Pablo Azcárraga
Chairman of the Board
Grupo Posadas
View from the Top

50-50 Bet Provides Comoetitive Advantage

Wed, 02/21/2018 - 11:04

Q: What are Mexico’s greatest areas of opportunity for growth within the tourism sector?

A: There are various indicators that demonstrate Mexico’s strong potential for growth if we tweak certain things. Ninety percent of leisure tourism is focused on beach destinations. The majority of Mexico’s tourism revenue is based on sun and beach destinations and not so much on cultural, ecological or religious tourism. In Europe for instance, the main reason for travel is culture. Mexico has such a rich culture but it is not being taken advantage of approximately 80 percent of leisure tourists arrive by plane. We are neighbors of the largest consumer market and when Americans travel in the US, 90 percent do so by car. We are limiting tourism and we must continue to change the culture so that it not only depends on sun and beaches. 

Ninety percent of tourists that visit Mexico also visit the same four destinations: Riviera Maya, Mexico City, Los Cabos and Vallarta. Mexico definitely has potential and we have grown exponentially with more than 35 million international tourists. These are good numbers but the World Tourism Organization predicted that Mexico should have more than 50 million by now. 

Q: How has Grupo Posadas positioned itself in the Mexican market?

A: Grupo Posadas is the leading hotel developer in Mexico and the only one with a presence in Mexico as an operator. We are four times bigger than our closest competitor and as of 1Q17, we have more than 26,000 hotel rooms in operation. We have 40 new hotels in construction today, which means almost 7,000 more rooms. There are more than 80 million Mexicans traveling inside the country compared to the 35 million who come from abroad.

Q: Why has Grupo Posadas decided not to franchise its brands?

A: We do not franchise because there is no real need to do so. In part, our success comes from the balance of our portfolio between both leisure and business. Tourism depends greatly on the economic state of a country but when one area is not doing so well, the other complements it. That is why building 50 percent of our developments in cities and 50 percent in beaches is a good competitive advantage to have. 

We have a business model similar to that of the most important companies in the world. Our large number of clients and investors allows us to avoid allocating a large amount of our resources to materials and allows us, instead, to develop our people, innovation and technology. Of the 40 hotels we have in construction, 90 percent are third-party properties. Our client network is satisfied and has enough confidence in us to sign 20-year O&M contracts. Because we deliver results, almost all the contracts are renewed. In 2016, we opened 13 hotels, which is considerably more than our competitors that tend to open one or two a year. As of today, we have more than 26,000 hotel rooms and 156 hotels. City Express has 11,000 and others fewer. The fact that we are listed on the BMV allows us to keep our liabilities in bonds and to raise more money for new projects.

Q: What impact has the company had on tourism education and jobs creation in Mexico?

A: It is important that we continue to focus on the professional growth of our human capital. Many of the most important players and directors within the industry started their careers in Posadas. We need to continue to train people to provide a higher quality service.