Dear Rental Pool Owners

Since his arrival, Saúl Fuentes, our new Director of Sales, he has been traveling to our most important markets; Phoenix and its surrounding area, Tucson, Mexicali, Tijuana, San Diego, Chihuahua and Cd. Juárez amongst others.

He and his Sales Team have been visiting Travel Agents, Tour Operators and Wholesalers in these areas promoting Las Palomas Beach & Golf resort with very good results. We launched an ad campaign guided towards the Mexican market before Easter and as you all know we got very good results including three days at 100% occupancy.

There is an important market that has been largely ignored or, at any rate, overlooked due to the lack of air transportation to and from Puerto Peñasco; the Groups, Conventions, Congress and Corporate Seminar market. In the last two months since his arrival, Saúl has been investigating this market’s potential and it is very interesting. We have started delivering quotes and proposals for different companies and entities and there is definitely an interest in using the Resort and Puerto Peñasco as an option for this type of groups.

Air transportation is still an issue but hopefully by June or July we will start receiving both from Mexico and the US.

Another issue we have is the competitiveness of other destinations such as Mazatlán, San Carlos, Puerto Vallarta and even the Mayan Riviera / Cancún that have cut rates and are offering a variety of services for very low prices. We have been working on a new rate structure in order to try and make us more competitive with the other destinations and give us the chance to offer regular and all-inclusive packages to these potential customers.

The following rates will therefore be uploaded into the system and offered staring May 1^st 2010 and will be valid until February 28^th 2011. As always, the rack rate is basically a base rate off which discounts are offered and between your Owner’s Rate and the Rack Rate we have established a Promotional, a Commercial, a Saver and Group rates to cater to the different type of customers.

Should you have any questions about these new rates please do not hesitate to contact Saul, Emilio or myself and we will gladly answer any of your questions.

Best regards

Arturo Freihofer

General Manager

Operadora Las Palomas