The Caribbean will soon have a new, big player in the accommodation industry. A giant of the Mexican hotel industry, Grupo Posadas is set to make a big splash in the region with the launch of two new hotels in Cuba (the all-inclusive Fiesta Americana Punta Varadero and Fiesta Americana Holguin Costa Verdein Cuba) and the Grand Fiesta Americana Punta Cana Los Corales in the Dominican Republic.
So what does Posadas seek in the Caribbean? And what does the Caribbean family need to know about this new entry into the tourism industry? Let’s look now.
Posadas Looks to the Future
Posadas has been pursuing aggressive expansion in the US during recent years. Announcing its plans in 2017 for expansion into five major US cities, the addition of the US locations was intended to complement Posadas’ existing roster of over 150 hotels, and provide an avenue for the company to become a truly global identity in the accommodation marketplace.
As well as the expansion plans, Posadas has also signalled its ambitions to grow further in Mexico and, in particular, to drive development of two new brands that are separate to, yet in complement of, their Posadas banner. This is a natural byproduct of the group’s longstanding success, and offers a path for the company to go from strength to strength in its home nation.
Just as it’s often said of the American economy, that ‘when the US sneezes, the rest of the world catches a cold’, so too does Posadas have a unique consideration here. Not only does the company seek to expand aggressively, but it also wants to retain a mainline presence in its native nation. By no means are the concepts of growing abroad and remaining strong at home mutually exclusive. However, they can create a particular challenge for business; one where an episode in the global economy can forestall growth and drive setbacks, just as any downturn in the domestic market can weaken the foundations for expansion. It is an audacious path to pursue as the company arrives in the Caribbean.
Accommodating Posadas Regionally
The nature of Posadas’ operations in Mexico affirms that it can enter the Caribbean marketplace with real impact. However, it will do so not only behind the pace of existing providers like Sandals and Royalton, but with the recognition that the competitors have not been standing still. Around the same time in 2017 that Posadas was beginning its US expansion, Royalton added four all-inclusive resorts to its stable, with the adults-only resort here in Cap Estate complemented by properties along Jamaica’s famous Seven Mile Beach. And just this week, on May 1, Royalton Antigua opened — the latest glittering addition within that nation’s beautiful Deep Bay.
Also in 2017, Sandals’ CEO Adam Stewart opted to bypass the traditional route of funding that company’s expansion via use of Caribbean banks, and instead looked to Wall Street for a capital raise that aimed for twelve new hotels to be built. This marked a sharp break from the previous strategy of pursuing only one new hotel per year, and signified ‘game on’ to all competitors in the region.
Posadas’ remarkable growth can be seen by the shift from owning over 130 hotels in 2015 to claiming 172 within its stable as of September 2018. The group is aiming for 300 hotels by 2020. Pursuing this goal has required some flexibility when it comes to what can be deemed a Posadas hotel, and even a Posadas hotel room.
At the core of its US strategy was an aspiration to pursue agreements similar to franchising arrangements, whereby the owners of Posadas-branded US hotels would manage the day-to-day running of their properties yet have them retain a Latin identity, theme and presence across all hotel branding and customer interaction.
Although many hoteliers consider the rise of Airbnb with trepidation and fear, the Posadas CEO, Jose Carlos Azcarraga, has signified his team’s readiness to work with Airbnb in future, signifying a pragmatic outlook that seeks to provide the most competitive offering to a customer with the strongest business model.
Unquestionably, Posadas is a strong brand, but anyone fearing the end is near due to the arrival of this giant in the region could find this is simply the latest chapter in a long line of entries where a huge name does indeed perform well, yet not to the point of wiping out all competition.
A Mexican Connection in the Caribbean
Where Posadas has a unique advantage is the strength of its Mexican presence. Mexico is Latin America’s second biggest economy after Brazil, and the 15th biggest in the world. Certainly, successful expansion in the Caribbean will take time for Posadas but, with its existing strengths in Mexico, there is an opportunity for it to build tourism links between Mexico and the Caribbean in a way that no other provider can. This advantage will be one to watch with interest, not only as Posadas seeks a unique selling point in the region but, in doing so, it could help drive a new chapter of growth between Mexico and the Caribbean for the benefit of all, and far beyond the new hotels in Cuba and the Dominican Republic.
With an ambitious expansion plan, the Mexican hotel chain seeks to capture Caribbean territory and settle more than 70 new hotels under its banner in the next five years.
