How Posadas, Mexico’s Largest Hotel Group, Competes Against Global Giants

Grupo Posadas is Mexico’s largest homegrown hotel operator, but U.S. analysts rarely discuss it.

The indifference may be an oversight as Posadas looks set to grow. Larger players examining the world’s sixth-most visited country for opportunities ought to keep the company in mind.

“We are focused on exponential growth,” said director and CEO José Carlos Azcárraga Andrade.

Posadas sees itself as “the Mexico expert.”

• The regional hotel management company has nine hotel brands, including Live Aqua, Grand Fiesta Americana, and One Hotels in Mexico and the Dominican Republic.

• “By the end of 2023, we will have more than 200 hotels and over 30,000 rooms,” the CEO said.

• Most will be managed, and about 30 will be franchised.

• The company also owns and leases 27 high-performing real-estate assets in prime locations.

• “Our current signed pipeline includes third-party investments totaling $817 million (about $14.4 billion Mexican pesos) to operate 21 new hotels offering 3,820 rooms,” said Azcárraga.

Posadas claims some edges over its rivals.

• It’s the only domestic player in the top 8 in terms of operated rooms.

• “We are competitive versus all the global competitors by generating the highest RevPAR [revenue per available room] … in the markets we operate in,” Azcárraga said.

• “We compete with all major players with a global distribution and commercialization platform that generates high market share on every competitive set with ranges between 1.10 to 1.35 — meaning that we have between 10% and 30% of the market that we take from our competitors in addition to our fair market share,” Azcárraga said.

• “Our employees are our greatest competitive advantage,” he said. “We have the best in the industry, and we are widely recognized as one of the top operators in terms of customer service and satisfaction in the markets in which we operate.”

• “We have the brands we need in our portfolio to cover all the main segments in the markets in which we compete,” said Azcárraga. “We still can expand our current brands, some of which are relatively new, including Gamma, Curamoria Collection, Devossion, Dayforia, and IOH.”

• In November, Posadas took a step to boost direct bookings by debuting a mobile app for Fiesta Americana Travelty — its centralized digital reservations platform that it unveiled earlier this year.

Posadas’ financials look promising.

• In the next year, S&P Global Ratings expects Posadas to enjoy occupancy rates above 65% as group travel and events recover while demand for beach resorts stays resilient.

• It forecasts Posadas’ revenue to be above $600 million (10.30 billion pesos) over the next year through September, well above its pre-pandemic levels.

• Grupo Posadas has had an EBITDA margin of around 20% over the normalized long-term. That compares favorably to recent margins for Marriott (about 19%) and Accor (16%).

• Posadas’ margin took a hit in the third quarter — and was only 13% — because of an unexpected appreciation of Mexico’s currency versus the U.S. dollar. About 30% of Posadas’ revenue is generated in U.S. dollars.

The Acapulco hurricane was only a small setback.

• The company has four hotels in Acapulco: Fiesta Americana Acapulco Villas, Gamma Acapulco Copacabana, One Acapulco Costera, and One Acapulco Diamante.

• They all suffered damage. The company is still tallying the costs and doing repairs.

U.S. hotel groups should eye marketing partnerships with Posadas.

• In October, Posadas signed a deal to be a commercial arm in America for Kempinski, Germany’s oldest luxury hotel group.

• Kempinski will be part of Posadas’ Fiesta Americana Travelty Collection. This will help the hotel take advantage of the distribution and marketing strength Posadas has in these markets (including for meetings and events sales and sales via travel agencies).

• The deal is similar to a licensing deal IHG signed with Iberostar a year ago to co-market hotels. The IHG deal includes a loyalty program integration. In contrast, Posadas loyalty members will have special rates for Kempinski’s properties, but they will not earn points on their stays.

In May, Marriott officially acquired City Express, a Mexican brand, for $100 million. What might be the next move by U.S.-based and Europe-based hotel companies in Mexico?

What do you think? Tell me. I’m at [email protected] and on LinkedIn.

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