volaris will launch a flight three times a week starting the fourth quarter of 2013.

From Hermosillo: Daily non-stop service into Phoenix with AeroMexico and with US Airways.

Wholesaler Trends in Mexico

• Mexico has 70 tour operators. Approximately forty of those are located in Mexico City.

• Twenty four tour operators included Arizona in their U.S. product offer during FY2013 versus twenty one in FY2012.

• OTA’s continue to grow in Mexico but traditional travel agencies remain the most important distribution channel for airline tickets (60% of sales) according to Cesar Romero, President of Asociacion Metropolitana de Agencias de Viajes. (Source: Periodico Viaje)

• According to IATA, Corporate Travel Services is in second place for national sales, just below American Express. CTS has presence in 20 cities throughout the country and reported more than 300 million dollars in annual sales. (Source: Periodico Viaje)

Online Travel Agencies in Mexico

In May 2012, Google reported that travel (36%), financial services (12%) and media & entertainment (12%) are the leading product categories purchased online amongst internet users in Mexico.  (Source: eMarketer, January 2013)

Best Day signed an agreement with Travelocity Mexico where their system will become Travelocity Mexico reservation engine, as they do for other companies including Volaris. With this decision Best Day reinforces its technological strength. (Source: www.travel-news.com.mx)

Price Travel is the only OTA that has customer service booths at shopping malls that allows them to sell travel packages not only online but also offline. According to Sabre, Price Travel is the travel agency with the most important growth in Mexico. (Source: Periodico Viaje)

Despegar.com plans to become the largest travel agency in Latin America this 2013. To achieve this goal, Despegar.com will make several changes and launches in order to provide their clients with additional and improved offers and services. (Source: www.travel-news.com.mx)

Expedia and Best Day launched booking apps for mobile devices. (Source: www.travel-news.com.mx)

Competing Destinations

Competing destinations not only include Las Vegas, Orlando, Miami and New York within the U.S., but also other international destinations that are being heavily promoted in Mexico, including Costa Rica, Colombia, Peru and Argentina. Another major competitor are cruise lines. Mexicans are keen on taking their vacation aboard a cruise ship.

What are other destinations doing to attract Mexican tourists?

Mexican actress Jacqueline Bracamontes was named California’s ambassador and spokesperson by Visit California Mexico, as she represents the positive spirit and energy that the State wants to project for its 2012-2013 campaign. She is a strong opinion leader of Mexican women.

California launched their new campaign in an event for trade and media. Videos were produced where the actress shares her experiences in California which are available in their website. Jacqueline’s image is part of all of this State’s promotional printed and online material in Mexico.

AOT MEXICOMARKETING & PR

ACTIVITIESIN FY 2013

Marketing Activities

Visit USA Seminars

AOT Mexico participated in 5 Visit USA training seminars for travel agents in the following cities in Mexico: Guadalajara, Puebla, Queretaro, León and Mexico City (Center) .

Arizona Showcase in Hermosillo

AOT Mexico coordinated the annual event “Arizona Showcase” – a consumer tradeshow/fashion show in the city of Hermosillo, Sonora on October 4, 2012.

“What’s New in Arizona” e-Newsletter

AOT Mexico sent out a bimonthly “What’s New in Arizona” Newsletter to JMI’s 530 trade contacts data base.

Travelocity Mexico’s Gnome talked about Arizona in Social Media

Travelocity Mexico’s gnome traveled to Arizona and featured his trip in Travelocity’s social media encouraging people to explore this amazing destination.

AOT Mexico trained :•347 agents in Visit USA Seminars•297 in Sales Missions and destination

trainings

Totaling 644 travel agents throughout Mexico in FY 2013

Mexico Trade & Media Mission

Arizona Trade and Media Sales Mission 2013

The Arizona Office of Tourism conducted a trade and media mission in Mexico City and Guadalajara the week of April 22th 2013 with the theme “Live the Arizona Experience”.

Mexican Media Overview

• The most important offline media in Mexico is TV, followed by radio and printed media.

• Mexicans spend 11 hours a day exposed to traditional and online media.

• Digital media consumption in Mexico has significantly increased in the past years.

• Mexicans use digital media more than 6 hours per day, and dedicate half of this

time to social networking and micro-blogging, the rest on online TV, online radio and online news.

Source: Global Web Index and IAB Mexico

Media Activities

• “What’s New in Arizona” e-Newsletter AOT Mexico sent out a bimonthly “What’s New in Arizona” e-newsletter to JMI’s 180 trade and consumer media database.

• Media Trips to ArizonaAOT Mexico sent 3 qualified journalists to the State of Arizona.

• Story Ideas and Press ReleasesAOT Mexico pitched and placed story ideas as well as sent out press releases to JMI’s consumer and trade media data base.

• Proactive Media OutreachAOT Mexico proactively reached out to new media. Eleven new qualified media were added to data base.

• Media AssistanceAOT Mexico successfully assisted media in their information and photo requests which resulted in more published articles on Arizona.

In Fiscal Year 2013 AOT hosted three journalists who traveled throughout the State. The value of the articles featured as a result of these FAM’s is USD $ 231,082.65

Alicia Boy / Freelance

Boydeviaje.com / Bon Voyage –Excelsior Newspaper /El Viaje de tu Boda

“Canyons Kept Secrets” FAM / October 8 – 12, 2012

Visiting: Tuba City, Page and Scottsdale

Carlos Velazquez / Editor

Bon Voyage – Excelsior Newspaper / Viajes – El Financiero Newspaper

“Amazing Gazing” FAM / March 4– 9, 2013

Visiting: Safford, Bisbee, Sierra Vista, Tucson, Tempe

Gerado Torres/ Sections Editor

Conozca Mas Magazine

“Amazing Gazing” FAM / March 4– 9, 2013

Visiting: Safford, Bisbee, Sierra Vista, Tucson, Tempe

Media FAMS

Media Highlights

Hugo Roca / Journalist Reforma De Viaje! / July 2012“Arizona: Legends on the Rocks”Value: USD $45,182.27As a result of attending the “Canyons, Canyons, Canyons “ FAM in April 2012

Carlos Lucio Ramos / Editor Golf & Spa / November 2012“Mii Amo Spa – Transformation in Arizona”Value: USD $50,611.32

Gerardo Torres / Sections EditorConozca Mas / April 2013“Shady Dell – The Best Vacations You Can Take in the Past”Value: USD $83,366.69As a result of attending “Amazing Gazing “ FAM in March 2013

Media Coverage

Printed Media $ 583,226.7159 articles

Online $ 73,552.5636 articles

Broadcast $ 22,102.296 broadcasts

TV $ 21,581.713 TV

Circulation 3,405,376Page Views 25,796,647

Total Media Coverage FY2013US $ 700,463.27

Total Editorials Generated FY2013104 Editorials

AOT MEXICOMARKETING & PR

ACTIVITIESIN FY 2014

Marketing Activities FY14

Arizona Showcase 2013

This annual event in Hermosillo, Sonora promotes fall and holiday shopping, attractions and accommodations throughout the State of Arizona. This year it will take place on Thursday, October 3rd. We encourage your participation as it reaches travel trade, media and more than 800 VIP consumers.

Arizona Mission 2014 – Mexico City and Guadalajara

AOT will plan a trade and media mission in Mexico City and Guadalajara in 2014.

Dates: Week of March 17th., 2014.

• What’s New in Arizona Bimonthly Newsletter

AOT Mexico will continue to send sent out a bimonthly “What’s New in Arizona” Newsletter to JMI’s 530 trade contacts data base. We encourage you to send relevant information for travel agents.

Destination Seminars

AOT Mexico will conduct six destination trainings to qualified groups of travel agents, tour operators and airline reservations and sales staff.

Media Activities FY14

Press ReleasesAOT Mexico will continue distributing press releases to our database of 180 trade and consumer media contacts in Mexico. We encourage you to send us items of interest.

Media Trips to ArizonaAOT Mexico will promote participation of qualified Mexican journalists in Media trips organized by AOT.

Individual Media VisitsAOT Mexico will promote individual media FAMS to the State

Media Event in Mexico City AOT Mexico will coordinate a media event in Mexico City as part of the Trade and Media Mission to take place in March 2014.

THANK YOU FOR YOUR CONTINUOUS SUPPORT OF THE

MEXICAN MARKET

BARBARA ANN JACKSONJACKSON MARKETING INTERNACIONAL