Mexico Financial Crisis Results In Sale Of Deluxe Chain

<B>Mexico Financial Crisis Results In Sale Of Deluxe Chain</B>

By Kellie K. Speed

Following several years of drastically increasing debt, Mexico is undergoing some vast industry changes, and for business travelers, these changes will hit them right where they sleep. The biggest blow to the lodging scene is the commencement of the sale of the Camino Real luxury hotel chain.

"The sale of the Camino Real hotels should be finalized by the second quarter of this year," said Dana Ciraldo of Hodges, Ward, Elliott, agent for the seller. "We have had a lot of interest in the properties but it won't be for a few months until we have something firm."

Mexico's economic crisis has forced many commercial properties to default on existing loan payments, including Camino Real. As a result, the Institute of the Protection of Bank Savings late last year took control of the luxury hotel chain--which was formerly an asset of the failed Banco Union--and began the sale process.

The Institute has not yet reached the point of soliciting bids. "In April, we will be setting up the first round of bidding. We have not received any bids yet, and at this point we can't specify an exact sales figure," Ciraldo added.

Although the sale of the Camino Real properties will provide a change in management, Mexico also will be experiencing a massive resurrection when the new 365-room Sheraton Historical District Hotel and Convention Center is built.

The project--a joint venture between Grupo Excell's real estate division, Grupo Dahnos (design and construction) and Sheraton Hotels & Resorts--currently is under construction on Avenida Juarez in downtown Mexico City. The 20-story building, expected to cost nearly $54 million, is slated to open in the summer of 2001.

The hotel will provide 64,600 square feet of convention and meeting space and will use a system of hydraulic pillars, extending 110 feet below street level to ensure it is earthquake-proof. City officials hope the project will further revitalize the desperately needed downtown area. Mexico's hotel capacity nationwide is expected to increase with the help of this project by about 10,000 rooms.

Meanwhile, Courtyard by Marriott has been targeting Mexico for development in the next two years. Mexico's first Courtyard property opened in the city of Monterrey at the end of last year.

"The economy in this market," said Michael D. Hutter, Courtyard brand vice president, "is looking strong enough to warrant investment.