Hospitality the Mexican Way: Interview with Development Head, Mauricio Elizondo

Posadas is Mexico’s largest hospitality group, operating over 200 hotels housing 30,500 rooms. Yet 50 years ago it started life as a family business based in a single hotel.

“The grandfather of our current CEO, José Carlos Azcárraga Andrade, built it and managed it by himself,” says Mauricio Elizondo, Posadas’s Development Head. “Over the years, the company has developed 14 new brands, and we are now focusing on managing hotels for third parties. We don’t own hotels, but we offer brand and management services throughout Mexico and the Caribbean.”

The shift from hotel owner to hotel operator occurred roughly 15 years ago, as real estate funds started gaining ground around the world.

“It was a moment when many hospitality companies decided to focus on brands and management services, instead of owning the assets,” says Elizondo. “Owning the assets requires a real estate focus, so that was what institutional funds were doing. They were acquiring assets and making sure they gained value.”

Posadas sold many of its hotels to these Real Estate Investment Trusts (REITs), and today half of its portfolio is owned by those firms. The other half is owned by family offices and individuals with assets that they want to provide long-term returns.

 Local Knowledge

But while there are a lot of hospitality management companies out there, none of them know Mexico as well as Posadas does.

“There are two big differences when you compare us to the main global brands,” Elizondo tells us. “We like to call ourselves the experts on Mexico. We are a Mexican company, operating hotels, and only hotels, in Mexico for over 50 years. We understand commercial distribution, we understand the labour market, we understand our clients and what foreign guests want when they come to Mexico, and we understand Mexican customers travelling within the country.”

As well as bringing a powerful repertoire of local knowledge to the table, Posadas also offers a proven franchise model.

“A lot of these franchise models offer the brand and showcase the venues on their website,” says Elizondo. “They offer venues access to all of these distribution channels, but they don’t operate the hotel itself. If you look at the big names, they often only manage a small percentage of their hotels. Our model is different; we do both. We are responsible for the brand, but we also operate the hotels. We then realise the operating profit that the hotel will have.”

Posadas takes responsibility for the whole business unit, and that is the source of Posadas’s value to its investors, giving them only one face they need to communicate with.

That ability to take responsibility and accountability for its clients’ investment is particularly important given the challenges that the hospitality sector frequently has to overcome.

“The hospitality industry is a very resilient industry, as it faces challenges every single day,” Elizondo tells us. “One of the most recent challenges was after the pandemic, because people started travelling again, but they had changed the way they travelled. They valued time with their families more, and they wanted the ability to travel outside and look around.”

 A New Kind of Guest

Elizondo points out that for many people today, travelling is a spending priority ahead of buying a house or car. It is a market environment that requires solid strategies to bring those travellers into the hotels Posadas operates, offering the experiences that they want.

“They don’t just want a hotel, they want a full experience with their significant other or their family,” Elizondo says.

But the pandemic didn’t just change people – it changed technology as well. The range of digital tools has expanded, and customers have taken to those tools like a fish to water, requiring hospitality firms to adjust their offering accordingly.

“Nowadays, most people book digitally, so we needed to adapt our marketing strategies accordingly,” Elizondo tells us. “Everything now goes to social media and digital services. We almost don’t do TV and print advertising. We have four generations travelling to our hotels at the same time, Boomers, Gen X, Millennials, and Gen Y. We have to understand the needs of a Boomer who has been travelling for 45 or 50 years while offering experiences that will connect with an 18 year old.”

Posadas is able to do that partly by offering the right kind of technological tools, but also by having the right sort of people on hand. Posadas employs 18,000 people, and 70% of them are Millennials or younger.

“Our human resource practices need to connect to a very young generation that requires different things and different approaches,” says Elizondo. “They don’t want to sit in the office from nine until five from Monday to Friday.”

To that end, Posadas offers a versatile, flexible schedule. Staff are able to come to the office two or three days a week, then spend the rest of the week working from home or a remote working location of their choice.

“We used to be a lot more formal. Now we can be a lot more flexible,” Elizondo says. “The younger generations don’t want to come to work in a suit and tie.”

This is one facet of what Elizondo calls the job’s “emotional salary”. It means what the job offers beyond monetary compensation, which includes not just the flexibility the company offers its employees, but also the opportunity to travel to Posadas hotels across Mexico.

 Taking Mexico International

With those people on board, Posadas has an exciting future ahead of it.

As Elizondo tells us, “We are going to focus on growing our footprint in Mexico and in the non-Mexican Caribbean, islands like the Dominican Republic, where they already have two resorts, Jamaica, Aruba and Costa Rica. That is our regional aim for the next few years.”

With a portfolio of 14 brands, Posadas can cover every single segment from urban hotels to economy class, all the way up to luxury event hotels.

“We have a solid strategy to continue our expansion into the all-inclusive segments,” Elizondo says. “We already have 15 throughout Mexico, and we will continue to build on that, opening new hotels in the Dominican Republic and Costa Rica. Our operational model, as a Mexican company that understands Mexican hospitality, is recognised around the world, and we want to provide that service in the countries we expand into.”