Grupo Posadas Hotel Co. plans to double size in next five years.

MEXICO CITY--(BUSINESS WIRE)--June 14, 1995--Despite Mexico's challenging economic climate, Grupo Posadas, Latin America's largest owner and operator of hotels, has announced plans to expand by more than 100 percent in the next five years.

Luis Barrios, Grupo Posadas chief executive officer, said Wednesday that the company, which has 42 properties and more than 10,000 rooms under two brands -- Fiesta Americana and Fiesta Inn -- in Mexico, the U.S. and Venezuela, is forging ahead with plans to have 100 properties by the year 2000.

Barrios credited the company's current strong position in the Mexico market and its optimistic growth plans to an "aggressive yet fiscally conservative approach to expansion."

"We have been growing steadily during the last 10 years, but we have not leveraged the company with too much debt," said Barrios. "Instead, we have been using non-company capital to grow and also have developed management contracts on many properties."

In this way, Barrios explained, Posadas has not had to use its own financial resources. "We sell our expertise, our technology and our operating and marketing capacity, and we use third-party capital...this is the key to our success."

Grupo Posadas is the largest hospitality chain in Latin America and is traded on the Mexico and New York stock exchanges. The company is led by Gaston Azcarraga, whose father founded the company in 1967 after selling his auto assembly plants to Chrysler and using the proceeds to partner with American Airlines to begin building hotels.

Javier Barrera, vice president of corporate administration, stressed Posadas' strong financial base. "Our debt-equity ratio is low. Posadas has a history of carefully planned growth. Five years ago we went public with our stock in order to attract capital. Since then, we've moved ahead one step at a time," said Barrera.

The Azcarraga family currently owns 70 percent of the publicly traded stock and Posadas has 20 percent of the market share of four- and five-star, chain-affiliated rooms in Mexico. In the first quarter of 1995, Posadas' revenues climbed 22 percent in peso terms and occupancy at Fiesta Americana's beach hotels was 48 percent higher than in 1994.

"The outlook for summer is equally promising," said Barrera.

"While this is partially due to the devaluation and the influx of foreign visitors, we have a good product, are well positioned marketing-wise and have a solid financial base," said Alejandro Zozaya, director of sales for the Fiesta Americana brand.

Like most hotel operators, Grupo Posadas prices rates for its luxury resorts in dollars while most of its operating costs are in pesos. At city hotels, tariffs are calculated in pesos, and while rates have gone up in line with inflation, a room at a city hotel costs less than it did a year ago in terms of dollars.

Grupo Posadas' careful planning has paid off as the company proceeds with new property openings in 1995. And while no new construction has been programmed for 1995 due to high interest rates, projects which were begun before the devaluation will be completed. Most Posadas properties are located in Mexico, 14 of which are situated on Mexico's most desirable beaches.

The flagship Fiesta Americana brand has more than 6,000 rooms and is managed by Gaston's brother, Pablo. This five-star chain targets foreign visitors and business people in large cities and beach resorts. Fiesta Americana Merida opened earlier this year and Fiesta Americana Veracruz is slated to open in the fall.

The Fiesta Inn brand -- "five-star properties at four-star prices" -- targets domestic business travelers in mid-size cities and suburbs. Five Fiesta Inn openings are slated for 1995. Together, both brands comprise twice as much market share as all their competitors combined.

Grupo Posadas is working closely with Mexico's Secretariat of Tourism (SECTUR) to promote tourism to Mexico. Juan Antonio Dorado, vice president of legal affairs for Posadas and president of the National Council of Tourism Businesses, said, "Tourism will be one of the most promising sectors of the Mexican economy over the next several years.

"There has been a resurgence at our beach resorts, due to the strengthening of the U.S. economy and the devaluation of the Mexican peso and we expect this to continue," Dorado added.

Grupo Posadas sets the pace for tourism practices both on the local and national level. "Hoteliers from around the country rely on us to set certain standards. If we recommend price changes, they follow our lead. Posadas is a leader in the tourism community," said Dorado.

Gaston Azcarraga is working with SECTUR to promote the country's colonial cities in an attempt to promote "more culture and less beach."

"Since 1967 our company has grown into the most important hotel operator in Mexico and Latin America. This growth has been reflected not only in a constant increase in the number of hotels we operate, but can be seen in our efforts to meet the demands of a quality hotel operation and our concern for consistently excellent service," said Azcarraga.

"This is Posadas, a company dedicated to service."

CONTACT: RY&P, Orlando, Fla.

Michelle Richmond, 407/875-1111