Grupo Posadas S.A.B. de C.V.

Overview Key strengths Key risks Leading position in Mexico?s lodging market, with 189 urban and coastal hotels. Large debt burden. Diversified hotel brands tapping different economic segments. Highly cyclical nature of lodging, which is exposed to public health, security, and economic events. Low capital investment needs given greater developments in managed and franchised hotels. Highly competitive and fragmented industry, coupled with limited geographic diversification outside of its domestic market. Our updated forecast for Posadas? adjusted debt to EBITDA is 5.5x-6.0x in the next 12 months, still indicating a highly leveraged financial profile, but significantly better than the previous two years. The company's key operating indicators have steadily recovered, translating into stronger revenue and profitability. Despite high inflation, Posadas has maintained

...High leverage and foreign currency risk limit the rating upside, but improvement and consistency in key operating indicators could strengthen our view of Grupo Posadas' (Posadas) business profile. Our updated forecast for Posadas' adjusted debt to EBITDA is 5.5x-6.0x in the next 12 months, still indicating a highly leveraged financial profile, but significantly better than the previous two years. The company's key operating indicators have steadily recovered, translating into stronger revenue and profitability. Despite high inflation, Posadas has maintained EBITDA margins at 17%-20% due to operating savings and average daily rate (ADR) increases above 10% in an effort to pass through higher costs. In our view, further improvement and resilient key operating indicators in the...

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