Rooms with a view: Mexico's biggest hotel chain is looking across the region --and to a new airline--for growth.

Thirty-six years ago, the now-deceased businessman Gaston Azcarraga Tamayo got into the hotel industry by opening a 20-floor hotel on one of Mexico City's main thoroughfares. Today, his son, Gaston Azcarraga Andrade, a second cousin to Televisa CEO Emilio Azcarraga Jean, directs the largest hotel chain in the country, Grupo Posadas. Sales last year were close to US$500 million.

Currently, the Posadas chain operates 91 hotels under the brands Fiesta Americana Grand, Fiesta Americana, Fiesta Inn, Caesar Park and Ceasar Business in Mexico, Argentina and Brazil. Beyond its own properties, it manages hotels for other companies, including Holiday Inn, in Mexico and the United States.

In 1998 the company bought the Caesar Park brand in Latin America, putting the company into Brazil and Argentina. Despite the economic setbacks experienced by Argentina in recent years, and a hugely competitive Brazilian market, Posadas has grown in South America; all of its rooms are booked until the beginning of April 2007. Now it's looking to get stronger in the region. "One of our objectives is to build on our strength as the leader in Latin America, and that includes thinking of new openings in the future," says Enrique Calderon, sales director for the chain in Mexico.

This month Posadas expects to enter Chile, opening the 167-room Caesar Business in Santiago, a $9.7 million investment. In 2007, the company expects to increase the number of hotels it owns in Argentina and Brazil.

Posadas revenues in 2005 were $290 million, of which $280 million was made in Mexico. "The Brazilian and Argentine economies are recovering. We have good occupancy rates. But we still need to increase the number of hotels in those countries," says Calderon.

Domestically, Posadas has decided to enter a new niche, opening last year One Hotels, its first economy line of lodgings, aimed at guests who travel frequently on business with a limited budget and seek efficiency above all. During the next five years, the company expects to open 50 of these hotels across Mexico, mainly in industrial and business areas.

Currently, Posadas has a total of 17,000 rooms around the world. During the next five years that figure should increase substantially, including the One Hotels investments and other hotels under existing brands. "Counting these 50 hotels, we would be adding 5,000 rooms to our total, plus what is being added under the other brands this year," Calderon says.

Mexico's tourism industry has been booming, now representing 10% of the country's economy. Some 800 hotels will be built this year in the country, a total of 50,000 rooms that will require investments of $5 billion, a figure that includes remodeling projects, according to the Mexican Hotel and Motel Association.

"In 2006, we estimate occupancy growth of around 7% and next year the trend will be the same," says Jesus Nader, president of the hotel trade group.

Tour king. Growth in domestic and global tourism is pushing businesses to invest. Last year, Mexico saw $11.80 billion in tourist money, a 10% increase from the previous year. And, despite damage from Hurricane Wilma, the country broke tourism records, at 22 million foreign visitors. The number of domestic tourists arriving at hotels in Mexico rose 3.2%

At the end of last year, Posadas stepped up its investments in Mexican tourism, buying one of the country's two main airlines, Mexicana de Aviacion, along with its low-cost unit Clic, as well as half of Aeromexpress, a domestic and foreign cargo carrier, plus Seat, a company that provides airport services, among other investments. The company spent $165.5 million in cash and assumed $294 million in debts, as well as aircraft leases valued at $997 million for a total transaction of $1.46 billion.

"With this important deal, two top-quality companies are combined, which will increase our profitability and move us ahead in terms of technological change," Gaston Azcarraga told reporters at the time.

"[Posadas] understands what the hotel business is missing, which destinations lack air service. So it sees airlines as important in terms of tourism, and it is trying to drive more tourism," says Nader.

A big part of the company's strength in Mexico comes from the variety of brands and rates it can offer, which motivates customers to stay with its brands of hotels. "The same person can have different budgets at different times. If he travels alone he could spend more. If he travels with family he might spend less," says travel agent Sara Avina. "With the variety of hotel types Grupo Posadas has in Mexico, the same customer can stay in several hotel brands."

MARISOL RUEDA * MEXICO CITY