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Posadas' Caesar Park has big plans for South America
Travel Agent

By Larry Luxner

RIO DE JANEIRO -- Mexico's Grupo Posadas, which not even two years ago paid $123 million for three Caesar Park Hotel properties and the brand name, is poised to expand dramatically throughout Brazil and South America -- competing with better-known luxury hotel names like Sheraton, Inter-Continental, Hyatt, Marriott and Hilton.

On Oct. 13, Posadas and Brazilian real-estate giant Inpar Construções e Empreendimientos Imobiliarios Ltda. signed a $105 million deal to build additional hotels throughout Brazil.

Gastón Azacárraga, president of Grupo Posadas, said the joint venture will build more than 1,200 additional hotel rooms in Brazil over the next two years.

"Beyond a quantified growth in the number of rooms, this contract represents the beginning of an aggressive expansion by Grupo Posadas in the Brazilian market," said Azacárraga in a press release. "Furthermore, developing projects with Inpar, a professional firm and equally aggressive in its own field, gives us an invaluable guarantor as a hotel partner."

Posadas operates hotels under its own brand names (including Fiesta Americana, Fiesta Inn and Caesar Park in South America, and The Explorean), and various other names under management contracts. It has 58 hotels containing 11,800 rooms in beach and city destinations in Mexico, Argentina, Brazil and the United States.

At the Caesar Park Ipanema, nearly $5 million was spent to renovate the 20-year-old beachfront property. In 1998, the luxury hotel posted an occupancy rate of 78%. This year, says general manager Alberto Grau Neto, the hotel will be lucky to reach 75%.

"The first semester after Brazil's [January 1999] devaluation was very quiet. There was no business," Grau said. "Now it’s started to grow again."

The average room rate at the 218-room hotel is $200, though junior suites go for $400 and up. While Rio generally attracts leisure rather than business tourists, the Caesar Park Ipanema’s guests are 80% executives; of which 40% are Americans, 20% Europeans and most of the rest Brazilians and other Latin Americans.

The five-star hotel prides itself on providing "attention to the finest details, through a service personalized to see the needs of each and every customer."

The Caesar Park chain also includes five-star properties in São Paulo, Fortaleza and Buenos Aires.

The Posadas-Inpar partnership will soon begin constructing a $40 million convention center near São Paulo's Guarulhos International Airport. The complex, which includes a 383-room hotel, should open by August 2001.

The two companies will also jointly develop a new 400-room hotel to be located on along Avenida Paulista, in the heart of São Paulo's financial district. That property will employ a "flats" concept, whereby each of the hotel rooms will be sold to individual investors, who will in turn receive a percentage of the income generated by room usage. Caesar Park will operate the hotel in accordance with its prevailing operational standards and procedures.

A third project involves the development of Vila Olimpia, an exclusive business and residential area southwest of the city, where a 400-room hotel operated by Caesar Park should open in August 2001. That $37 million property will be connected to a convention center, office buildings and a shopping mall. Posadas will have exclusive rights of Caesar Park under a 25-year operation contract.

Other Caesar Park hotels may soon rise in Rio de Janeiro's up-and-coming Barra de Tijuca district and in the state of Minas Gerais, as well as in Chile, Colombia, Venezuela and various Central American countries.

Grau declined to give financial details on any of these projects, though he did say that Grupo Posadas is actively looking to expand throughout Latin America.

“We are just in negotiations with different investors,” he says. “Some properties we’ll manage, some we’ll own.”

Meanwhile, the International Finance Corp. is investing $60 million to support Grupo Posadas "through a difficult economic period for the region." That company will use the financing to restructure medium-term obligations and build five new hotels in Mexico.

Bernard Pasquier, associate director of IFC's Latin America and Caribbean department, said the project would support a long-standing IFC client through tough economic times in Latin America, when private funding is limited. Debt restructuring will help match the company's liabilities with the long-term nature of the hotel business. IFC's financing for the $175.6 million project totals $60 million. IFC is also making an equity investment of $15 million.

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