Grupo Posadas, S.A.B. De C.V

http://www.oblible.comOffering Memorandum U.S.$350,000,000

Grupo Posadas, S.A.B. de C.V. 7.875% Senior Notes Due 2022 We are offering U.S.$350,000,000 aggregate principal amount of our 7.875% Senior Notes due June 30, 2022 or the “Notes”. The Notes will mature on June 30, 2022. We will pay interest on the Notes on June 30 and December 30, commencing on December 30, 2015. The Notes will bear interest at a rate equal to 7.875% per annum. Prior to June 30, 2019, we may redeem the Notes, in whole or in part, at a redemption price based on a “make-whole” premium and on or after June 30, 2019, at the redemption prices set forth in this offering memorandum. Until June 30, 2018, we may redeem up to 35% of the Notes with the net proceeds of qualified equity offerings (as defined under “Description of the Notes”). If we undergo a change of control or sell certain of our assets, we may be required to offer to purchase Notes from holders. The Notes will be our senior unsecured obligations and will rank equally with all of our other unsecured senior indebtedness, except for our obligations that are preferred by statute, and senior to all of our subordinated indebtedness. The Notes will be guaranteed by certain of our existing and future wholly owned direct and indirect subsidiaries. The guarantees will be the senior unsecured obligations of the guarantors and will rank equally with all of the guarantors’ other senior unsecured indebtedness, except for their obligations that are preferred by statute, and senior to all of the guarantors’ subordinated indebtedness. The Notes and the guarantees will be structurally subordinated in right of payment to all of our and the guarantors’ secured indebtedness to the extent of the value of the assets securing such indebtedness, and the Notes and the guarantees will also be structurally subordinated in right of payment to all liabilities, including trade payables, of our subsidiaries that are not guarantors. We have applied to list the Notes on the Official List of the Luxembourg Stock Exchange and to trade on the Euro MTF Market. This offering memorandum constitutes a prospectus for the purpose of the Luxembourg Law dated July 10, 2005 on Prospectuses for Securities, as amended.

Investing in the Notes involves risks that are described in the “Risk Factors” section beginning on page 22 of this offering memorandum. Issue Price: 100.000% plus accrued interest, if any, from June 30, 2015. The Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any other jurisdiction. We are offering the Notes only to qualified institutional buyers under Rule 144A promulgated under the Securities Act and to persons outside the United States under Regulation S promulgated under the Securities Act. See “Transfer Restrictions.”

THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE REGISTRO NACIONAL DE VALORES (NATIONAL SECURITIES REGISTRY) MAINTAINED BY THE COMISION NACIONAL BANCARIA Y DE VALORES (NATIONAL BANKING AND SECURITIES COMMISSION), OR CNBV, AND MAY NOT BE OFFERED OR SOLD PUBLICLY, OR OTHERWISE BE THE SUBJECT OF BROKERAGE ACTIVITIES IN MEXICO, EXCEPT PURSUANT TO THE PRIVATE PLACEMENT EXEMPTION SET FORTH UNDER ARTICLE 8 OF THE LEY DEL MERCADO DE VALORES (MEXICAN SECURITIES MARKET LAW). AS REQUIRED UNDER THE MEXICAN SECURITIES MARKET LAW, WE WILL NOTIFY THE CNBV OF THE OFFERING OF THE NOTES OUTSIDE OF MEXICO. SUCH NOTICE WILL BE DELIVERED TO THE CNBV TO COMPLY WITH THE MEXICAN SECURITIES MARKET LAW AND FOR INFORMATION PURPOSES ONLY. THE DELIVERY TO AND THE RECEIPT BY THE CNBV OF SUCH NOTICE DOES NOT IMPLY ANY CERTIFICATION AS TO THE INVESTMENT QUALITY OF THE NOTES OR OF OUR SOLVENCY, LIQUIDITY OR CREDIT QUALITY OR THE ACCURACY OR COMPLETENESS OF THE INFORMATION SET FORTH HEREIN. THE INFORMATION CONTAINED IN THIS OFFERING MEMORANDUM IS SOLELY THE RESPONSIBILITY OF GRUPO POSADAS, S.A.B. DE C.V. AND HAS NOT BEEN REVIEWED OR AUTHORIZED BY THE CNBV. IN MAKING AN INVESTMENT DECISION, ALL INVESTORS, INCLUDING ANY MEXICAN INVESTORS WHO MAY ACQUIRE NOTES FROM TIME TO TIME, MUST RELY ON THEIR OWN REVIEW AND EXAMINATION OF GRUPO POSADAS, S.A.B. DE C.V. ANY OFFER OR SALE OF NOTES IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED DIRECTIVE 2003/71/EC (THE ‘‘PROSPECTUS DIRECTIVE’’) MUST BE ADDRESSED TO QUALIFIED INVESTORS (AS DEFINED IN THE PROSPECTUS DIRECTIVE). Delivery of the Notes will be made to investors in book-entry form through The Depository Trust Company and its direct and indirect participants, including Clearstream Banking, société anonyme, and Euroclear S.A./N.V., as operator of the Euroclear System, on or about June 30, 2015. ______Global Coordinator Citigroup Joint Bookrunners Citigroup BofA Merrill Lynch J.P. Morgan

June 30, 2015 http://www.oblible.com

This map shows the number and brand of the hotels we operate as of June 25, 2015:

We have not authorized anyone to provide any information other than that contained in this offering memorandum. We and the initial purchasers take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are not, and the initial purchasers are not, making an offer to sell, or seeking offers to buy, the Notes in any jurisdiction where the offer or sale is not permitted. This offering memorandum does not constitute an offer to sell, or a solicitation of an offer to buy, any notes by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation. You should assume that the information contained in this offering memorandum is accurate only as of any date on the front of this offering memorandum. Our business, financial condition, results of operations and prospects may have changed since that date. This offering memorandum has been prepared by us solely for use in connection with the placement of the Notes. We and the initial purchasers reserve the right to reject any offer to purchase for any reason.

TABLE OF CONTENTS SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES ...... iii WHERE YOU CAN FIND MORE INFORMATION ...... iii PRESENTATION OF FINANCIAL AND OPERATING INFORMATION ...... v FORWARD-LOOKING STATEMENTS ...... vii SUMMARY ...... 1 SUMMARY OF THE OFFERING ...... 10 SUMMARY CONSOLIDATED FINANCIAL AND OPERATING INFORMATION ...... 14 RISK FACTORS ...... 22 USE OF PROCEEDS ...... 48 EXCHANGE RATES ...... 49 CAPITALIZATION ...... 50 SELECTED FINANCIAL AND OPERATING INFORMATION ...... 51 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 59 BUSINESS ...... 91 MANAGEMENT ...... 119 PRINCIPAL SHAREHOLDERS ...... 125 RELATED PARTY TRANSACTIONS ...... 126 DESCRIPTION OF OTHER INDEBTEDNESS ...... 127 DESCRIPTION OF THE NOTES ...... 128 BOOK-ENTRY; DELIVERY AND FORM ...... 171 TAXATION ...... 175 PLAN OF DISTRIBUTION ...... 180 TRANSFER RESTRICTIONS ...... 185 LEGAL MATTERS ...... 188 INDEPENDENT AUDITORS ...... 189 GENERAL LISTING INFORMATION ...... 190 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ...... F-1 ______Neither the Securities and Exchange Commission, or SEC, any state securities commission nor any other regulatory authority has approved or disapproved the Notes, nor have any of the foregoing authorities passed upon or endorsed the merits of this offering or the accuracy or adequacy of this offering memorandum. Any representation to the contrary is a criminal offense. Responsibility Statement: We accept responsibility for the information contained in this Offering Memorandum. To the best of our knowledge (having taken all reasonable care to ensure that such is the case), the information contained in this Offering Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information.

The initial purchasers make no representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this offering memorandum. Nothing contained in this offering memorandum is, or shall be relied upon as, a promise or representation by the initial purchasers as to the past or future. We have furnished the information contained in this offering memorandum. The initial purchasers have not independently verified any of the information contained herein (financial, legal or otherwise) and assumes no responsibility for the accuracy or completeness of any such information. The Notes are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and the applicable securities laws of any state or other jurisdiction pursuant to registration or exemption therefrom. As a prospective purchaser, you should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. Please refer to the sections in this offering memorandum entitled “Plan of Distribution” and “Transfer Restrictions.” In making an investment decision, prospective investors must rely on their own examination of our business and the terms of the offering, including the merits and risks involved. Prospective investors should not construe anything in this offering memorandum as legal, business or tax advice. Each prospective investor should consult its own advisors as needed to make its investment decision and to determine whether it is legally permitted to purchase the securities under applicable legal investment or similar laws or regulations. In this offering memorandum, we rely on and refer to information and statistics regarding our industry and the economic condition of the countries where we operate. We have obtained this data from either our internal studies or publicly available sources such as independent industry publications and government sources. Although we believe that these publicly available sources are reliable, we have not independently verified and do not guarantee the accuracy and completeness of this information. This offering memorandum contains summaries believed to be accurate with respect to certain documents, but reference is made to the actual documents for complete information. All such summaries are qualified in their entirety by such reference. Copies of documents referred to herein will be made available to prospective investors upon request to us or the initial purchasers.

NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ANNOTATED (THE “RSA”) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B OF THE RSA IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. ______

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES Grupo Posadas, S.A.B. de C.V., or Posadas, is a sociedad anónima bursátil de capital variable (listed corporation with variable capital) and each of the guarantors is a sociedad anónima de capital variable (corporation with variable capital) organized under the laws of the United Mexican States, or Mexico. Substantially all of our directors and officers and certain of the experts named herein and the directors and officers of all guarantors are non-U.S. residents, and all or a significant portion of the assets of those persons may be, and substantially all of our assets and the assets of the guarantors are, located outside the United States of America, or United States. As a result, it may not be possible for investors to effect service of process outside Mexico upon such parties or to enforce against such parties judgments predicated upon civil liability provisions of the U.S. federal or state securities laws. We have been advised by Curtis, Mallet-Prevost, Colt & Mosle, S.C., our special Mexican counsel, that no treaty exists between the United States and Mexico for the reciprocal enforcement of judgments issued in the other country. Generally, Mexican courts would enforce final judgments rendered in the United States if certain requirements are met, including the review in Mexico of the U.S. judgment to ascertain compliance with certain basic principles of due process and the non-violation of Mexican law or public policy; provided that U.S. courts would grant reciprocal treatment to Mexican judgments. Additionally, we have been advised by Curtis, Mallet-Prevost, Colt & Mosle, S.C. that there is doubt as to the enforceability, in original actions in Mexican courts, of liabilities predicated solely on the U.S. federal securities laws and as to the enforceability in Mexican courts of judgments of U.S. courts obtained in actions predicated upon the civil liability provisions of the U.S. federal securities laws. In the event that proceedings are brought in Mexico seeking to enforce our or our guarantors' obligations under the Notes, we would not be required to discharge such obligations in a currency other than the Mexican peso. Pursuant to Mexican law, an obligation in a currency other than Mexican pesos, which is payable in Mexico, may be satisfied in Mexican pesos at the rate of exchange in effect on the date on which payment is made. Such rate of exchange is currently determined by Banco de México (Mexican Central Bank) and published in the Federal Official Gazette. Upon declaration of insolvency (concurso mercantil), payment obligations under the Notes (a) would be converted to Mexican pesos at the exchange rate prevailing at the time of such declaration and subsequently converted into Unidades de Inversión (inflation-indexed units), or UDIs, (b) would cease accruing interest, (c) would be paid at the time claims of all creditors are satisfied, (d) would be paid depending upon the outcome of insolvency proceedings and (e) would not be adjusted to consider the depreciation of the Mexican peso against the U.S. dollar occurring after such declaration of insolvency.

WHERE YOU CAN FIND MORE INFORMATION So long as any Notes remain outstanding, we will make available, upon request, to any holder and any prospective purchaser of Notes the information required pursuant to Rule 144(A)(d)(4)(i) under the Securities Act, during any period in which we are not subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act. You may obtain a copy of the indenture that governs the Notes by requesting it in writing or by telephone at the address and phone number below:

Grupo Posadas, S.A.B. de C.V. Attention: Corporate Finance Department Prol. Paseo de la Reforma 1015, Torre A, Piso 9 Colonia Santa Fe, Delegación Álvaro Obregón 01210, México, D.F. México Telephone number: (52 55) 5326 6757

We have applied to list the Notes on the Official List of the Luxembourg Stock Exchange and to trade the Notes on the Euro MTF Market. See “General Listing Information.” We will comply with any

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undertakings assumed or undertaken by us from time to time to the Euro MTF Market in connection with the Notes, and we will furnish to them all such information as the rules of the Luxembourg Stock Exchange may require in connection with the listing of the Notes. Our principal executive offices are located at Prol. Paseo de la Reforma 1015, Torre A, Piso 9, Colonia Santa Fe, Delegación Álvaro Obregón, México, D.F., México 01210, and our telephone number is (52 55) 5326-6700. Additional information about our company and our operations can be found at our website at http://www.posadas.com. Information available on our website is not a part of, nor is it incorporated by reference into, this offering memorandum.

PRESENTATION OF FINANCIAL AND OPERATING INFORMATION Grupo Posadas, S.A.B. de C.V. is a sociedad anónima bursátil de capital variable (listed corporation with variable capital) organized under the laws of Mexico and is a holding company that conducts business itself and through its subsidiaries. In this offering memorandum, except when indicated or the context otherwise requires, the words “Posadas,” “Grupo Posadas,” the “Company,” “we,” “us,” “our” and “ours” refer to Grupo Posadas, S.A.B. de C.V. together with its consolidated subsidiaries. For purposes of this offering memorandum, we refer to hotels we operate to which we hold title or in which we have an equity interest of 50% or greater in the titleholder as our “owned hotels,” hotels we operate in which we have a leasehold interest as our “leased hotels,” hotels we operate for unrelated third parties (i.e., hotels other than our owned or leased hotels) and hotels we have franchised under a new scheme launched in 2014 as our “managed and franchised hotels” or our “managed-only hotels.” We have entered into management contracts with all of the hotels that we operate, pursuant to which we receive management and other fees. The management fees we receive from our owned and leased hotels are paid to us on substantially the same basis as fees we receive from unrelated third parties with respect to our managed hotels. With respect to our owned and leased hotels, we receive revenues from hotel operations in addition to management fee revenues. Under International Financial Reporting Standards, or IFRS, issued by the International Accounting Standards Board, or IASB, pursuant to the criteria established in IAS 27, Consolidated and Individual Financial Statements, revenues generated by the fees that our owned and leased hotels pay to us are eliminated from our consolidated statements of comprehensive income (loss). For additional information relating to the consolidation of our financial statements and the methods of intercompany elimination employed in such consolidation, see note 4.c to our consolidated audited financial statements. Financial information This offering memorandum includes our audited consolidated financial statements for the years ended December 31, 2012, 2013 and 2014 and for each of the three years in the period ended December 31, 2014, or audited financial statements, and our unaudited condensed consolidated interim financial statements as of March 31, 2015 and for the three months ended March 31, 2014 and 2015, or unaudited interim financial statements. On January 1, 2012, we began preparing our consolidated financial statements, including presentation of comparable annual statements for the prior year, in accordance with IFRS in order to comply with regulations promulgated by the CNBV. IFRS differ in certain significant respects from accounting principles generally accepted in the United States of America, or U.S. GAAP. We have not prepared a reconciliation of our audited consolidated financial statements and related footnotes between IFRS and U.S. GAAP and have not quantified such differences. The CNBV requires that we prepare and disclose our financial information through the Bolsa Mexicana de Valores, S.A.B. de C.V. (the Mexican Stock Exchange) in conformity with IFRS. Our unaudited interim financial statements have been prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting as issued by the IASB, applicable to the preparation of interim financial statements. In making an investment decision, investors must rely upon their own examination of Posadas, the terms of the offering and the financial statements and other information included herein. Potential investors should consult their own advisors for an understanding of the differences between IFRS and U.S. GAAP and how those differences might affect the financial information herein. Rounding Certain figures included in this offering memorandum and in our financial statements have been rounded for ease of presentation. Percentage figures included in this offering memorandum have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to

rounding. For this reason, percentage amounts in this offering memorandum may vary from those obtained by performing the same calculations using the figures in our financial statements. Certain numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them due to rounding. EBITDA This offering memorandum also includes our earnings before interest, taxes and depreciation and amortization, or EBITDA, which we calculate by adding depreciation and amortization to our consolidated operating income (loss) as determined in accordance with IFRS, as applicable. EBITDA is not a measure recognized under IFRS or under U.S. GAAP, does not have a standardized meaning and may not be comparable to similarly titled measures provided by other companies either in Mexico or in other jurisdictions. In addition, we have not calculated EBITDA in accordance with the guidelines adopted by the SEC on presentation of non-GAAP financial measures. Moreover, our manner of calculating EBITDA in this offering memorandum may not be the same as the way in which we will calculate EBITDA for purposes of compliance with the covenants set forth in the indenture governing the Notes. We disclose EBITDA because we use it as a measure of our consolidated operating performance. EBITDA should not be considered in isolation or as a substitute for net income or loss or as an indicator of operating performance or cash flow or as a measure of liquidity or our ability to service debt obligations. Currency information We publish our financial statements in Mexican pesos. Unless otherwise specified or the context otherwise requires, references in this offering memorandum to “pesos” or “Ps.” are to Mexican pesos. Also, unless otherwise specified or the context otherwise requires, we present pesos in this offering memorandum in thousands of pesos. Unless otherwise specified or the context otherwise requires, references in this offering memorandum to “U.S. dollars,” “$” or “U.S.$” are to United States dollars. Solely for the convenience of the reader, certain amounts presented in Mexican pesos in this offering memorandum as of and for the year ended December 31, 2014 and the three months ended March 31, 2015 have been converted into U.S. dollars at specified exchange rates. Unless otherwise indicated, the exchange rate used for purposes of these convenience translations is the exchange rate published by the Banco de México in the Federal Official Gazette for the payment of obligations denominated in non-Mexican currency payable in Mexico (the “Official Exchange Rate”) as of such dates. You should not construe our conversions as representations that the Mexican peso amounts actually represent the U.S. dollar amounts presented, or that they could be converted into U.S. dollars at the specified rate or at the dates indicated or at all. Industry and market data Unless otherwise noted, market data and other statistical information used throughout this offering memorandum are based on our estimates, which are derived from our review of internal surveys and independent industry publications, government publications, and reports by market research firms or other published independent sources, including, reports and analyses prepared by Smith Travel Research, the World Tourism Organization and the Secretaría de Turismo (Ministry of Tourism) of the Mexican federal government. Although we believe our sources, including our estimates, are reliable, we have not independently verified the information and cannot guarantee its accuracy or completeness.

FORWARD-LOOKING STATEMENTS This offering memorandum includes forward-looking statements within the meaning of the U.S. securities laws. These forward-looking statements include, but are not limited to, statements about our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets where we participate or are seeking to participate and other statements contained in this offering memorandum that are not historical facts. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “should” or “will” or the negative of such terms or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements expressed or implied by such forward-looking statements to differ materially from historical results or those anticipated. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. These risks, uncertainties and other factors include, among other things, those listed under “Risk Factors” as well as those included elsewhere in this offering memorandum and include, but are not limited to: • general economic and political conditions, including global geopolitical events, recently promulgated structural reforms in Mexico, and the impact of security issues related to crime in Mexico and the countries where we currently operate or intend to operate in the future; • supply and demand changes for hotel rooms and vacation club memberships in our markets; • competition with other hotel operators in the markets in which we operate, as well as with third parties offering lodging services through various digital and web-based distribution channels; • the financial condition of the airline industry and its impact on the lodging industry; • availability, or increases in prices, of construction and remodeling materials and changes in the relationship with our suppliers or in the level of quality of our contractors; • the impact of government regulations and resolutions, including land use, tax, health, safety and environmental laws; • litigation or other disputes involving us and our guests, employees or suppliers or governmental authorities or any other third party; • risks related to our business, our strategy, our expectations about growth in demand for our services, our expectations as to our ability to increase the number of hotels, hotel rooms and Vacation Club inventory we manage and our business operations, financial condition and results of operations; • statements of our plans, objectives or goals, including our ability to implement our strategy; • failure of our information technology systems, including data, communications and distribution systems; • the effect of changes in accounting principles; • capital markets volatility; • performance of financial markets and our ability to secure financing on competitive terms for our growth or to refinance our financial obligations as needed; • currency fluctuations and inflation in the countries in which we operate; • restrictions on foreign currency convertibility and remittance outside of Mexico;

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• the impact of natural events, such as earthquakes, tsunamis, hurricanes and floods; and • health pandemics, such as the 2009 H1N1 influenza outbreak. These factors could cause our actual results, performance or achievements to differ materially from those in the forward-looking statements. These forward-looking statements speak only as of the date of this offering memorandum and we undertake no obligation to update our forward-looking statements or risk factors to reflect new information, future events or otherwise. Additional factors affecting our business emerge from time to time and it is not possible for us to predict all of these factors, nor can we assess the impact of all such factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Although we believe that the plans, intentions, and expectations reflected in or suggested by such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. In addition, you should not interpret statements regarding past trends or activities as assurances that those trends or activities will continue in the future. While we continually review trends and uncertainties affecting our results of operations and financial condition, we do not intend to update any particular forward-looking statements contained in this offering memorandum.

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SUMMARY This summary contains basic information about us and this offering. Because it is a summary, it does not contain all of the information that you should consider before investing. You should read this entire offering memorandum carefully, including the section entitled “Risk Factors” and our financial statements and the notes thereto incorporated by reference herein, before making an investment decision. Overview

We are the largest and one of the fastest growing hospitality companies in Mexico, with 133 hotels, resorts and vacation properties in our portfolio comprising 22,021 rooms. In the nearly 45 years since opening our first hotel, we have defined the hospitality industry in Mexico and established a portfolio of 10 highly recognizable brands. Our flagship brands, Fiesta Americana and Fiesta Americana Grand, are the most recognized hotel brands in Mexico. Our middle-scale brand, Fiesta Inn, is among the largest brands in its category across Mexico based on total number of rooms. In the luxury, lifestyle resort category, our Live Aqua brand is among the highest regarded of our brands and we expect to further bolster its profile in the coming years through development initiatives that are currently in process. Of our 133 hotels, 17 are owned, 13 are leased, 99 are managed-only hotels and four are franchised. Our hotels are located in a mix of urban and coastal destinations serving both leisure and business travelers across Mexico, with approximately 82% of our rooms located in urban destinations and 18% in coastal destinations. Currently we have more than 13,000 employees serving our guests on a daily basis at our properties and in our corporate headquarters and over 1.5 million members in our loyalty programs, which position us among the leading hospitality providers in Mexico. Our shares are listed on the Mexican Stock Exchange under the ticker “POSADAS” with a market capitalization as March 31, 2015 of Ps.14,283.0 million or U.S.$942.5 million. We are the leading operator of hotels in Mexico based on number of rooms, geographic coverage and market share. We distinguish ourselves from other operators by offering hotel owners superior management and franchise services including centralized reservation and distribution networks, marketing programs, revenue-optimization tools, data gathering and customer relationship management capabilities, web-based guest satisfaction systems, robust customer loyalty programs and strong, well- defined brands. According to our internal market studies, as of December 31, 2014, we were the leading hotel operator in Mexico with 27% of the total managed hotel rooms in the country. Our Fiesta Americana, Fiesta Inn and One Hotels brands rank first with 23%, 35% and 58% of the total managed rooms in the upscale, middle-scale and economy classes, respectively. In the luxury class, our Fiesta Americana Grand and Live Aqua brands rank second and sixth, respectively, with 18% and 7% of the total luxury managed rooms in Mexico, respectively. We have achieved a leadership position by implementing strategies and following opportunities that have allowed us to grow consistently, with a diversified and balanced portfolio of owned, leased, managed and franchised hotels, in both urban and coastal destinations. As part of our corporate strategy, we have continued to focus on our core strategic markets and strengthening of our overall company risk profile. We believe that our ongoing shift to a more asset-light business model, in combination with our leading position in the Mexican market, enhances our ability to become more resilient to industry cycles while also providing us with flexibility to take advantage of future growth opportunities. We also operate a vacation club business through Fiesta Americana Vacation Club (FAVC). FAVC markets and sells memberships that grant a 40-year, point-based right to use vacation club resorts that we own and operate in resort destinations in Mexico, including Los Cabos, Puerto Vallarta, Cancún, Acapulco, Kohunlich and Cozumel, as well as other affiliated properties around the world. We also offer a vacation club product called Kivac, which consists of the sale of points which may be redeemed within five years of sale for accommodation in any of our hotels. Kivac was created to generate a new distribution channel for our hotels’ unused inventory and targets a market for which FAVC membership may be too expensive or long in duration. Kivac has proven to be very popular in the mid-scale market, particularly in urban locations. In 2013, we launched a new product called The Front Door within our

Vacation Club business line which is similar to the FAVC product but targets a more exclusive and luxury market. Collectively, our Vacation Club business represented 34.1% and 37.6% of our revenues for the year ended December 31, 2014 and for the three months ended March 31, 2015, respectively. In addition, we have successfully developed management services and technology platforms to support our hotel operating business, by establishing a number of related services businesses and units to support our core business lines: Ampersand manages loyalty programs for diverse related and unrelated businesses; Konexo provides call center and contact services for related and unrelated businesses; and Conectum offers business process outsourcing services, or shared services, for diverse industries. Collectively, the Ampersand, Konexo, and Conectum services businesses represented 5.8% and 7.2% of our revenues for the year ended December 31, 2014 and for the three months ended March 31, 2015, respectively. Together with the strategic expansion of our hotel operations and vacation club business, we have sought to build strong, well-positioned brand names and to foster customer recognition through consistency of service. We believe we have a unique mix of strong hotel brands within the 3, 4 and 5-star tiers, providing a range of options for our customers. We consider our brands to be one of our greatest assets. We operate substantially all of our hotels in Mexico under the Fiesta Americana, Fiesta Americana Grand, Fiesta Inn, One Hotels, Live Aqua, Gamma and The Explorean brand names. Our Hotel Brands • Fiesta Americana and Fiesta Americana Grand are our flagship brands. We currently operate 22 hotels under these brands, including five hotels under the Fiesta Americana brand devoted to the FAVC. Hotels operating under these brands offer deluxe, large scale, full-service accommodations to the high-end leisure traveler segment in coastal destinations and to the high-end business traveler segment in major urban centers. We currently operate three hotels under the Fiesta Americana Grand brand. The Fiesta Americana hotels are upper-scale class hotels, and the Fiesta Americana Grand hotels are luxury class hotels. According to the Mexican classification system, Fiesta Americana properties are five-star hotels and Fiesta Americana Grand properties are Gran Turismo hotels, which exceed the five-star category. The hotels range from approximately 80 to 650 rooms. The Fiesta Americana and Fiesta Americana Grand brands represented, as of March 31, 2015, 22.5% of our total hotel rooms. Approximately 24.0% of the hotels in our development pipeline will be operated under the Fiesta Americana and Fiesta Americana Grand brands. We are currently redesigning our Fiesta Americana and Fiesta Americana Grand concept logo and décor and have begun remodeling our hotels to reflect the updated look. • Fiesta Inn hotels are middle-scale class hotels offering modern, comfortable accommodations and efficient service primarily to the domestic and regional business traveler segment. We position our Fiesta Inn properties as business class hotels. According to the Mexican classification system, Fiesta Inn properties are four-star hotels. We currently operate 62 hotels in Mexico under the Fiesta Inn brand, and these hotels are normally located in small, mid-size or main urban destinations or suburbs of major urban areas. Fiesta Inn hotels compete primarily with other moderately priced Mexican and international chains, as well as with moderately priced Mexican independent hotels. The hotels range from approximately 90 to 220 rooms. The Fiesta Inn brand represented, as of March 31, 2015, 41.8% of our total hotel rooms. Approximately 26.0% of the hotels in our development pipeline will be operated under the Fiesta Inn brand. • One Hotels is an innovative chain of economy class hotels in Mexico that offers guests a modernly designed and comfortable accommodation at an affordable rate. The warm atmosphere, efficient service and functional design is ideal for business travelers who desire a convenient location and restful accommodations at an accessible price. According to the Mexican classification system, One Hotels properties are three-star hotels. One Hotels compete primarily with other economy class independent hotels. We currently operate 36 hotels under the One Hotels brand. The hotels range from approximately 100 to 140 rooms. The One Hotels brand represented, as of March 31,

2015,19.8% of our total hotel rooms. Approximately 34.0% of the hotels in our development pipeline will be operated under the One Hotels brand. • Live Aqua is an upscale, luxury, lifestyle resort hotel brand. The Live Aqua concept seeks to create a memorable experience through pampering details–including fine dining, aromatic scents, spirit-renewing sanctuaries and comfortable settings–and superior service. According to the Mexican classification system, Live Aqua properties are lifestyle hotels. We have two Live Aqua hotels, the 371-room Live Aqua hotel in Cancún and the 135-room Live Aqua in the exclusive business district of Bosques de las Lomas in Mexico City. In 2015, we entered into an exclusive license contract for use of the Live Aqua brand in the United States. As a result of this alliance, we expect to receive income from royalties and other related services from the hotels to be developed in the United States. The Live Aqua brand represented, as of March 31, 2015, 2.3% of our total hotel room inventory. Approximately 8.0% of the hotels in our development pipeline will be operated under the Live Aqua brand. • Gamma is a new brand which targets independent hotel owners and is based on a franchise model. According to the Mexican classification system, Gamma properties are four-star hotels. The hotel owners have two options under this brand: (i) an operating plan and license under which we assume hotel operations on their behalf, or (ii) a pure franchise model under which they maintain their own operation but we offer them access to the distribution and marketing systems of our Fiesta Americana and Fiesta Inn brands. As of March 31, 2015, six hotels operated under our Gamma brand, representing 4.2% of our total hotel rooms. Approximately 8.0% of the hotels in our development pipeline will be operated under the Gamma brand by Fiesta Inn. • The Explorean is a brand directed at international and domestic tourists with a focus on adventures accessible to a wide range of people. According to the Mexican classification system, The Explorean properties are five-star hotels. We have two Explorean hotels, one in Cozumel and one in Kohunlich, ranging from 40 to 56 rooms. The Explorean brand represented, as of March 31, 2015, 0.4% of our total hotel room inventory. Our ongoing growth will be driven by increasing the number of properties managed and franchised under our brand portfolio. This strategy means allocating capital expenditure to certain selected expansion projects and focusing on investing in the maintenance of already existing properties. In particular, as of the date of this offering memorandum, we plan to expand in Mexico primarily by operating and franchising 38 additional hotels with 5,964 rooms. This will represent an approximately 27.0% increase in the number of rooms we offer, with 56.0% of the new rooms corresponding to our economy and business brands, including the Gamma brand under Fiesta Inn. Of these hotels, three will operate as a Live Aqua, three as Fiesta Americana Grand, five under the Fiesta Americana brand, one as FAVC, 10 under the Fiesta Inn brand, three under the new Gamma brand as Fiesta Inn and 13 under the One Hotels brand. In keeping with our strategy of operating a greater number of hotels with minimum investment, we plan to be the operator or franchiser of these new rooms through franchise, management and lease agreements with third party investors. We estimate that total investment for this development plan in Mexico will be approximately U.S.$567 million, of which we estimate that we will contribute approximately 15.3% or U.S.$87 million, mainly from our cash flow generation and by contributing in kind certain of our existing owned real estate assets to the development of such plan, with the remainder contributed by the owners of the hotels we will manage and franchise. We anticipate opening these hotels within 24 months following the date of this offering memorandum. Since 2013, we have made significant investments in development projects for the enhancement of our Fiesta Americana and Fiesta Americana Grand brands. We have also designed and launched Fiesta Inn Loft for extended-stay travelers, and designed Fiesta Inn Express, which offers a more limited range of services and infrastructure than Fiesta Inn but maintains the same quality standards with respect to rooms and common areas. We have also developed the design and implemented the necessary infrastructure to provide hotel franchise services under our brands, including the Gamma brand.

Our Other Brands • Fiesta Rewards is our hotels’ customer loyalty program. Launched in 1989, Fiesta Rewards was the first customer loyalty program developed in Mexico, and today we believe it is Mexico’s largest hotel loyalty program based on redemption numbers. The program is point-based and offers points for every hotel stay. Points can, in turn, be redeemed for a variety of rewards including free hotel stays, airline tickets, car rentals, electronics, clothing and fashion products. Fiesta Rewards has established partnerships with American Airlines AAdvantage, Avis, Accor Le Club, American Express, Thanks Again and other programs and companies for use in our Fiesta Rewards program. As of March 31, 2015, our Fiesta Rewards program had approximately 1.5 million members. Fiesta Rewards represents approximately 34.0% of the occupancy of all of our hotels and is one of the most important competitive advantages of our urban hotels. Fiesta Rewards also has a co-branded credit card with Banco Santander, the Santander-Fiesta Rewards Card, which has over 133,000 cardholders in Mexico and also generates points to be redeemed in our program. • Fiesta Americana Vacation Club is the vacation club business within our hospitality portfolio. FAVC members receive an annual allocation of points that they can redeem over a period of 40 years to stay at our FAVC properties, any of our managed hotels, and through FAVC’s affiliation with Resorts Condominium International (RCI), Hilton Hotels Corp. and any RCI-affiliated or Hilton Grand Vacation Club Resort throughout the world. As of March 31, 2015, FAVC had over 30,600 members. • Kivac is a vacation club product that we launched in 2010 and consists of the sale of points that may be redeemed within five years of sale for accommodations in any of our hotels or in certain other hotels. As of March 31, 2015, Kivac had over 20,000 members. • The Front Door is our new luxury vacation club business. The Front Door provides similar services to FAVC with a particular focus on a more exclusive and luxury market. The Front Door members can redeem their annual allocation of points to stay at our apartments in Marina Vallarta and Cozumel dedicated to this business line, as well as other upscale properties managed by us and other properties affiliated with The Registry Collection throughout the world. As of March 31, 2015, The Front Door had approximately 270 members.

We have also developed synergistic services businesses which, as of March 31, 2015, represented 7.2% of our revenues and include: • Ampersand, which operates our loyalty program management business for diverse related and unrelated businesses; • Konexo, which provides call center and customer care solutions for related and unrelated businesses; and • Conectum, which offers business process outsourcing services, or back office shared services, for diverse industries. Our Competitive Strengths Although we operate in a highly competitive environment, we believe that we have a number of competitive strengths that differentiate us from our competitors and position us well in the market segments in which we operate. We believe that the following are the key highlights of our competitive position: • Leading hotel operator in Mexico. We believe we are the leading operator of hotels in Mexico based on number of rooms, geographic coverage and market share. Our strength is a result of our diversified brand portfolio and investments. We operate hotels in Mexico City and in 59 other cities in Mexico. Our diverse portfolio allows us to obtain a better penetration in urban areas and offer our managed services to top regional hotels.

• Unique mix of strong hotel brands and diversified portfolio of properties. We believe that we benefit from strong brand recognition in Mexico. Our brands are recognized as providing high-value accommodations in desirable locations. For example, 50 of our properties have received the Certificate of Excellence by TripAdvisor in 2015. According to Millward Brown Dynamic Tracking 2015, our Fiesta Americana and Fiesta Inn brands are within the top three hotel brands in Mexico in terms of brand consideration, which is an indicator based on the percentage of people who have expressed that a particular brand would be either their first choice or one that they would seriously consider for their next trip. Our diversified brand portfolio targets a range of market segments throughout Mexico—including business and leisure travelers in urban destinations in upscale, moderately priced categories, and groups, conventions and leisure travelers in urban and coastal destinations. In addition to benefiting from Mexico’s position as the 10th leading destination in the world for tourism, our portfolio is positively impacted by the growth in foreign direct investment in urban areas of Mexico related to diverse economic sectors such as automotive, energy and manufacturing. • Highly scalable and efficient operating model. In recent years we have been able to expand our hotel business mainly by increasing our operation of hotels developed with investment capital provided by third parties. Our movement from a capital-intensive business model towards a service-focused business model has allowed us to significantly reduce our capital expenditures and reposition ourselves as an asset-light company with a highly scalable and efficient operating structure. • Proprietary state-of-the-art technological infrastructure. We have invested and continue to invest in technology platforms to achieve greater operating efficiencies, enhanced distribution capabilities and revenue management tools. We believe that these investments have made our distribution network competitive with most international hotel companies, which has given us a strong advantage over our Mexican competitors. We have reduced our distribution costs by centralizing and consolidating the room inventory data from our entire hotel portfolio into a repository solution called the Inventario Central Posadas (Posadas Central Inventory), or ICP, which allows us easy access to revenue management and inventory data. We have enhanced our profitability through real-time dynamic pricing of our room inventory. Of the total reservations at our managed hotels, 77% are received through our voice and web-based direct distribution channels at a very competitive average cost, while 23% are received through indirect third-party channels, including wholesalers, global distribution systems and online travel agencies, allowing us to maximize revenue. We have also achieved cost reductions by centralizing and consolidating accounting, payroll, strategic sourcing and receivables processing. We believe we are one of the few hotel operators in the industry that has developed such systems. We have created our systems in partnership with technology industry leaders such as Oracle, Savvis, Pros and VFM Leonardo, among others. • Preeminent vacation club offering significant synergies. Our Vacation Club business enhances the profitability of our existing core hotel portfolio by leveraging synergies stemming from both businesses. Since its inception, FAVC has provided us with a new market niche, replicating the business model followed by major global chains. FAVC has allowed us to reduce cyclicality in our coastal properties due to its flexibility and create a loyal client base that values high-end service. We also extended the vacation club concept with the implementation of Kivac, which has generated a new distribution channel for our hotels’ unused inventory and targets a market for which FAVC membership may be too expensive or long in duration. In addition, since 2013 with the launch of our new product called The Front Door within our Vacation Club business line, we provide a similar service to the FAVC product but with a particular focus on a more exclusive and luxury market.

• Mexico’s largest loyalty program based on redemption numbers and a portfolio of value-creating ancillary service-based businesses. We have created a loyal customer base through our Fiesta Rewards guest loyalty program. As of March 31, 2015, our Fiesta Rewards program had approximately 1.5 million members. Fiesta Rewards has established partnerships with American Airlines AAdvantage, Avis, Accor Le Club, American Express, Thanks Again and other programs and companies for use in our Fiesta Rewards program. Our Fiesta Rewards program allows us to retain valued customers while generating stable cash flows during cyclical periods. Fiesta Rewards also has a co-branded credit card with Banco Santander, the Santander-Fiesta Rewards Card, which has over 133,000 cardholders in Mexico and also generates points to be redeemed in our program. We have capitalized on our position as the leading hotel operator in Mexico by marketing our management skills and technology platform, originally developed to support our hotel operating business, and establishing a number of value-creating services businesses that set us apart from the industry. • Consistent market outperformer. The effectiveness of our overall strategy and our business model, as well as the success of our distribution and loyalty programs, is supported by our consistent outperformance of our competitors in the Mexican market, as reflected in our occupancy and RevPAR data. The average occupancy at our managed hotels has consistently been higher than occupancy at hotels managed by our competitors in Mexico. For the twelve month period ended March 31, 2015, the occupancy average at our managed hotels, excluding new hotel openings during such twelve month period, was 64%, compared to 58% for the Mexican market’s average. Historically, the RevPAR penetration average at our managed properties has been over 100% and, for the three month period ended March 31, 2015, our RevPAR penetration average was 112%. • Highly respected and influential management team. Our management team has extensive industry expertise and is well respected among peers and investors. With some of the lowest turnover rates in the industry, our management team has been able to reduce organizational volatility, thereby facilitating our pursuit of longer-term goals and objectives. Our Chairman, Pablo Azcárraga Andrade, and our Chief Executive Officer, José Carlos Azcárraga Andrade, have been with us 30 years and 24 years, respectively, and members of our top management team collectively have an average of 18 years of industry experience. Our Business Strategy Our long-term strategic plan is to continue to be the leading hotel operator and a major tourism- related services provider in Mexico. We focus on maximizing shareholder value and return on capital by optimizing the use of our talent, third party management contracts, real estate and advanced proprietary operating systems. As part of our portfolio management strategy, we continuously examine our business units to address issues of market dynamics, demand, supply and competition. Several of our key strategies are highlighted below: • Continue to consolidate and expand our hotel network through the addition of long-term hotel management and franchise contracts. An important part of our growth strategy is to utilize our strong brand recognition, solid reputation, centralized resources and extensive management experience to enter into additional hotel management and franchise contracts and, by extension, reduce our investment in owned hotels. We believe that we are an attractive option for hotel owners who seek profitable investments with a stable revenue stream. Management and franchise contracts with hotels owned by third parties, including hotels that we lease from third parties, help improve our profitability by generating revenue streams with minimal additional capital investment by us. As of the date of this offering memorandum, our development pipeline is comprised of plans to operate 38 new hotels with 5,964 rooms, which will represent an

increase of approximately 27.0% in our total number of rooms. Approximately 60.0% of these hotels are Fiesta Inn and One Hotels, which are our economy and budget-brand tiers and 8.0% of these hotels are Gamma hotels which are our franchised hotels. We estimate our pipeline hotels to represent a total investment of U.S.$567 million, of which we estimate that we will contribute approximately 15.3% or U.S.$87 million, mainly from our cash flow generation and by contributing in kind certain of our existing owned real estate assets to the development of such plan, with the remainder contributed by the owners of the hotels we will manage and franchise. We anticipate opening these hotels within 24 months following the date of this offering memorandum. • Continue to increase capital efficiency. The continued shift to an asset-light model and a focus on our Mexican operations has resulted in reduced operational risk, as well as diminished capital expenditure requirements. Furthermore, the sale in 2012 of our South American hotel operations for approximately U.S.$278 million, in combination with the sale to FibraHotel of 14 of our hotels in 2013 and the sale of two additional hotels in 2014 by a subsidiary in which we held a non-controlling interest and the sale of our corporate headquarters, have provided us with significant proceeds that have helped to reduce our overall indebtedness. Lastly, we are currently in the process of reprofiling debt to reschedule our existing maturities, which will further help to improve our capital structure. We expect that these initiatives, paired with greater EBITDA, will provide additional financial flexibility to achieve our strategy as well as enhance our shareholder returns. • Continue to enhance our operational efficiency. We are in the process of implementing an internal corporate restructuring in order to reorganize the number of our subsidiaries and the functions that some of them perform in our structure and to transform the Company into a stock holding company and therefore transfer, to the extent possible, our hotel management, brand licensing and franchising businesses to one or more of our subsidiaries which will, as a result of such transfer, receive the revenues from such operations. We expect that this corporate restructuring will allow us to reduce the number of our subsidiaries to 37 from 142, consolidate our hotel operations and payroll activities in a single entity, eliminate 70% of our intercompany transactions and close 273 bank accounts. This corporate restructuring is expected to be completed in 2016. As of the date of this offering memorandum, we have completed six mergers. In addition, we implement strategies and make investments aimed at improving our operational procedures and reducing our operating costs, including redirecting bookings at our properties from third-party intermediaries which charge us booking fees to our own reservation systems and reducing headcount to avoid redundancy. • Continue to penetrate the moderately priced business traveler segment. We have successfully addressed the needs of the domestic and regional business traveler, and our success has allowed us to diversify our operations. We believe the domestic business travel segment continues to be underserved and represents attractive growth opportunities to us going forward. In 1993 we began to serve this segment in Mexico through our Fiesta Inn brand. Building on the success of Fiesta Inn, in 2007 we launched One Hotels, an economy class line in Mexico, catering to business travelers with lower budgets. We currently operate 62 Fiesta Inns and 36 One Hotels serving this market segment. We plan to continue expanding our Fiesta Inn brand in the moderately priced business traveler segment and to expand our One Hotels economy class budget brand, primarily through third-party owned hotels, by opening 10 Fiesta Inn hotels (including 2 Fiesta Inn Loft hotels) and 13 One Hotels within 24 months following the date of this offering memorandum. • Continue to develop our vacation club portfolio. We have been able to build a solid and profitable vacation club business by leveraging our brand positioning. Our strong brand names have helped us significantly increase our customer base while providing our customers a unique experience with unparalleled flexibility. We believe that the vacation club business enhances the profitability of our existing asset base by leveraging

synergies stemming from both businesses. We will selectively continue converting, developing and constructing resorts or new vacation club units in appealing destinations. We currently have seven vacation club resorts in Acapulco, Los Cabos, Cancún, Kohunlich, Puerto Vallarta and Cozumel. A recent example of our innovative approach to the vacation club business is our new product called The Front Door within our Vacation Club which was launched in 2013 and complements our previously existing FAVC and Kivac vacation club programs. • Enhance the guest experience. We believe our knowledge of our guests’ preferences and patterns grants us a significant competitive advantage. For more than 20 years, we have consistently invested in customer loyalty programs, such as our Fiesta Rewards program, thereby creating repeat users of our hotels. Using the knowledge of our customers as a foundation, we have built a detailed database that feeds into our proprietary guest experience customer relationship management system, which allows us to anticipate each customer's pre-stay, in-stay and post-stay needs, preferences and desires. This platform allows us to tailor our services to each guest based on experience, thus creating a unique bond with our customers. In addition, we closely monitor and study global trends in the hotel industry in terms of customer experience and seek to improve our customers’ stay at our properties by providing unique attention to their needs through our selection of furniture, beds, pillows, services and food and beverages. We have also implemented a service culture which is focused on creating out of the ordinary and spontaneous experiences with bespoke elements and details based on each client. • Use our leading sector and geographical expertise to selectively develop and acquire strategic assets. Our management team possesses significant market knowledge, an average of 18 years of industry experience and strong relationships within the Mexican real estate and hospitality sector. We intend to identify opportunistically unique asset acquisitions that are consistent with our overall risk profile, as well as our asset-light strategy. We have successfully partnered with FibraHotel, Fibra Danhos and FibraUno, three Mexican REITs whose stock trades on the Mexican Stock Exchange, with whom we have entered into real estate sale and purchase, leasing and hotel management transactions in connection with our business, and we have successfully renewed our management contracts with many of the owners of the hotels we have operated throughout the years. • Focus on strengthening the core capabilities of our services platforms. We have successfully designed and developed specific services platforms, such as Ampersand, Konexo and Conectum, to support our day-to-day operations and, to a lesser extent, offer our management experience to third parties. We intend to continue strengthening and developing these services platforms through marginal investments. Concurrent Tender Offer Concurrently with this offering, we are inviting holders of our outstanding 7.875% Senior Notes due 2017 (the “Existing Notes”) to sell their Existing Notes for a U.S. dollar amount of cash financed through the issuance of the Notes (the “Concurrent Tender Offer”). We are also undertaking a consent solicitation (the “Consent Solicitation”) to solicit consents in order to amend certain terms and conditions of the indenture among us, the subsidiary guarantors party thereto, and The Bank of New York Mellon, as trustee, dated November 30, 2012, governing the terms of the Existing Notes. Holders of Existing Notes that participate in the Concurrent Tender Offer will be required to deliver consents in the Consent Solicitation. Holders that tender their Existing Notes and deliver consents at or prior to 5:00 p.m. New York City time, on June 24, 2015 will receive an amount equal to U.S.$1,060 for every $1,000 of principal tendered and accepted for purchase. Holders that tender after such date but at or prior to the expiration time of the Concurrent Tender Offer will only receive U.S.$1,030 for every $1,000 of principal tendered and accepted for purchase as consideration for their acceptance of the Concurrent Tender Offer, though such holders will still be required to consent to the amendments to the indenture. The settlement of the Concurrent Tender Offer is conditioned, among other things, on (i) our receipt of sufficient proceeds in this offering to pay the applicable consideration to holders of Existing Notes who tender their securities

pursuant to the Concurrent Tender Offer and to pay the expenses of the Concurrent Tender Offer and (ii) the tender by holders of at least a majority in aggregate principal amount of the Existing Notes, which is required to approve the proposed amendments to the indenture governing the Existing Notes, through the delivery of the consents pursuant to the Consent Solicitation. This offering memorandum is not an offer to purchase the Existing Notes. Recent Developments On January 15, 2015, we repaid the remaining U.S.$51.7 million principal amount outstanding of our 9.250% Senior Notes due 2015, or 2015 Senior Notes. The payment was made with the proceeds of the November 28, 2014 issuance of U.S.$47.2 million of Euro commercial paper maturing on November 18, 2015 with an annual interest rate of 6.0% and other cash from operating activities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. In 2015, we entered into an exclusive license contract for use of the Live Aqua brand in the United States. As a result of this alliance, we expect to receive income from royalties and other related services from the hotels to be developed in the United States. During 2015, we have opened six hotels representing a total of 927 rooms, of which three are One Hotels under operating contracts and three are Gamma hotels under a franchise contract. In addition, one Gamma hotel under an operating contract became a franchised hotel. In 2015, we reached a partial settlement with the federal tax authorities of Mexico with respect to the audit of our subsidiary Turística Hotelera los Cabos Siglo XXI, S.A. C.V. The Mexican tax authorities determined a potential tax credit of Ps.243.5 million. The adoption of a conclusive agreement was requested before the office of the Attorney General for Taxpayer Protection (Tax Ombudsman) and we reached a preliminary agreement with the Servicio de Administración Tributaria (the Mexican Tax Administration Service), or SAT to pay Ps.41.8 million in order to settle the total claim. As of March 31, 2015, we had paid Ps.18.6 million of the settlement amount; the payment of the remaining Ps.23.2 million is still pending approval from SAT. On June 2, 2015, we called an ordinary shareholders’ meeting which was held on June 18, 2015, where our shareholders approved this offering. Corporate Headquarters Our principal executive offices are located at Prol. Paseo de la Reforma 1015, Torre A, Piso 9, Colonia Santa Fe, Delegación Álvaro Obregón, México, D.F., México 01210, and our telephone number is (52 55) 5326-6700. Additional information about our company and our operations can be found on our website at http://www.posadas.com. Information available on our website is not a part of, nor is it incorporated by reference into, this offering memorandum. Our corporate structure chart is set forth under “Business—Organizational Structure.”

SUMMARY OF THE OFFERING Issuer ...... Grupo Posadas, S.A.B. de C.V. Notes Offered ...... U.S.$350,000,000 aggregate principal amount of 7.875% senior notes due 2022. Issue Price ...... 100.000% of the principal amount. Maturity ...... June 30, 2022. Interest Payment Dates ...... June 30 and December 30 of each year, commencing December 30, 2015. Indenture ...... The Notes will be issued under an indenture, to be dated as of June 30, 2015, between us and The Bank of New York Mellon, as trustee. Guarantees ...... The Notes will be jointly and severally guaranteed by certain of our existing and future wholly owned direct and indirect Mexican subsidiaries. See “Business—Organizational Structure” and “Risk Factors—Risks Relating to the Notes.” Ranking ...... The Notes will be our senior unsecured obligations and will rank equally with all of our other unsecured senior indebtedness, except for our obligations that are preferred by statute, and senior to all of our subordinated indebtedness. The guarantees of the guarantors will be the senior unsecured obligations of the guarantors and will rank equally with all of the guarantors’ other senior indebtedness, except for their obligations that are preferred by statute, and senior to all of the guarantors’ subordinated indebtedness. The Notes and the guarantees will be structurally subordinated in right of payment to all of our and the guarantors’ secured indebtedness to the extent of the value of the assets securing such indebtedness, and the Notes and the guarantees will also be structurally subordinated in right of payment to all liabilities, including trade payables, of our subsidiaries that are not guarantors. As of March 31, 2015, after giving pro forma effect to the sale of the Notes offered hereby, the Concurrent Tender Offer and the application of the gross proceeds thereof, all as described under “Use of Proceeds,” our total consolidated indebtedness would have been U.S.$ 415.1 million. Applying the same pro forma effect, we and the guarantors would have had no secured debt outstanding, while the total indebtedness of our non-guarantor subsidiaries would have been approximately U.S.$2.6 million which is structurally senior to the Notes. In addition, as of March 31, 2015, the guarantors represented 79.0% and 83.2% of our consolidated revenues and total assets respectively, for the three months ended March 31, 2015. Optional Redemption ...... Prior to June 30, 2019, we may redeem the Notes, in whole or in part, at a redemption price based on a “make-whole” premium, and on or after June 30, 2019, at the redemption prices set forth in “Description of the Notes—Optional Redemption”. Prior to June 30, 2018, we may redeem up to 35% of the aggregate principal amount of the Notes with the proceeds from certain qualified equity offerings. The redemption may, at our discretion,

be subject to one or more conditions precedent. See “Description of the Notes–Selection and Notice of Redemption.” Redemption for Tax Reasons ...... We may redeem the Notes at a redemption price equal to 100% of their principal amount, plus accrued interest, and any additional amounts thereon, in whole but not in part, upon giving not less than 30 or more than 60 days’ notice if, as a result of • any change in, or amendment to, the laws, rules or regulations of any Relevant Jurisdiction (as defined in “Description of the Notes—Redemption for Tax Reasons”) or taxing authority thereof or therein; or • any amendment to or change in any (or any subsequently enacted) official interpretation, application or pronouncement regarding such laws, treaties rules or regulations, which are of general applicability; we or any guarantor would be obligated to pay additional amounts in respect of the Notes, in excess of those payable at a rate of 4.9%. See “Description of the Notes—Redemption for Tax Reasons.” Restrictive Covenants ...... The indenture governing the Notes contains certain covenants, which, among other things, restrict our and our restricted subsidiaries’ ability to: • incur additional indebtedness; • grant liens; • make restricted payments; • make certain investments; • sell assets; • permit restrictions on the ability of restricted subsidiaries to declare dividends; • enter into certain types of transactions with affiliates; and • merge or consolidate with other companies or transfer all or substantially all of our assets. These covenants are subject to a number of limitations and exceptions. See “Description of the Notes—Certain Covenants.” Change of Control Offer ...... If we experience a change of control, holders of the Notes may require us to repurchase all or part of the Notes at 101% of their principal amount, plus accrued and unpaid interest and any additional amounts to the redemption date. See “Description of the Notes—Repurchase at the Option of Holders—Change of Control.” Transfer Restrictions ...... We have not registered the Notes under the Securities Act or any state securities laws, and we will not be required to do so. Consequently, the Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Pursuant to the Mexican Securities Market Law, the Notes may not be offered or sold publicly in Mexico but may be privately

offered in Mexico under the private placement exemption set forth in Article 8 of the Mexican Securities Market Law. Form of Notes and Clearance ...... The Notes will be issued in the form of one or more global notes in fully registered form, without interest coupons, in denominations of U.S.$150,000 and integral multiples of U.S.$1,000 in excess thereof. Each global note will be deposited with, or on behalf of, a custodian for The Depository Trust Company, or DTC, and registered in the name of DTC or its nominee. Beneficial interests in each global note will be shown on, and transfers will be effected only through, records maintained by DTC and its direct and indirect participants, and any such interest may not be exchanged for certificated notes, except in limited circumstances. Concurrent Tender Offer……………. Concurrently with this offering, we are inviting holders of the Existing Notes to sell their Existing Notes for a U.S. dollar amount of cash financed through the issuance of the Notes. We are also undertaking a Consent Solicitation to solicit consents in order to amend certain terms and conditions of the indenture governing the terms of the Existing Notes. Holders that tender their Existing Notes and deliver consents at or prior to 5:00 p.m., New York City time, on June 24, 2015 will receive an amount equal to U.S.$1,060 for every $1,000 of principal tendered and accepted for purchase. Holders that tender after such date but at or prior to the expiration time of the Concurrent Tender Offer will only receive U.S.$1,030 for every $1,000 of principal tendered and accepted for purchase as consideration for their acceptance of the Concurrent Tender Offer, although such holders will still be required to consent to the amendments to the indenture. The settlement of the Concurrent Tender Offer is conditioned, among other things, on (i) our receipt of sufficient proceeds in this offering to pay the applicable consideration to holders of Existing Notes who tender their securities pursuant to the Concurrent Tender Offer and to pay the expenses of the Concurrent Tender Offer and (ii) the tender by holders of at least a majority in aggregate principal amount of the Existing Notes, which is required to approve the proposed amendments to the indenture governing the Existing Notes, through the delivery of the consents pursuant to the Consent Solicitation. This offering is not an offer to purchase the Existing Notes. Listing ...... We have applied to list the Notes on the Official List of the Luxembourg Stock Exchange and to trade on the Euro MTF Market. Governing Law ...... The Notes, the guarantees and the indenture will be governed by the laws of the State of New York. Use of Proceeds ...... After deducting the discount and fees to the initial purchasers and the estimated offering expenses, we expect to use the net proceeds from the sale of the Notes first to purchase the Existing Notes that are validly tendered in the Concurrent Tender Offer and to pay the related tender fees and expenses, then to pay the U.S.$47.2 million principal amount outstanding of our Euro commercial paper maturing on November 18, 2015 and then for general corporate purposes. See “Use of Proceeds.”

Risk Factors ...... Investing in the Notes involves substantial risks. See the “Risk Factors” section beginning on page 22 for a description of certain of the risks that you should consider before investing in the Notes. Trustee, Registrar, Transfer Agent and Principal Paying Agent ...... The Bank of New York Mellon.

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING INFORMATION The following tables set forth our summary historical and other financial data as of and for the periods indicated. The summary historical financial data for the years ended December 31, 2012, 2013 and 2014 were derived from the audited consolidated financial statements as of and for the years then ended, as audited by Galaz, Yamakazi, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu Limited. Our audited consolidated financial statements have been prepared in accordance with IFRS. The summary historical financial data as of March 31, 2015 and for the three months ended March 31, 2014 and March 31, 2015 was derived from our unaudited condensed consolidated interim financial statements as of and for the periods then ended. Our unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS No 34, Interim Financial Reporting. With respect to our audited financial statements, comparability may be impacted as a result of the following: (i) the sale of our South American hotel operations in 2012, reflected as discontinued operations in our statement of comprehensive income (loss) for that year; and (ii) the sales of certain non- strategic assets in 2013 and 2014. Our financial statements and other financial information included in this offering memorandum, unless otherwise specified, are stated in pesos. The U.S. dollar amounts provided below are translations from the peso amounts, solely for the convenience of the reader. See “Presentation of Financial and Operating Information–Currency Information” for an explanation of the exchange rates used to translate peso amounts into U.S. dollars. These translations should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated or at any other rate. The following information is qualified by reference to, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes beginning on page F-1 of this offering memorandum. The historical results are not necessarily indicative of results to be expected in any future period.

Statements of Comprehensive Income (Loss) Data:

Year Ended December 31, 2012 2013 2014 2014 Ps. Ps. Ps. (U.S.$)(1) (in thousands, except as otherwise indicated)

Revenues: Hotel operation ……………………………………. 3,026,383 2,673,704 2,691,647 182,881 Hotel management, brand and other …………… 1,268,734 1,200,437 1,107,921 75,277 Vacation Club ……………………………………... 1,844,757 1,894,629 1,996,686 135,663 Sales of non-strategic properties 0 2,781,588 26,197 1,780 Other revenues ……………………………………. 25,827 1,755 6,139,874 8,550,358 5,848,278 397,355 Operating expenses: Hotel operation cost and expenses …………….. 1,069,259 1,007,563 1,004,529 68,252 Hotel management cost and expenses ………… 1,459,605 1,300,426 1,116,372 75,851 Vacation Club cost and expenses ………………. 1,250,621 1,429,250 1,520,736 103,325 Cost of sales of non-strategic properties ………. 0 2,216,418 26,197 1,780 Administrative ……………………………………... 240,699 137,977 177,299 12,046 Sales, advertising and promotion ……………….. 130,342 110,563 105,726 7,183 Maintenance and energy ………………………… 331,797 292,641 288,674 19,614 Property taxes and insurance …………………… 29,560 25,329 23,130 1,572 Corporate expenses ……………………………… 212,070 247,157 256,202 17,407 Depreciation and amortization …………………... 431,511 420,057 409,265 27,807 Impairment of assets ……………………………... 0 894,831 0 0 Real estate leasing ……………………………….. 331,154 326,513 329,761 22,405 Other expenses, net ……………………………… 30,989 183,213 45,669 3,103 5,517,607 8,591,938 5,303,560 360,345 Operating income (loss) …………………….. 622,267 (41,580) 544,718 37,010 Interest expense ……………………………………….. 610,174 393,659 417,669 28,378 Interest income …………………………………………. (27,139) (110,875) (22,509) (1,529) Commissions and financial expenses ……………….. 173,847 57,711 60,763 4,128 Exchange result, net (3) ……………………………….. (152,200) 29,996 427,934 29,076 Effects of valuation of financial instruments (4) …….. (80,613) (2,209) 0 0 524,069 368,282 883,857 60,053 Equity in results of associated companies …………... (2,119) (4,863) (12,595) (856) Income (loss) before income tax ………….. 96,079 (414,725) (351,734) (23,898) Income tax expense (benefit) ….……………………… 616,559 1,161,883 (1,061,257) (72,106) Consolidated income (loss) from continuing operations ………………………………………………. (520,480) (1,576,608) 709,523 48,208 Income (loss) from discontinued operations, net of income tax ………………………………………………. 1,876,044 (181,206) 8,718 592

Consolidated net income (loss) ……………. 1,355,564 (1,757,814) 718,241 48,800

Three months ended March 31, 2014 2015 2015 Ps. Ps. (U.S.)(2) (in thousands, except as otherwise indicated)

Revenues: Hotel operation ………………………………………………. 644,303 751,624 49,598 Hotel management, brand and other ……………………… 247,056 331,338 21,864 Vacation Club ………………………………………………… 450,921 658,411 43,447 Other revenues ………………………………………………. 2,560 11,730 774 1,344,840 1,753,103 115,683 Operating expenses: Hotel operation cost and expenses ………………………... 242,660 271,116 17,890 Hotel management cost and expenses …………………… 273,135 303,923 20,055 Vacation Club cost and expenses …………………………. 374,755 487,442 32,165 Administrative ………………………………………………… 33,698 47,081 3,107 Sales, advertising and promotion ………………………….. 27,282 36,531 2,411 Maintenance and energy ……………………………………. 72,348 71,896 4,744 Property taxes and insurance ………………………………. 6,125 7,781 513 Corporate expenses …………………………………………. 57,238 83,035 5,479 Depreciation and amortization ……………………………… 95,937 87,822 5,795 Real estate leasing ………………………………………….. 82,068 96,980 6,400 Other expenses, net …………………………………………. 25,241 3,596 237 1,290,487 1,497,203 98,798 Operating income ……………………………….. 54,353 255,900 16,886 Interest expense …………………………………………………... 97,317 109,620 7,234 Interest income ……………………………………………………. (7,695) (15,233) (1,005) Commissions and financial expenses …………………………... 12,236 16,062 1,060 Exchange result, net (3) ………………………………………….. (8,727) 127,346 8,403 93,131 237,795 15,692 Equity in results of associated companies ……………………... (6,382) 0 0 Income (loss) before income tax …………………….. (45,160) 18,105 1,195 Income tax expense (benefit) ……………………………………. (13,548) 72,594 4,790 Consolidated loss from continuing operations …………..…….. (31,612) (54,489) (3,596) Loss from discontinued operations, net of income tax ……….. (537) (69) (5)

Consolidated net loss .………..……………………….. (32,149) (54,558) (3,600)

Statements of Financial Position Data:

As of December 31, 2012 2013 2014 2014 Ps. Ps. Ps. (U.S.$)(1) (in thousands, except as otherwise indicated) Assets Current assets: Cash and cash equivalents ……………………………………...... 1,431,867 706,365 997,792 67,794 Investments in securities ……………………………………………… 48,110 525,351 519,073 35,268 Accounts and notes receivable, net …………………………………. 1,704,108 2,251,204 2,627,080 178,494 Inventories ……………………………………………………………… 44,375 35,803 34,068 2,315 Prepaid expenses ……………………………………………………… 77,370 121,866 133,311 9,058 Vacation Club inventory ………………………………………………. 70,395 105,996 286,968 19,498 Other current assets ……………………………………………...... 21,268 35,383 27,733 1,884 Assets classified as held for sale ……………………………………. 1,364,958 0 50,910 3,459 Total current assets …………………………………………………… 4,762,451 3,781,968 4,676,935 317,770 Long-term notes receivable, net ………………………………...... 1,355,028 1,513,309 1,726,722 117,320 Long-term accounts receivable ………………………………...... 319,938 396,679 0 0 Vacation Club inventory in construction …………………………….. 272,600 239,944 303,150 20,597 Property and equipment, net (5) ………………………………...... 7,367,586 6,337,625 6,267,293 425,825 Investment in shares of associated companies ……………………. 40,300 35,437 1,879 128 Other assets ………………………………...... 130,496 214,415 269,362 18,302 Deferred tax assets ………………………………...... 72,610 4,933 Total non-current assets ……………………………………………… 9,485,948 8,737,409 8,641,016 587,105 Total assets …………………………………………………………….. 14,248,399 12,519,377 13,317,951 904,875

Liabilities and stockholders’ equity Current liabilities: Bank loans and current portion of long-term debt ………………….. 1,005,842 2,498 1,449,957 98,516 Trade accounts payable ………………………………………………. 381,355 348,327 400,101 27,184 Other liabilities and accrued expenses ……………………………… 954,872 784,931 806,166 54,774 Income tax payable …………………………………………………… 45,203 597,538 280,272 19,043 Deferred income of Vacation Club …………………………………… 29,266 45,069 65,344 4,440 Current portion of long-term value-added tax ………………………. 111,945 101,703 133,539 9,073 Derivative financial instruments ……………………………………… 19,798 0 0 0 Liabilities directly associated with assets classified as held for sale 514,816 0 6,423 436 Total current liabilities (6) …………………………………...... 3,063,097 1,880,066 3,141,802 213,467 Long-term liabilities: Debt (7) …………………………………………………………………. 4,059,456 4,555,080 4,432,316 301,149 Accrued liabilities ……………………………………………………… 170,011 276,050 343,898 23,366 Value-added tax payable ………………………………………...... 156,796 165,051 248,719 16,899 Deferred income of Vacation Club …………………………………. 256,000 394,198 508,858 34,574 Income tax payable …………………………………………………… 99,359 702,233 533,148 36,224 Deferred income tax ………………………………………………….. 1,220,783 1,158,482 0 0 Total long-term liabilities ……………………………………………… 5,962,405 7,251,094 6,066,939 412,212 Total liabilities ………………………………………………………….. 9,025,502 9,131,160 9,208,741 625,679 Stockholders’ equity: Contributed capital: Capital stock …………………………………………………………… 489,427 495,937 495,937 33,696 Contributions for future capital increases …………………………… 17,523 12,516 12,516 850 Share repurchase reserve ……………………………………………. 133,509 133,509 16,800 1,141 Shares held in trust ……………………………………………………. (3,322) (3,322) 0 0 Additional paid-in capital ……………………………………………… 25,451 157,429 157,429 10,696 662,588 796,069 682,682 46,384 Earned capital: Share repurchase reserve …………………………………………… 559,371 559,371 535,556 36,388 Retained earnings …………………………………………………….. 3,609,315 1,776,394 2,645,031 179,714 Accumulated other comprehensive income items …………………. 15,138 25,982 27,244 1,851 4,183,824 2,361,747 3,207,831 217,953

As of December 31, 2012 2013 2014 2014 Ps. Ps. Ps. (U.S.$)(1) (in thousands, except as otherwise indicated)

Total controlling interest ……………………………………………… 4,846,412 3,157,816 3,890,513 264,337 Non-controlling interest ………………………………………………. 376,485 230,401 218,697 14,859 Total stockholders’ equity ……………………………………………. 5,222,897 3,388,217 4,109,210 279,196 Total liabilities and stockholders’ equity ……………………………. 14,248,399 12,519,377 13,317,951 904,875

Other Financial Data: EBITDA (8) ....…………………………………………………………. 1,053,778 1,273,308 953,982 64,817 Other Operating Data:(9) ADR (10) ……..……………………………………………………….. 984 1,040 1,108 75 RevPÄR (11) ..…………………………………………………………. 633 670 703 48 Occupancy (12) ..………………………………………………………. 64.3% 64.4% 63.5% 63.5%

Liabilities and stockholders’ equity Current liabilities: Bank loans and current portion of long-term debt (6) ………… 714,980 47,180 Trade accounts payable …………………………………………. 393,816 25,987 Other liabilities and accrued expenses ………………………… 1,013,111 66,853 Income tax payable ………………………………………………. 278,189 18,357 Deferred income of Vacation Club …………………………….. 363,738 24,002 Current portion of long-term value-added tax …………………. 111,397 7,351 Liabilities directly associated with assets classified as held for sale 4,109 271 Total current liabilities ………………………………………. 2,879,340 190,003 Long-term liabilities: Debt (7) ……………………………………………………………. 4,576,024 301,964 Accrued liabilities ………………………………………………… 349,173 23,041 Value-added tax payable ………………………………………... 243,284 16,054 Deferred income of Vacation Club …………………………….. 562,267 37,103 Income tax payable ………………………………………………. 542,433 35,794 Total long-term liabilities …………………………………… 6,273,181 413,957 Total liabilities ……………………………………………….. 9,152,521 603,959 Stockholders’ equity: Contributed capital: Capital stock ………………………………………………………. 495,937 32,726 Contributions for future capital increases ……………………… 12,516 826 Share repurchase reserve ………………………………………. 16,800 1,109 Shares held in trust ………………………………………………. 0 Additional paid-in capital ………………………………………… 157,429 10,388 682,682 45,049 Earned capital: Share repurchase reserve ………………………………………. 535,556 35,340 Retained earnings ………………………………………………... 2,599,281 171,522 Accumulated other comprehensive income items ………….… 27,076 1,787 3,161,913 208,649 Total controlling interest …………………………………… 3,844,595 253,698 Non-controlling interest …………………………………………. 198,083 13,071 Total stockholders’ equity ………………………………… 4,042,678 266,769

As of March 31, 2015 Ps. (U.S.$)(2) (in thousands, except as otherwise indicated)

Total liabilities and stockholders’ equity ……………………… 13,195,199 870,729

Other Financial Data: EBITDA (8) ....…………………………………………………… 343,722 22,682

Other Operating Data:(9) ADR (10) ………..………………………………………………… 1,218 80 RevPÄR (11) ..……………………………………………………. 760 50 Occupancy (12) ..…………………………………………………. 62.4% 62.4%

(1) Converted into U.S. dollars, solely for the convenience of the reader, using an exchange rate of Ps.14.7180 per U.S. dollar, the Official Exchange Rate in effect on December 31, 2014. These conversions should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the specified rate or at the dates indicated or at all. See “Exchange Rates.” (2) Converted into U.S. dollars, solely for the convenience of the reader, using an exchange rate of Ps.15.1542 per U.S. dollar, the Official Exchange Rate in effect on March 31, 2015. These conversions should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the specified rate or at the dates indicated or at all. See “Exchange Rates.” (3) With respect to our historical financial data, we have the following currencies:

Currency Country Recording Functional Reporting

Mexico Mexican pesos Mexican pesos Mexican pesos United States of America U.S. dollar U.S. dollar Mexican pesos Brazil Brazilian reais Brazilian reais Mexican pesos Argentina Argentine pesos Argentine pesos Mexican pesos Chile Chilean pesos Chilean pesos Mexican pesos

(4) Reflects the effect of adjustments to fair value in connection with certain of our derivative financial instruments. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources— Market Risk Disclosure—Derivative Financial Instruments.” (5) Net of accumulated depreciation. (6) Current liabilities include bank loans and current portion of long-term debt and other payable and accrued liabilities. (7) Long-term debt does not include equity instruments. (8) We calculate EBITDA by adding depreciation and amortization to our consolidated operating income (loss) as determined in accordance with IFRS. EBITDA is not a measure of financial performance under IFRS and should not be considered as an alternative to net income as a measure of operating performance or to cash flow from operations as a measure of liquidity. The following table sets forth the reconciliation between EBITDA to operating income (loss) under IFRS, as applicable, for each of the periods presented. Years ended December 31, Three months ended March 31, 2012 2013 2014 2014 2014 2015 2015 Ps. Ps. Ps. (U.S.$)(1) Ps. Ps. (U.S.$)(2) (in thousands) Operating income (loss)... 622,267 (41,580) 544,718 37,010 54,353 255,900 16,886 Depreciation and 431,511 420,057 409,265 27,807 95,937 87,822 5,795 amortization ...... 894,831

EBITDA ...... 1,053,778 1,273,308 953,982 64,817 150,290 343,722 22,682

(9) Includes only data for hotels in Mexico. (10) ADR, or average daily rate per room, is determined by dividing total room revenues for the period indicated by total room nights sold during such period. (11) RevPAR is calculated as ADR multiplied by the occupancy rate (equivalent to dividing total room revenues by total room nights available for sale). (12) Occupancy is determined for a period by dividing total room nights sold during the period by total rooms available for each day during the period.

The following table sets forth the number of our hotels by type of hotel, the number of available rooms by type of hotel, the number of our hotels by brand and the number of available rooms by brand, in each case, as of December 31, 2012, 2013 and 2014, as of March 31, 2014 and 2015, and as of June 25, 2015:

As of As of As of December 31, March 31, June 25, 2012 2013 2014 2014 2015 2015 Number of Hotels ...... 105 110 127 115 131 133 Owned hotels ...... 29 16 17 16 17 17 Managed hotels ...... 60 79 97 85 98 99 Leased hotels ...... 16 15 13 14 13 13 Franchised hotels --- - 34 Number of available rooms ...... 17,871 18,943 21,094 19,623 21,742 22,021 Owned hotels ...... 6,210 4,811 4,817 4,811 4,817 4,817 Managed hotels ...... 8,851 11,575 14,002 12,397 14,169 14,295 Leased hotels ...... 2,810 2,557 2,275 2,415 2,275 2,275 Franchised hotels --- - 481 634 Number of hotels ...... 105 110 127 115 131 133 Live Aqua ...... 2 2 2 2 22 Fiesta Americana(1) ...... 16 17 17 17 17 17 Fiesta Americana Vacation Club ...... 6 6 7 6 77 Fiesta Inn(2) ...... 61 60 62 61 62 62 One Hotels ...... 18 23 33 27 35 36 Gamma ...... 0 0 4 0 67 Other Brands(3) ...... 2 2 2 2 22 Number of available rooms ...... 17,871 18,943 21,094 19,623 21,742 22,021 Live Aqua ...... 506 506 506 506 506 506 Fiesta Americana(1) ...... 4,616 4,865 4,889 4,889 4,889 4,889 Fiesta Americana Vacation Club ...... 1,206 1,607 1,613 1,607 1,613 1,613 Fiesta Inn ...... 8,867 8,676 9,091 8,842 9,091 9,091 One Hotels ...... 2,260 2,873 4,061 3,363 4,312 4,438 Gamma ...... 0 0 518 0 915 1,068 Other Brands(3) ...... 416 416 416 416 416 416

(1) Includes hotels operating under the Fiesta Americana Grand brand. (2) The figures as of December 31, 2014, March 31, 2015 and as of June 25, 2015 do not include 2 hotels operating under the Fiesta Inn Loft brand. (3) Hotels operating under the Holiday Inn and Ramada brands.

RISK FACTORS

You should review and consider carefully the following risk factors, as well as all the other information presented in this offering memorandum, before purchasing the Notes. The risks and uncertainties described below are not the only ones that we face. Additional risks and uncertainties that we are not aware of or that we currently think are immaterial, or that in our judgment do not reach the level of materiality that merits disclosure, may also impair our business operations. Any of the following risks, if they were to occur, could materially and adversely affect our business, results of operations, prospects and financial condition. In that event, the market price and liquidity of the Notes could decline and you could lose all or part of your investment. This offering memorandum also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the following risks faced by us and the risks described elsewhere in this offering memorandum. Risks Relating to Our Hotel and Vacation Club Business Global economic conditions and their effects on global credit markets and the economies of Mexico and the countries of origin of our customers could adversely affect our business. A global economic crisis and its effects may adversely affect our business, financial condition and operating results. An economic downturn may decrease demand for our services and products, prevent our customers from meeting their commitments, or limit the ability of the owners of hotels we operate to build the hotels we have agreed to operate, maintain ownership of their properties or make required investments on a timely basis, thus impacting our results and profitability. In addition, substantial increases in air and ground travel costs, and decreases in airline capacity arising primarily from reduced or consolidated flights have also contributed to a reduction in demand for our hotel rooms and our vacation club villas. These economic conditions may also negatively affect the financial markets, thereby causing high volatility and an increase in the cost of available financing resources. Due to the above and for other reasons, we may face higher financing costs or difficulties in raising financing to fund our operations, investments and acquisitions or to refinance our indebtedness. In addition, these economic conditions may adversely affect the airlines, bus common carriers and other transportation businesses which would negatively impact the lodging industry. Accordingly, our financial results were impacted by the economic slowdown in 2010, 2011 and 2012, and although we have recently witnessed a recovery, we have not yet returned to 2008 levels. Our financial results as well as our growth may be further impaired if this global economic crisis recurs, affecting the general condition and liquidity of our business. The risk of an economic downturn in the United States, Europe or other countries may cause the residents of those countries to change their spending patterns, such as postponing or cancelling travel plans, which may be reflected in lower occupancy rates in our hotels, especially in coastal destinations with a greater influx of tourists from the United States, such as Cancún and Los Cabos. As of the date of this offering memorandum, approximately 18% of our hotel rooms are located in coastal destinations, and the remaining 82% in urban destinations. The gross domestic product growth rate of the United States in 2013 and 2014 was reported at 2.2% and 2.4%, respectively, and inflation was at 1.0% and 0.8%, respectively. As of the date of this offering memorandum, we own one hotel in the United States in southern Texas. A high percentage of the hotel rooms we manage are in luxury hotels or in hotels in locations which have been particularly impacted by the recent economic slowdown, which has had and may continue to have a significant adverse effect on our results of operations and financial condition. Approximately 25% of the rooms we manage currently, excluding our Fiesta Americana Vacation Club units, are in hotels that we classify as deluxe or luxury hotels. Deluxe or luxury hotels generally

command higher room rates. In an economic downturn, these hotels may be more susceptible to a decrease in revenues, as compared to hotels in other categories that have lower room rates, since hotels in this segment generally target business and high-end leisure travelers. In periods of economic difficulties, such as the recent economic downturn, business and leisure travelers have sought to reduce travel costs by limiting trips or seeking to reduce costs on their trips. Adverse economic conditions could have a material adverse effect on our results of operations and financial condition. We may be adversely affected by the concentration of our activities in a single industry and the concentration of the owners of the hotels we operate. Our operations are principally concentrated in a single industry—hotel and services—and our current strategy consists of staying focused on this industry and other related business, such as the vacation club, management of loyalty programs, contact centers and centralized management. We have undergone a consolidation process of the owners of the hotels under our management and single ownership groups own significant numbers of hotels operated by us. There is a potential for a concentration of ownership of the hotels we operate under our brands by any single owner. While the risks associated with such ownership are no different than exist generally (i.e., the financial position of the owner, the overall state of the relationship with the owner and its participation in optional programs), they are more concentrated. This consolidation and dependency risk may also affect, among others, our negotiation and operating capabilities and our operational margins. Approximately 38% of the total room inventory under our management is owned by FibraHotel, Fibra Danhos and FibraUno, three Mexican REITs whose stock trades on the Mexican Stock Exchange and which may encounter liquidity problems to maintain their hotels in optimum conditions. This may affect our brands and our revenue. In addition, another 21% of the total room inventory under our management is owned by owners with more than one hotel each. The geographic concentration of our hotels in Mexico exposes us to any adverse developments specifically affecting Mexico. All but one of our hotels are located in Mexico. Such geographic concentration exposes our operating results to events or conditions which specifically affect Mexico, such as local and regional economic, political, social, climate-related and other conditions. Adverse developments that specifically affect Mexico may have a material adverse effect on our results of operations and financial condition. Although our hotel rooms in Mexico are diversified to serve the urban and coastal segments and vacation as well as business travelers, we are significantly dependent on our operations in Mexico, a market in which we have high penetration, as 99% of the rooms we operate representing 99% of our revenues are located in Mexico. The failure of our Mexican operations to perform according to the plans and strategies we have designed could have a material adverse effect on our operations, financial condition or overall operating results. In addition, the perception of violence at national and international levels may adversely affect travelers’ decisions to travel to certain locations in Mexico or to make plans to stay at our hotels. Epidemics can affect our hotel occupancy. The hotel industry is also susceptible to any type of health development that could directly affect the flow of national and international tourists as well as the flow of business travelers, which may affect occupancy and consumption rates at the properties public we operate. Any outbreaks or recurrence of avian flu, SARS, H1N1 influenza or other adverse public health developments in Mexico may have a material adverse effect on our business operations. In April 2009, an outbreak of H1N1 influenza occurred in Mexico and the United States that spread to more than 70 countries. In Mexico, localized public-health measures were implemented as a result of outbreaks of H1N1 influenza, including travel bans, the closing of schools and businesses and cancellations of events. Similar epidemics could impact travel and lead to the implementation of additional public-health measures and result in reduced demand for places of public accommodation, such as our hotels, and negatively affect our business and results of operations. Any of the foregoing events or other unforeseen consequences of public health problems could adversely affect our business and results of operations.

We face competition for management, leasing and franchising agreements. When we seek to grow through increasing the number of hotel properties we manage, we face competition from other entities seeking the same opportunities. We compete with entities that have substantially greater marketing and financial resources than we do or that have better-recognized international brands than we do for opportunities to enter into management contracts and leases with hotel owners. In addition to the competition that we face for new opportunities, we are also subject to competition from other hotel companies when our existing management or lease contracts expire. Although in the past we have generally been successful in renewing our existing contracts, and in finding new properties to manage, there can be no assurance that we will continue to be as successful in the future. Competition may generally reduce the number of suitable growth opportunities available to us, increase the bargaining power of property owners and reduce our operating margins. In addition, the terms of management contracts and leases that we enter into in the future may not be as favorable as agreements that we have entered into previously. We have also decided to grow through the granting of franchises based on novel brands backed by traditional brands. This involves an entry into a new market for us and in which we are not a leader. Accordingly, we cannot assure you that we will be successful in the execution and operation of franchise contracts and, in general, competition in this market may decrease the number of growth opportunities in the future, increase the hotel owners’ negotiating leverage and reduce our operating margins. Our management contracts, leases and brand licensing agreements may be terminated or not renewed under various circumstances, which may have a material impact on our results of operations. Of the hotels that we managed as of March 31, 2015, 98 operated under a management arrangement we implement by entering into hotel management and brand licensing contracts. Under certain of our management contracts, the owner may discontinue our management of the property and terminate the contracts if specified performance standards at the hotel are not met or if we breach any substantial obligation under these agreements. Furthermore, under certain management contracts, we guarantee a minimum revenue to the owner of the hotel. As of March 31, 2015, no hotel management contract had been terminated early for this reason. In addition, although our hotel management contracts and/or leases ordinarily limit the owner’s ability to transfer or convey such hotels or to assign its rights to a third party and seek other protections, we cannot assure you that such transfer or conveyance will not occur nor that the third party to which the land or rights are conveyed will continue performing under such agreements. In 2013, the owner of the Fiesta Inn Monterrey Norte hotel lost title to the hotel and therefore the relevant management agreement was terminated before its term. Although certain of our management contracts in the past have not been renewed at the end of their term, we have not experienced any generalized material problems with respect to renewing our management or lease agreements, but we cannot assure you that the termination protections included in our management contracts and leases will prevail in our favor. The termination of management contracts as a result of hotel dispositions or our inability to renew such contracts on terms as favorable to us could have an adverse effect on our revenues. In addition, hotel owners may choose to allow our management contracts to expire. As of March 31, 2015, the average remaining term of our management contracts was 10.1 years. In addition, for certain of our owners, we do not have the right to assign a management contract to an unrelated third party without prior written consent of the relevant hotel owner. The termination of management contracts could have a material adverse effect on our results of operations. Hotel owners may not have sufficient financial resources to maintain the standards of the brand under which the hotels operate, which would adversely affect revenues from the hotels and the fees we receive based on such revenues. In addition, in cases where the owners have control over the hotels’ cash flow, they may withhold the payment of operating and capital expenditures related to such hotels, which would also affect the standards of the brand under which the hotels operate, adversely affecting the revenues from the hotels and the fees we receive based on such revenues.

We are exposed to risks related to our franchise contracts. Since 2015, we have begun to grow our business by granting franchises based on novel brands backed by traditional brands. This represents an entry into a new market in which we are not a leader. Therefore, we cannot guarantee our success in the execution and operation of franchise contracts. In this franchise business, the hotel owner or a third party other than us will manage the hotel’s operation under our brands and through our distribution platforms. We cannot provide assurance that we will succeed in our franchising business nor can we guarantee that our franchisees in this new segment will succeed. Our revenues may not be sufficient to cover our obligations under our lease agreements. Of the hotels we operate, we currently lease 13 hotels from third-party owners. We must comply with our lease obligations, including lease payment obligations and other obligations that require us to incur certain operating expenses, even if the hotel operation is not profitable. For the three months ended March 31, 2015, 6 of our 13 leased hotels during such period did not generate sufficient revenues to cover our lease payment obligations. Regardless of whether such hotels generate sufficient revenues to cover the respective lease payment obligations, we continue to make all required lease payments for our leased hotels. Our financial and operating condition may be adversely affected to the extent that our revenues and operating profits are not sufficient to cover our obligations under the lease agreements. Our growth strategy may not result in improvement in our results of operations. We have implemented a growth strategy for our hotel, vacation club and other service businesses in Mexico, the United States and, potentially, Latin America, which is primarily based on managing third- party hotels, franchise contracts with respect to third-party operated hotels and the construction of new buildings destined to be timeshare arrangements. Our ability to expand will depend on a number of factors including, but not limited to, the economic conditions of Mexico and the Americas, the ability of investors to construct new properties for us to lease and/or manage, the ability to enter into franchise contracts with respect to third-party operated hotels, the selection and availability of suitable locations for new hotels and the availability of financing. There can be no assurance that our expansion plans can be achieved, or that new hotels or vacation club resorts will meet consumer acceptance or be operated profitably. As part of our growth strategy, we have assumed obligations with respect to the development and refurbishment of owned and leased properties. A number of factors, including financing, regulatory or meteorological events, may affect their timely completion, which may in turn adversely affect our financial condition. We may expand our operations to the United States of America and other Latin American countries. In 2015, we entered into an exclusive license contract for use of the Live Aqua brand in the United States. The risks that may affect our ability to succeed in the markets in which we currently operate may also be present in and affect our ability to operate in new markets, and we may be exposed to additional risks inherent to those markets. We do not have the same knowledge or familiarity with respect to the new markets we may enter, which may affect our operating capacity and growth in such markets, thereby affecting our overall profitability. Our acquisitions, dispositions and investments in new brands or businesses may ultimately not prove successful and we may not realize anticipated benefits. We consider corporate as well as property acquisitions and investments that complement our business. In many cases, we compete for these opportunities with third parties who may have substantially greater financial resources or different or lower acceptable financial metrics than we do. There can be no assurance that we will be able to identify acquisition or investment candidates or complete transactions on commercially reasonable terms or at all. If transactions are consummated, there can be no assurance that any anticipated benefits will actually be realized. Similarly, there can be no assurance that we will be able to obtain additional financing for acquisitions or investments, or that the ability to obtain such financing will not be restricted by the terms of our debt agreements.

We periodically review our business to identify properties or other assets that we believe either are non-core, no longer complement our business, are in markets which may not benefit us as much as other markets during an economic recovery or could be sold at significant premiums. We are focused on restructuring and enhancing real estate returns and monetizing investments, and from time to time, may attempt to sell these identified properties and assets. There can be no assurance, however, that we will be able to complete dispositions on commercially reasonable terms or at all or that any anticipated benefits will actually be received. We also continue to develop new businesses related to offering third-party services, such as loyalty program management, management services and contact center services. We also entered into an exclusive license contract for use of the Live Aqua brand in the United States. There can be no assurance regarding the level of acceptance of this new brand or our investments in new businesses by the development and consumer marketplaces, that the cost incurred in developing and integrating new brands or investments will be recovered or that the anticipated benefits from these new brands or investments will be realized. We may not be able to decrease costs and successfully obtain certain operating efficiencies. We implement strategies and make investments aimed at improving our operational procedures and reducing our operating costs, including with respect to redirecting bookings at our properties from third-party intermediaries which charge us booking fees to our own reservation systems and reduction of headcount to avoid redundancy. We may be unable to reduce costs or attain efficiencies or be unable to confront the issues that may arise from implementing such operating changes, which could negatively affect our performance. The amount that we could be required to pay counterparties under the indemnifications and guarantees which we provide from time to time is uncertain. If these payments were to become significant, our future liquidity, capital resources or our credit risk profile could be adversely affected. From time to time, we enter into agreements that provide for indemnification and guarantees to counterparties in transactions involving sales of assets, sales of services, purchases and development of assets, securitization agreements and operating leases. For instance, in the October 10, 2012 disposition of our South American assets we were required to provide customary indemnifications to the purchaser and put approximately U.S.$32 million in escrow to cover such indemnifications. In September 2014, we executed an agreement to fully terminate the escrow guaranty related to the sale of our hotel operation business in South America, pursuant to which termination we received U.S.$16.6 million. The nature of many of these indemnifications and guarantees prevents us from making a reasonable estimate of the maximum potential amount that we could be required to pay counterparties. If these payments were to become significant, our future liquidity, capital resources and our credit risk profile could be adversely affected. Our services businesses may be disruptive to our hotel business. The operation of certain services businesses, such as Ampersand, Konexo and Conectum have, on a consolidated basis, represented less than 10% of our total revenues as of December 31, 2014 and as of March 31, 2015. These services businesses grew from our core competencies, which we have attempted to leverage to diversify our operations beyond the hotel industry. However, these companies are operated independently of our other business operations and there can be no assurances that these services businesses will continue to perform in accordance with our expectations. Moreover, our efforts to maintain and expand these services businesses are likely to divert management attention and resources. In addition, we rely on several of these businesses to perform certain critical functions, such as administering our Fiesta Rewards loyalty program, operating our call center and providing process outsourcing services such as accounting, payroll and technology services. If any of these companies ceased to provide their respective services to us, or if they provide them less effectively, our operations and financial condition would be adversely affected.

Our properties are subject to risks relating to force majeure and any such event could materially adversely affect our operating results. Our financial and operating performance may be adversely affected by force majeure, such as natural disasters, particularly in locations where we own and/or operate significant properties. Some types of losses, such as those from earthquakes, hurricanes, tsunamis, epidemics, terrorism and environmental hazards, may be either uninsurable or too expensive to justify insuring against and there may also be significant deductibles and certain caps on coverage. Any of these events could increase our capital expenditures for repairs of the properties we own. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. Although we believe that our properties are properly insured to a commercially reasonable extent, the damage that force majeure events may cause to our properties and the cost of the associated deductibles may materially affect our operations and revenue. We operate 24 hotels in locations which are and whose business is at risk of hurricanes (9 of them in Cancún, Cozumel and the Riviera Maya). In 2005, damage caused by Hurricane Wilma to one of the hotels which we lease in Cancún forced the owner to close the hotel and suspend our lease agreement until repairs were completed. The owner’s insurance policy did not cover consequential losses relating to a covered event, so we did not receive any income from that hotel during the two years it was closed. In September 2014, Hurricane Odile damaged part of the Fiesta Americana Grand Los Cabos hotel and the Fiesta Americana Vacation Club Villas. We estimate we will pay approximately U.S.$1.9 million for the deductibles corresponding to insurance for physical damages and loss profit. These deductibles will be offset from the recovered amounts. The coastal areas of Mexico are prone to hurricanes and flooding, such as the flooding that occurred in Acapulco in 2013 due to the tropical storm Manuel, and our financial condition will be affected if our hotels suffer damage from hurricanes or flooding, as well as from the loss of business due to hurricane activity or flooding in these areas. High criminality rates and the threat of violence may adversely and materially affect our results. High criminality rates, violence resulting from drug-trafficking activities and kidnappings have been experienced in several areas of Mexico, including areas in which we operate, and have been widely covered in the international media. Both tourists and business travelers have been and may continue to be deterred from traveling to Mexico or certain areas within Mexico in which we operate based on the current crime rates and our revenues and results of operations would be materially and adversely affected due to decreased travel and reduced demand for our businesses, especially in areas affected by such events. We have significant amounts of indebtedness coming due in each of the next several years, and we may not be able to secure refinancing on favorable terms or at all. We currently have a substantial amount of indebtedness. As of March 31, 2015, we had directly or indirectly Ps.5,291 million (U.S.$349.1 million) of total indebtedness. Of our total indebtedness as of March 31, 2015, approximately Ps.715 million (U.S.$47.2 million) was short-term indebtedness (including the current portion of long-term indebtedness), and approximately Ps.4,576 million (U.S.$302 million) was long-term indebtedness. We have a substantial amount of indebtedness maturing in the next several years. As of March 31, 2015, we had indebtedness with an aggregate principal amount of approximately Ps.712.8 million (U.S.$47 million) maturing in 2015, Ps.4,576 million (U.S.$302 million) maturing in 2017 and Ps.2.2 million (U.S.$0.1 million) maturing in 2018. Subject to the terms of the contractual restrictions binding on us at the time, we may also incur additional indebtedness in the future, including secured indebtedness. Historically, we have addressed our liquidity needs (including funds required to make scheduled principal and interest payments, refinance indebtedness, and fund working capital and planned capital expenditures) with operating cash flow, borrowings under credit facilities, proceeds of debt offerings and

proceeds from asset sales. The global credit markets have recently experienced significant price volatility, dislocations and liquidity disruptions, which have caused market spreads on prospective and outstanding debt financings to widen considerably. These circumstances have materially impacted liquidity in the financial markets, making terms for financings materially less attractive, and in several cases have resulted in the unavailability of certain types of financing. This volatility and illiquidity has negatively impacted a broad range of fixed-income securities. As a result, the market for fixed-income securities has experienced decreased liquidity, increased price volatility, credit downgrade events and increased defaults. These factors and the continuing market disruption have had, and may continue to have, an adverse effect on us, including on our ability to refinance indebtedness. In addition, continued uncertainty in the equity and credit markets may negatively impact our ability to access additional short- term and long-term financing, which would negatively impact our liquidity and financial condition. Downgrades of our credit ratings may increase our financing costs or otherwise adversely affect us. If our financial condition deteriorates, we may experience future declines in our credit ratings, with attendant consequences. A downgrade in our credit ratings could increase the cost of and/or limit the availability of financing, which may make it more difficult for us to raise capital when necessary. If we cannot obtain adequate capital on favorable terms or at all, our business, operating results and financial condition would be adversely affected. Our holding company structure requires us to rely substantially on payment from subsidiaries in order to meet our debt service obligations. We are a holding company and, as such, conduct a substantial portion of our operations through subsidiaries. See “Business—Operations.” Accordingly, we must rely on dividends, principal and interest payments on intercompany loans and other intercompany transfers of funds as well as management fees paid by our subsidiaries to us as the primary source of funds to pay our expenses and meet our debt service obligations, including our obligations under the Notes. The extent of such cash flows to us will depend on the results of operations and financial condition of our subsidiaries. In addition, payments and transfers of funds may be restricted by the terms of any indebtedness that may be incurred by our subsidiaries and by applicable law, including corporate and tax laws governing our subsidiaries and corporate laws governing asset distribution upon liquidation. Our rights and, therefore, our creditors’ rights with respect to the cash flow of our subsidiaries are subordinated to our subsidiaries’ creditors’ claims. Under Mexican law, Mexican companies may only pay dividends from profit included in annual financial statements approved by shareholders duly convened at a general ordinary shareholders' meeting after any and all prior existing losses have been offset by such profit and funds have been set aside for certain mandatory legal reserves. The inability of any or all of our subsidiaries to pay dividends or make other distributions directly or indirectly to us could have a material adverse effect on our financial condition and, as a result, on our ability to make payments in respect of the Notes. We intend to transform the Company into a stock holding company and therefore transfer, to the extent possible, our hotel management, brand licensing and franchising businesses to one or more of our subsidiaries which will, as a result of such transfer, receive the revenues from such operations. This could mean that we, as a holding company, may not directly own operational assets. We are in the process of implementing a corporate restructuring which entails risks. In 2014, we announced our intention to carry out an internal corporate restructuring in order to reorganize the number of our subsidiaries and the functions that some of them perform in our structure and to transform the Company into a stock holding company and therefore transfer, to the extent possible, our hotel management, brand licensing and franchising businesses to one or more of our subsidiaries which will, as a result of such transfer, receive the revenues from such operations. This could mean that we, as a holding company, may not directly own operational assets. This corporate restructuring is expected to be completed in 2016. We continue analyzing several aspects of our proposed corporate restructuring plan which may have an impact on the final corporate structure that will result from such restructuring. We are exposed to several risks, known and unknown to us, in connection with such restructuring related to, among others, opposition by our and our subsidiaries’ creditors, governmental and third-party approvals and consents, legal matters under Mexican and other applicable laws and fluctuations in our share price and taxation. Although we have sought the assistance of legal

counsel and other advisors, as appropriate, we cannot assure that we will be in a position to foresee and prevent all risks associated with our corporate restructuring. There can be no assurances that our restructuring will be completed or completed as proposed, that the implementation of our corporate restructuring will not be subject to delays or complications or entail unforeseen or unexpected costs which may affect our current operations and revenue and that the results and efficiencies that we are expecting as a result of such restructuring can be achieved. We are subject to significant claims under tax disputes in Mexico for which we do not maintain reserves. We are involved in various tax proceedings, including several tax disputes with federal tax authorities in respect of our operations. See “Business–Legal Proceedings–Tax Proceedings.” As of the date of this offering memorandum, the most relevant tax related proceeding relates to allegations by SAT that we failed to pay certain income taxes in fiscal year 2006 in connection with a trademark repatriation strategy. In connection with such dispute, SAT assessed a tax liability of Ps.767.2 million (U.S.$49.5 million). On July 7, 2014 we initiated and filed an administrative appeal for revocation in order to defend ourselves against the claim presented by SAT. If any of these claims are resolved unfavorably to us, we may ultimately be required to pay amounts levied together with certain interest, penalties and fees associated with our challenges, which could have a material impact on our business, financial condition and results of operations and cash flows. Tax proceedings pose a significant amount of unpredictability and, as a result, we cannot forecast the outcome of any of such proceedings, when they may be resolved or the final amounts that may be payable in connection therewith. We are audited by the Mexican tax authorities from time to time and may be subject to additional tax related claims in the future. Any such future claims, to the extent significant and resolved unfavorably to us, may also have an adverse impact on our business, financial condition, results of operations and cash flows. Tax legislation is often amended by the authorities. See “Management's Discussion and Analysis of Financial Condition and Results of Operations–Taxes.” These amendments or interpretations by the relevant authorities, which may differ from our own, may have a material impact on our business, financial condition and results of operations and cash flows. As discussed below, the Mexican Government has recently enacted changes to tax laws. See “Risk Factors–Mexican federal governmental policies could adversely affect our results of operations and financial condition.” We are exposed to risks related to litigation filed by or against us. We are subject to a number of legal actions in the ordinary course of business, as well as exposed to the risk of future litigation. See “Business–Legal Proceedings–Other Legal Proceedings.” As a property owner and manager of hotels, we are subject to accident claims, civil liability or other similar claims on behalf of our guests and employees. If such claims are not resolved in our favor, we may be liable for negligence with respect to incidents that occur in our hotels. As a hotel developer, we contract with and supervise third-party contractors during the construction of our hotels and such contractors and their employees may bring claims against us for various reasons. We may be subject to legal disputes or proceedings that involve our development sites and cannot ensure that we will not be held responsible for the claimed compensation. We do not currently maintain reserves for any legal proceedings. In addition, we are currently, and may in the future be, involved in other litigation or proceedings arising from claims with respect to our assets and operations, including claims on behalf of suppliers, neighbors and governmental authorities and labor issues. We cannot predict with certainty the ultimate outcome and related damages and costs of litigation and other proceedings filed by or against us. Adverse results in litigation and other proceedings may materially and adversely affect our business, operating results and financial condition. We are exposed to currency and interest rate risk on our debt, and we have entered into derivatives contracts in the past. In recent years, substantially all of our indebtedness has been denominated in U.S. dollars. As of March 31 2015, substantially all of our indebtedness was denominated in U.S. dollars (Ps.5,291 million

(U.S.$349.1 million)). In addition, as of the date of this offering memorandum, substantially all of our indebtedness bears interest at fixed rates. However, we have contracted indebtedness at variable interest rates in the past and may do so in the future. As a result, we have been, are and might be exposed to risks from fluctuations in exchange rates and interest rates. To help minimize our exposure to high volatility in peso interest rates, we have sought to maintain a significant percentage of our indebtedness in U.S. dollars. At times when we issue debt in peso or other non-U.S. dollar markets, we enter into derivative financial instruments with financial institutions, to balance our debt in alignment with our revenues, specifically, revenues from certain hotels in Mexico whose room rates are typically quoted in U.S. dollars, as well as the sale and financing of vacation club memberships, which are also typically quoted in U.S. dollars. We have not entered into derivative financial instruments for any other purpose, although we may do so in the future. The types of derivative instruments we have typically entered into in recent periods principally include cross-currency swaps under which we generally pay U.S. dollar amounts based on fixed interest rates and receive peso amounts based on peso floating interest rates. As of March 31, 2015 we have no derivative financial instruments in effect. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Market Risk Disclosure—Derivative Financial Instruments.” Our use of derivative instruments is primarily intended to provide protection against the exchange rate risk of our indebtedness. Our use of derivative instruments for interest rates is primarily intended to mitigate risk. We may determine that such risks are acceptable or that the protection available through derivative instruments is insufficient or too costly. These determinations depend on many factors, including market conditions, the specific risks in question and our expectations concerning future market developments. We review our derivatives positions regularly, and our hedging policies change from time to time. Notwithstanding such review, our derivative positions may be insufficient to cover our exposure. When the financial markets experience periods of heightened volatility, as they have recently, our results of operations may be substantially affected by variations in exchange rates and, to a lesser degree, interest rates. These effects include foreign exchange gain and loss on assets and liabilities denominated in U.S. dollars, fair value gain and loss on derivative instruments, and changes in interest income and interest expense. Although we attempt to match the cash flows on our derivative transactions with the cash flows on our indebtedness, the net effects on our reported results in any period are difficult to predict and depend on market conditions and our specific derivatives positions. Although we seek to enter into derivatives that are not affected by volatility to a significant extent, in the event of volatile market conditions our exposure under derivative instruments may increase to a level that impacts our financial condition and results of operations. In addition, volatile market conditions may require us to post collateral to counterparties to our derivatives, which affects our cash flow position, the availability of cash for our operations and may impact our financial condition and results of operations. Our derivative transactions are also subject to the risk that counterparties will default or seek bankruptcy protection. The instability and uncertainty in the financial markets has made it more difficult to assess the risk of counterparties to derivatives contracts. Moreover, in light of the greater volatility in the global securities and exchange markets, there may be fewer financial entities available with which we could continue entering into derivative financial instruments to protect against currency and interest rate risk and the financial condition of our counterparties may be adversely affected under stressful conditions. See “—Risks Relating to Mexico.” Fluctuations in foreign currency exchange rates could negatively affect our operating results. For the year ended December 31, 2014, approximately 17% of our revenues was denominated in U.S. dollars. However, our operating expenses are generally in pesos. As we customarily do not hedge against exchange rate fluctuations other than with respect to our indebtedness, a weak U.S. dollar in relation to the peso may have a material adverse effect on our business, results of operations and financial condition.

We are exposed to third-party claims with respect to industrial or intellectual property rights. During the course of our business activities, third parties may perceive that we violate or infringe their industrial or intellectual property rights. Although we take measures to mitigate exposure to these claims, the measures taken could be insufficient or ineffective and, in the future, litigation may be necessary to defend use of industrial or intellectual property rights and so determine the validity and scope of the intellectual property rights of third parties. Litigation of this nature may result in substantial cost and we may be obligated to allocate monetary resources for such purposes, which may result in counterclaims or other claims against us, distract the attention of our officers, and may significantly affect the income of our operations. External perception of our hotels could harm our brands and reputation as well as reduce our revenues and lower our profits. Our brands and our reputation are among our most important assets. Our ability to attract development partners and franchisees and to attract and retain customers depends, in part, upon the external perceptions of Grupo Posadas and our brands, the quality of our hotels and services and our corporate and management integrity. There is a risk to our brands and our reputation if we fail to act responsibly or comply with regulatory requirements in a number of areas, such as safety and security, sustainability, responsible tourism, environmental management, human rights and support for local communities. The considerable increase in the use of social media over recent years has greatly expanded the potential scope and scale, and increased the speed of the dissemination, of the negative publicity that could be generated by any such adverse incident or failure. An adverse incident involving our associates or our customers, or in respect of our third-party vendors or owners and the industry, and any media coverage resulting therefrom, may harm our brands and reputation, cause a loss of consumer confidence in Grupo Posadas, our brands or the industry, and negatively impact our results or operations. Costs of compliance with employment laws and regulations could adversely affect operating results. Union contracts for hotel employees in several major markets and for employees in certain corporate offices are up for renewal periodically. Although under the terms of the management contracts the employees and service providers at our managed hotels are employed by the hotel owners, such employees may, nevertheless, direct their claims against us. In such circumstances, if we are not successful in defending our position before a labor court, we could be held liable for those employee claims. A similar situation would occur in the case of franchised hotels. We also have a great number of suppliers of, among others, outsourcing, labor, security, promotion or intermediation services whose employees may, despite legal and contractual provisions, file claims against us. Under such circumstances, if we are not successful in defending our position before a labor court, we might be held liable for those claims. In addition, we have a significant number of employees working at our wholly owned hotels. Although we have not experienced labor stoppages or disruptions in the past, the failure to timely renegotiate the contracts that are expiring could result in labor stoppages or disruptions, which could adversely affect our revenues and profitability. Labor costs, including indemnities and severance payments, are significant and could also escalate beyond our expectations which could have a material adverse effect on our operating margins. We depend on our key employees. We depend to a significant degree on the talent, abilities and experience of the members of our Executive Committee and other key members of our executive management staff, each of whom would be difficult to replace due to his or her extensive experience in the hotel industry and the technical knowledge relating to our operations. The loss of any of these individuals or failure to attract adequate replacements could have a material adverse effect on our business and future operations. See “Management.” Our insurance coverage may be insufficient to cover potential losses we face. We carry insurance coverage for general civil liability, damage to property, business interruption and other risks with respect to our owned and leased hotels. Likewise, the owners of managed and

franchised hotels are contractually bound to have the same coverage for similar risks. However, the owners may fail to contract and maintain such insurance. Our policies offer coverage terms and conditions that we believe are usual and customary for our industry. Generally, our “all-risk” policies provide that coverage is available on a per occurrence basis and that, for each occurrence, there is a limit as well as various sub-limits on the amount of insurance proceeds we will receive in excess of applicable deductibles. In addition, there may be overall limits under the policies. Sub-limits exist for certain types of claims such as service interruption, debris removal, expediting costs or landscaping plant material replacement, and the covered amounts of these sub-limits are significantly lower than the covered amounts of the overall coverage limit. Our policies also provide that, for the coverage of earthquakes, hurricanes and floods, all claims from any hotel resulting from a covered event must be combined for purposes of the annual aggregate coverage limits and sub-limits. In addition, any such claims will be combined with claims by the owners of managed and franchised hotels that participate in our insurance program. Therefore, if covered events occur that affect more than one of our owned hotels and/or managed and/or franchised hotels that participate in our insurance program, the claims from each affected hotel will be added together to determine whether, depending on the type of claim, the per occurrence limit, annual aggregate limit or sub-limits have been reached. If the limits or sub-limits are exceeded, then each affected hotel would only receive a proportional share of the amount of insurance proceeds provided for under the policy. In addition, under those circumstances, claims by third-party owners would reduce the coverage available for our owned and leased hotels. There are also other risks including, but not limited to, non-conventional war, certain forms of terrorism such as nuclear, biological or chemical terrorism, certain forms of political risks, some environmental hazards and/or certain events of force majeure that may be deemed outside of the general coverage limits of our policies, uninsurable or for which carrying insurance coverage is cost-prohibitive. We may also encounter challenges from insurance providers regarding payment on a particular claim that we believe to be covered under our policy. Should an uninsured loss or a loss in excess of our insured limits occur, we could lose all or a portion of the capital we have invested in a hotel owned, managed, franchised or leased by us, as well as the anticipated future revenue from any such hotels. In that event, we might nevertheless remain obligated for any lease payments or other financial obligations related to the hotel. Our insurance program includes a single insurance carrier per risk classification. Disruptions in the global financial markets in recent years have resulted in the deterioration in the financial condition of many financial institutions, including insurance companies. We are not currently aware of any information that would indicate that our insurer is unlikely to perform in the event of a covered incident. However, in light of this uncertainty, we can make no assurances that we will be able to obtain the full amount of our insurance coverage for insured events. When we hire third parties for certain services, such as construction services, we normally require them to contract insurance or bonds for our benefit. Such insurances and bonds may be insufficient or ineffective with respect to certain events or certain events may be uninsurable. We could be adversely affected by violations of the relevant Mexican and foreign anti- corruption legislation. Our business operations in countries inside and outside Mexico are subject to anti-corruption legislation. The relevant anti-corruption legislation generally prohibits companies and their intermediaries from making improper payments to government officials or any other person for the purpose of obtaining or retaining business. We operate in parts of the world where government corruption has existed to some degree and, in certain circumstances, our compliance with anti-corruption laws may conflict with local customs and practices. We train our employees concerning compliance with anti-corruption laws. We also have policies in place applicable to our employees in order to enforce and monitor internal compliance with anti-corruption laws. We cannot provide assurance that our internal controls and procedures will always protect us from reckless or criminal acts committed by our employees or third parties with whom we work. If we are found liable for violations of the relevant anti-corruption legislation in Mexico or in other jurisdictions, either due to our own acts or out of inadvertence, or due to the acts or inadvertence of others, we could suffer criminal or civil penalties which could have a material and adverse effect on our results of operations, financial condition and cash flows.

We are required to comply with the Federal Law on the Prevention and Identification of Operations with Illicit Resources due to our operating activities. On October 17, 2012, the Federal Law on the Prevention and Identification of Operations Using Illicit Resources (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita or the “Anti-Money Laundering Act”) was published in the Federal Official Gazette and entered into force on July 17, 2013. Additionally, the Regulation of the Anti-Money Laundering Act (Reglamento de la Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita) was published in the Federal Official Gazette on August 16, 2013, and the Agreement 2/2013 regarding the application of the Anti-Money Laundering Act was published on August 23, 2013 (in conjunction with the Anti-Money Laundering Act and the Regulation of the Anti-Money Laundering Act, the “Anti-Money Laundering Provisions”). Under the Anti-Money Laundering Provisions, we are required to compile and maintain records of certain transactions that we execute for the creation of property rights and rights for the use or enjoyment of real-estate, prepaid services cards, certain promotional gifts and management of third-party properties. Furthermore, we are obligated to submit certain notices before the Ministry of Finance in connection with such transactions if certain thresholds are met. If we do not to comply with the abovementioned obligations, we might become subject to various penalties, including fines, which could negatively impact our results of operations. Our vacation club business is subject to regulation. We develop and operate vacation club resorts and we market and sell memberships in our vacation club. We generally sell the memberships pursuant to interest-accruing installment payment arrangements. These activities are all subject to regulations, including the standards established by the Normas Oficiales Mexicanas (Official Mexican Standards). For example, Mexican regulations grant the purchaser of a vacation club membership the right to rescind the purchase contract at any time within a minimum statutory rescission period of five business days that begins upon the signing of the contract. In addition, the Procuraduría Federal del Consumidor (the Mexican Consumer Protection Agency) must authorize our model contract for the sale of vacation club memberships. Although we believe that we are in material compliance with all applicable laws and regulations to which vacation club marketing, sales and operations are currently subject, including the terms of our agreements, changes in these requirements or a determination by a regulatory authority that we were not in compliance could adversely affect us and the manner through which we operate our vacation club business. The vacation club business is subject to risk of member defaults. We develop and operate vacation club resorts by marketing vacation club memberships in such resorts and we bear the risk of defaults under purchase contracts for vacation club memberships. Vacation club members buy a “40-year-right-to-use” evidenced by an annual allocation of vacation club points. We typically charge an initial payment of between 10% and 30% of the total price of the membership and offer monthly installment payment plans that comprise both payments of capital and interest which accrues on the unpaid balance of the purchase price. We recognize the entire value of a purchase contract as revenue when 10% of the purchase price is paid and we create a reserve for future uncollectible accounts based on our experience. When a purchaser enters into a loan agreement with us for the remaining balance, defaults under such loans are covered by the reserve. Our reserves may not be sufficient to offset non-performing receivables which could negatively affect our financial results. Although historically a substantial portion of our vacation club sales were denominated in U.S. dollars, as of March 31, 2015, approximately 50% of our vacation club receivables portfolio is denominated in pesos, albeit at a higher interest rate, as a result of the requests by certain members who wanted to convert their installment payment obligations from U.S. dollars to pesos. We expect to continue to offer peso-denominated payment plans to Mexican residents who wish to manage their exposure to fluctuations in the peso exchange rate. Notwithstanding our re-denomination of a significant portion of our vacation club receivables portfolio, many outstanding vacation club sales and loans to purchasers remain denominated in U.S. dollars. Accordingly, our results will still be affected by U.S. dollar-peso exchange rate fluctuations. As payments are made in U.S. dollars over the term of the loan, sales revenues recognized in U.S. dollars at the time of purchase may ultimately be discounted to the extent the U.S. dollar has weakened against the

peso. We do not completely hedge against our exposure to exchange rate risk. Traditionally, we have not hedged this exposure. Vacation club members pay annual maintenance fees that are allocated to the operation and maintenance of vacation club resorts. Failure by members of the vacation club to pay maintenance fees may require us to allocate funds to cover such operation and maintenance expenses, which could negatively impact our business, results of operations and financial condition. We are subject to all of the operating risks common to the hotel and vacation club industries. Operating risks common to the hotel and vacation club industries include: • changes in general economic conditions, including the timing and robustness of a recovery from the current economic slowdown; • impact of public safety, armed encounters, war and terrorist activity on travel desirability; • domestic and international political and geopolitical conditions, including civil uprising and unrest, expropriation, nationalization and repatriation; • travelers’ fears of exposure to contagious diseases; • decreases in demand or increases in supply for vacation interests; • the impact of internet intermediaries on pricing and our continuing reliance on technology; • cyclical over-building of hotel and vacation club properties; • restrictive changes in laws or regulations or the interpretations thereof and other governmental actions, including those relating to zoning and land use, health and safety, the environment, hotel operation, taxation, travel and immigration; • changes in travel patterns; • changes in operating costs including, but not limited to, energy, labor and labor-related costs, insurance and unanticipated costs incurred due to disasters such as acts of nature and their consequences; • disputes with third-parties which may result in litigation; • disputes relating to the right to use brands and brand names or other industrial property rights; • the availability of capital to fund construction, renovations and other investments; • foreign exchange fluctuations; • personal injury and other types of litigation brought by our customers; • the financial condition of third-party property owners; and • the financial condition of the airline industry and its impact on the lodging industry. We are also impacted by our relationships with third-party property owners. Our hotel management contracts are typically long-term arrangements, but most allow the hotel owner to replace us in certain circumstances, such as the bankruptcy of the hotel owner, the failure to meet certain financial or performance criteria and in certain cases, upon a sale of the property. Our ability to meet these financial and performance criteria is subject to, among other things, the risks described in this section. Additionally, our operating results would be adversely affected if we could not maintain existing management agreements or obtain new agreements on as favorable terms as the existing agreements. We must compete for customers. The hotel and vacation club industries are highly competitive. Our hotels and vacation club resorts compete for customers with other hotel and resort properties. The competition for hotel revenues

comes from a variety of both domestic and international hotel operators as well as other third parties offering lodging services through various digital and web-based distribution channels. Some of our competitors are substantially larger than us, have greater marketing and financial resources, and operate under well-known international brand names. In addition to competing with other tourism resorts in the countries in which we operate, we compete with Mexican tourism resorts in other countries to attract tourists to our resorts. New or existing competitors in each of our business lines could significantly lower rates or offer greater conveniences, services or amenities or significantly expand, improve or introduce new facilities in markets in which we compete, thereby adversely affecting our operations and the number of suitable business opportunities. We are subject to governmental regulations. We are subject to laws, ordinances and regulations relating to, among other things, taxes, environmental matters, the preparation and sale of food and beverages, accessibility for disabled persons, use and disposal of water and residues, construction, occupational health, sanitation and safety, general building, zoning and operating requirements, archeological conservation and protection of personal information to which we have access in the various jurisdictions in which our hotels are located. Owners and managers of hotels are also subject to laws governing the relationship with hotel employees, including minimum wage requirements, overtime, working conditions and work permit requirements. Compliance with these laws may be cumbersome and difficult to monitor and failure to comply with them may materially and adversely affect our results of operations. Environmental laws, ordinances and regulations of the various jurisdictions in which we operate regulate our properties and could make us liable for the costs of removing or cleaning up hazardous or toxic substances on, under, or in property we currently own, operate, franchise or lease or that we previously owned, operated or leased without regard to whether we knew of, or were responsible for, the presence of hazardous or toxic substances. The presence of hazardous or toxic substances, or the failure to properly clean up such substances when present, could jeopardize our ability to develop, use, sell or rent the affected real property or borrow money using such property as collateral. We are also subject to other laws, ordinances and regulations relating to lead, asbestos-containing materials, operation and closure of storage tanks, and preservation of wetlands, coastal zones or endangered species, which could limit our ability to develop, use, sell or rent our real property or use it as collateral. Future changes in environmental laws or the discovery of currently unknown environmental conditions may have a material adverse effect on our financial condition and results of operations. In addition, Mexican environmental regulations have been increasingly stringent. This trend is likely to continue and may be influenced by various international environmental agreements. Accordingly, there can be no assurance that more stringent enforcement of existing laws and regulations or the adoption of additional legislation would not have a material effect on our business and financial (or other) condition or prospects. The hotel industry is seasonal. The hotel industry is seasonal. However, the periods during which our properties experience higher hotel revenue vary from property to property and depend principally on location. Of the 22,021 hotel rooms we operate as of the date of this offering memorandum, approximately 82% are in urban or suburban locations and cater primarily to business travelers. These hotel operations have not experienced significant seasonal fluctuations aside from minor reductions in occupancy during the holiday season from mid-December through mid-January. The remaining 18% hotel rooms we operate are in resort locations. Generally, our resort hotel revenues are greater in the first and fourth quarters than in the second and third quarters. This seasonality can be expected to cause quarterly fluctuations in our revenues. Concentration in Internet distribution channels may negatively impact our distribution costs. A significant and increasing number of our hotel rooms are booked through internet travel intermediaries such as Travelocity.com®, Expedia.com®, Priceline.com®, Hotels.com® and Orbitz.com®. As the percentage of internet bookings increases, these intermediaries may be able to obtain higher commissions, reduced room rates or other significant contract concessions from us. Moreover, some of

these internet travel intermediaries are attempting to commoditize hotel rooms, by increasing the importance of price and general indicators of quality (such as “three-star downtown hotel”) at the expense of brand identification. Over time, consumers may develop loyalties to these reservations systems rather than to our lodging brands. Although we expect to derive most of our business from our direct channels (our call center, our corporate sales booking tools and our websites) and traditional channels, if the amount of sales made through internet intermediaries increases significantly, our business and profitability may be harmed as we would have to use a higher percentage of our profit margin to pay for higher commissions. The hotel industry places significant dependence on technology. The hospitality industry continues to demand the use of sophisticated technology and systems including solutions utilized for property management, revenue management, brand assurance and compliance, procurement, reservation systems, operation of our customer loyalty program, distribution and guest amenities. These technologies can be expected to require enhancements and new interfaces, including those to comply with legal requirements such as privacy regulations and specifications established by third parties such as the payment card industry. Further, the development and maintenance of these technologies may require significant capital. There can be no assurance that as various systems and technologies become outdated or new technology is required we will be able to replace or introduce them as quickly as our competition or within budgeted costs and adequate timeframes for such technology. Further, there can be no assurance that we will achieve the benefits that may have been anticipated from any new technology or system. The hotel and vacation club industries are capital-intensive, and degradation in the quality or reputation of our brands could adversely affect our financial results and growth. For our owned, leased, managed and franchised properties to remain attractive and competitive, we and the property owners have to spend money periodically to keep the properties well maintained, modernized and refurbished. This creates an ongoing need for cash. Third-party property owners may be unable to access capital or unwilling to spend available capital when necessary, even if required by the terms of our management or franchise agreements. To the extent that we and property owners cannot fund expenditures from cash generated by operations, funds must be borrowed or otherwise obtained. Recent events, including the failures and near failures of financial services companies and the decrease in liquidity and available capital, have negatively impacted the capital markets for hotel and vacation club investments. Accordingly, our financial results have been and may continue to be impacted by the cost and availability of funds. Failure to make the investments necessary to maintain or improve such properties, to act in accordance with applicable brand standards or to project a consistent brand image could adversely affect the quality and reputation of our brands. Moreover, third-party owners or franchisees may be unwilling or unable to incur the cost of complying with brand standards for new and existing brands as such brands may evolve from time to time. If the reputation or perceived quality of our brands declines, our market share, reputation, business, financial condition or results of operations could be adversely affected. We are subject to risks relating to real estate investing. We are subject to risks that generally relate to investments in and operation of real property because of the properties we own and lease. The investment returns available from equity investments in real estate depend in large part on the amount of income earned and capital appreciation generated by the related properties, and the expenses incurred. In addition, a variety of other factors affect income from properties and real estate values, including local economic conditions, competition, necessity of improvements and remodeling of existing property, natural disasters, governmental regulations, real estate, insurance, zoning, tax and expropriation laws, interest rate levels and the availability of financing. For example, new or existing real estate zoning or tax laws can make it more expensive and/or time- consuming to develop real property or expand, modify or renovate hotels. When interest rates increase, the cost of acquiring, developing, expanding or renovating real property increases and real property values may decrease as the number of potential buyers decreases. Similarly, as financing becomes less available, it becomes more difficult both to acquire and to sell real property. Furthermore, under expropriation and similar laws, governments can take or expropriate real property in exchange for some measure of “reasonable” compensation. Sometimes the compensation paid in an expropriation is less

than the owner believes the property is worth. Any of these factors could have a material adverse impact on our results of operations or financial condition. In addition, real estate investments generally cannot be sold quickly. We may not be able to vary our portfolio promptly in response to economic or other conditions. There can be no assurance that the market value of any of our hotels will not decrease in the future. There can be no assurance that we will be able to dispose of a hotel if we find such a disposition advantageous or necessary, nor can there be any assurance that the sale price of any disposition will recoup or exceed the amount of our investment. The inability to respond promptly to changes in the performance of our investments could adversely affect our financial condition. Hotel and vacation club development is subject to timing, budgeting and other risks. We intend to develop hotel and vacation club properties as suitable opportunities arise. In addition, the owners and developers of new-build properties that we have entered into management and franchise agreements with are subject to these same risks which may impact the amount and timing of fees we had expected to collect from those properties. New project development has a number of risks, including risks associated with: • construction delays or cost overruns that may increase project costs; • receipt of zoning, environmental, occupancy and other required governmental permits and authorizations; • incurrence of development costs for projects that are not pursued to completion; • hurricanes, floods, fires or other acts of nature that could adversely impact a project; • defects in design or construction that may result in additional costs to remedy or require all or a portion of a property to be closed during the period required to rectify the situation; • ability to raise capital; and • governmental restrictions on the nature or size of a project. We cannot assure you that any development project will in fact be developed, and if developed, the time period or the budget of such development may be greater than initially contemplated and the actual number of units or rooms constructed may be less than initially contemplated. We are subject to risks related to stoppages or failures in informational systems. Our operation depends on sophisticated informational systems and infrastructure through which we operate or carry out our business. Systems are prone to failures arising from, among others, fires, floods, power outages, information or infrastructure theft, telecommunication failures, system failures. The occurrence of any failure in our informational systems and infrastructure may affect our operations, which may negatively impact our revenues and operating costs. Although we have plans to reduce the impact of such failures, such plans may not be effective. In 2014, in accordance with better industry practices, we initiated a project to migrate information to a collaborative cloud in order to mitigate loss of information risk, as well as to implement improved information security and protection controls. However these measures may be insufficient to address the risks related to our informational systems and infrastructure and to ensure compliance with the data protection rules to which we are and may be subject. Room distribution technology is subject to continuous changes. Due to changes in travelers’ purchasing trends and decision making, a greater demand exists for high-content information with respect to hotels, and purchasing preferences may increasingly be affected by the provision of various related services such as airplane tickets, lodging, car rental and attractions at the selected destination. Catering to these trends entails online information exchange from several websites and databases which requires high capacity IT infrastructure in order to consolidate information from us and from the parties that provide such services and connect our products with the final consumers.

This demand may require significant investments in technology and contents, as well as high distribution costs that may render our products less profitable. To the extent that our IT infrastructure may become outdated with respect to our competitors’ and suppliers’, we may not experience adequate connectivity with the main distribution channels or have the capacity to provide the required content (images, videos, information) to all relevant websites. Changes in privacy law could increase our operating costs and/or adversely impact our ability to market our products, properties and services effectively. We are subject to numerous laws, regulations, and contractual obligations designed to protect personal information, including relevant Mexican privacy law, other foreign data privacy laws, various U.S. federal and state laws, and credit card industry security standards and other applicable information security standards. We have established policies and procedures to help protect the privacy and security of our information. However, every year the number of laws, regulations, and information security requirements continue to grow, as does the complexity of such laws and requirements. Further, privacy regulations, on occasion, may be inconsistent from one jurisdiction to another. Compliance with applicable privacy regulations may increase our operating costs and/or adversely impact our ability to market our products, properties and services to our guests. Our business may be adversely impacted as a result of changes in demand for our services. Economic and political uncertainty may, among other external factors, adversely impact our customers’ demand for our services businesses. A general economic downturn, such as the worldwide economic slowdown in 2008-2010 could adversely affect our customers’ demand for Ampersand’s loyalty program management services, Conectum’s business process outsourcing services and Konexo’s call center and contact services. Our intellectual property portfolio may not prevent competitive offerings, and we may not be able to obtain necessary licenses. Our intellectual property may not prevent competitors from independently developing products and services similar to or duplicative to ours, nor can there be any assurance that the resources we have invested to protect our intellectual property will be sufficient or that our intellectual property portfolio will adequately deter misappropriation or improper use of our technology. In addition, we may be the target of aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities. Also, several of the services we provide rely on platforms and systems that we use under licenses from third parties, and there can be no assurances that we will be able to obtain from such third parties the licenses we need in the future. Any failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our business. We believe our trademarks are an important component of our business. We rely on trademark laws to protect our proprietary rights. The success of our business depends in part upon our continued ability to use our trademarks to increase brand awareness and further develop our brand in both the Mexican and international markets. Monitoring the unauthorized use of our intellectual property is difficult and burdensome. In the future, litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resources, may result in counterclaims or other claims against us, divert management attention and could significantly harm our results of operations. From time to time, we apply to have certain trademarks registered. There is no guarantee that such trademark registrations will be granted. We cannot assure you that all of the steps we have taken to protect our trademarks will be adequate to prevent imitation of our trademarks by others. The unauthorized reproduction of our trademarks could diminish the value of our brand and its market acceptance, competitive advantages or goodwill, which could adversely affect our business.

Our ability to provide our customers with competitive services is dependent on our ability to attract, train and retain qualified personnel. Our ability to grow and provide our customers with competitive services is partially dependent on our ability to attract, train and retain highly motivated people with the skills to serve our customers. The markets we serve are highly competitive and competition for skilled employees is intense. During 2014, we started a project aimed at attracting and retaining talent for key positions at our various business units. However we cannot predict or guarantee the success of such project. Our customers may experience financial difficulties and we may not be able to collect our receivables, materially and adversely affecting our profitability. Over the course of a contract, our customers’ financial fortunes may change affecting their ability to pay their obligations and our ability to collect our fees for services rendered. While we may resort to other methods to pursue our claims or collect our receivables, these methods are expensive and time consuming and success is not guaranteed. Failure to collect our receivables or prevail on our claims would have an adverse affect on our profitability. A network failure could cause delays or interruptions of service, which could cause us to lose customers and revenues. We rely on our telecommunication network and infrastructure to provide our hotel customers, vacation club members and service business clients with reliable access to our reservation system, customer contact and other services, including internet and telephone. Some of the risks to our network and infrastructure include physical damage, natural disasters such as hurricanes, earthquakes, floods and storms, among others, and other disruptions beyond our control. Although we carry casualty insurance against loss and we have implemented redundancy in our network and installed backup technologies, disruptions may cause interruptions in service or reduced capacity for customers, either of which could cause us to lose customers and revenues or incur additional expenses and will adversely affect our operations, financial condition and results of operation. Cyber threats and the risk of data breaches or disruptions of our information technology systems could harm our brand and adversely affect our business. Our business involves the processing, use, storage and transmission of personal information regarding our employees, customers, hotel owners, and vendors for various business purposes, including marketing and promotional purposes. The protection of personal as well as proprietary information is critical to us. We are dependent on information technology networks and systems to process, transmit and store proprietary and personal information, and to communicate among our various locations in Mexico and the United States, which may include our reservation systems, vacation exchange systems, hotel/property management systems, customer and employee databases, call centers, administrative systems, and third-party vendor systems. We store and process such internal and customer information both at onsite facilities and at third-party owned facilities, including for example, in a third-party hosted collaborative cloud environment. The complexity of this infrastructure and the shared control and management of hotel systems contributes to the potential risk of security breaches. We rely on the security of our information systems, and those of our vendors, owners and other authorized third parties, to protect our proprietary and personal information. Despite our efforts, information networks and systems may be vulnerable to threats such as system, network or internet failures; computer hacking or business disruption; cyber-terrorism; viruses, worms or other malicious software programs; employee error, negligence, fraud, or misuse of systems; or other unauthorized attempts by third parties to access, modify or delete our proprietary and personal information. Although we have taken steps to address these concerns by implementing network security and internal controls, there can be no assurance that a system failure, unauthorized access, or breach will not occur.

Risks Relating to Mexico Mexican federal governmental policies could adversely affect our results of operations and financial condition. We and substantially all of our subsidiaries are incorporated under Mexican law, and our corporate offices and substantially all of our operations and assets are located in Mexico. As a result, our business has been and may be affected by the general condition of the economy, inflation, interest rates, political and other developments and events in Mexico. The Mexican federal government has exercised, and continues to exercise, significant influence over the Mexican economy and therefore, the government’s economic policies may have a significant impact on the Mexican private sector in general, and on us in particular, as well as on market conditions, prices and payment of securities issued by Mexican legal entities, including the Notes. We cannot assure you that changes in Mexican federal governmental policies will not adversely affect our business, financial condition and results of operations. Recently, several reforms have been approved by the Mexican Federal Congress (including tax and labor reforms). Certain aspects of such changes have affected our business and we have sought relief from certain elements of such reforms. It is not possible to predict, at this time, the full effect of such reforms on our business, financial condition and results of operations. Economic slowdowns could adversely affect our revenues. We believe that economic slowdowns have negatively affected and could continue to negatively affect our revenues. The market value of securities in Mexican companies is affected by economic and market conditions in developed and other emerging market countries. Although economic conditions in those countries may differ significantly from economic conditions in Mexico, adverse economic conditions may expand regionally or investors’ reactions to developments in any of these other countries may have an adverse effect on the market value of securities of Mexican issuers. In recent years, for example, prices of both Mexican debt and equity securities have sometimes suffered substantial drops as a result of developments in other countries and markets. In addition, in recent years economic conditions in Mexico have been linked increasingly to economic conditions in the United States and Europe as a result of the free trade agreements signed by Mexico, the United States and the European Union, and increased economic activity among these countries, similar to what took place during the recent economic crisis affecting the United States and Europe. The Mexican economy is still strongly influenced by the United States and European economies and therefore any deterioration in the economic conditions or delays in the recovery of the United States or European economy can affect recovery in Mexico. These events could have a material adverse effect on our results of operations, which could affect our liquidity, financial condition and the market price of the Notes. Currency exchange fluctuations may affect our results of operations. As of March 31, 2015, after giving pro forma effect to the sale of Notes offered hereby as described under “Use of Proceeds,” 100% of our indebtedness would be U.S. dollar-denominated, whereas a significant portion of our consolidated revenues are peso-denominated. Accordingly, we are affected by fluctuations in the value of the peso against the U.S. dollar and any depreciation or devaluation of the peso against the U.S. dollar results in net foreign exchange losses. In the first three months of 2015, the peso depreciated against the U.S. dollar by approximately 3%, however the peso has experienced considerable volatility throughout the year. In 2014, the peso depreciated against the U.S. dollar by approximately 12.6%. In 2013, the peso depreciated by approximately 0.5% against the U.S. dollar, compared to an appreciation of approximately 7% in 2012. Severe devaluation or depreciation of the peso may also result in disruption of the international foreign exchange markets and may limit our ability to transfer or to convert pesos into U.S. dollars and other currencies for the purpose of making timely payments of interest and principal on our non-peso- denominated indebtedness, including on the Notes. Although the Mexican government currently does not restrict, and for many years has not restricted, the right or ability of Mexican or foreign persons or entities to convert pesos into U.S. dollars or transfer foreign currencies out of Mexico, the Mexican government could, as in the past, institute restrictive exchange rate policies that could affect us in the future.

Devaluation or depreciation of the peso against the U.S. dollar may also adversely affect U.S. dollar prices for the Notes. Currency fluctuations are likely to continue to have an effect on our financial condition, results of operations and cash flows in future periods. See “—Fluctuations in foreign currency exchange rates could negatively affect our operating results.” Inflation and interest rates may adversely affect our business and results of operations. High inflation rates can adversely affect our business and results of operations in the following ways: • to the extent that a significant portion of our operating costs are denominated in pesos, a considerable inflation increase may in turn cause an increase in our operating costs; • inflation can adversely affect consumer purchasing power, thereby adversely affecting demand for hotel rooms and vacation club memberships; • to the extent inflation exceeds our price increases, our prices and revenues will be adversely affected in “real” terms; • if the rate of Mexican inflation exceeds the rate of the depreciation of the peso against the U.S. dollar, our U.S. dollar-denominated sales will decrease in relative terms when stated in constant pesos; and • inflation and its effect on domestic interest rates can lead to reduced liquidity in the domestic capital and lending markets, which could affect our ability to refinance our indebtedness in those markets. According to the National Consumer Price Index (“INPC”) published by the Mexican Central Bank (Banco de México), annual inflation rates have been 3.6%, 4.0% and 4.1% for the years ended December 31, 2012, 2013 and 2014, respectively. Interest rates in Mexico have also undergone volatility periods. The adverse situations that have affected the Mexican economy in the past, including inflation increases, have resulted in significant interest rate increases in the Mexican market during such periods. High interest rates in Mexico may significantly increase our financing costs and thereby impair our financial condition, results of operations and cash flows. Political, social and other developments in Mexico could affect our business. Currently, no single party has an absolute majority in any chamber of the Mexican Federal Congress. The absence of a clear majority and misalignment between the legislature and the administration could result in deadlock and affect the legislative process, which in turn could have an adverse effect on the Mexican economy. Recent changes in laws, regulations and governmental policies with respect to key issues such as tax, energy, financial markets, telecommunications and antitrust, may contribute to economic uncertainty or cause heightened volatility of the Mexican capital markets and securities issued by Mexican companies. These reforms and other changes could have a material adverse effect on our results of operations by, for example, affecting consumer spending in Mexico. We cannot assure you that political developments in Mexico will not have an adverse effect on our business, financial condition or results of operations. Mexican governmental actions concerning the economy could have a significant impact on private sector entities in general and us in particular, as well as on market conditions and prices of, and returns on, Mexican securities. Changes to governmental policies, plans, strategies or regulations affecting tourism in Mexico could adversely affect our operations. Our future growth greatly depends on the policies adopted by the Mexican government and regulations relating to investment in tourism and real estate development and the participation of private entities in such projects. Any change in such governmental policies and strategies, adjustments to the programs and budgets for the procurement of tourism projects or the enactment of new rules in

connection with the development of tourism promotions may affect our activities. Our growth depends largely on our ability to obtain, in a timely manner, the permits, licenses and authorizations required for the construction and operation, by us or by third parties, of hotel and vacation club properties. We can give no assurance that amendments to laws and regulations applicable to the tourism or real estate industries, or that the application thereof, or the enactment of new laws and regulations, will not have a material adverse effect over our activities, our results of operations, our financial condition or our prospects. We likewise give no assurance that our operating expenses will not increase or that it may not become more difficult to obtain permits or authorizations required for the construction of our developments. Currently, our operations are concentrated in Mexico, which makes us particularly sensitive to the regulations adopted by federal, state, local and municipal authorities of Mexico. Our corporate disclosure, including our financial statements, may be different in significant respects from that of issuers in other countries. Our shares are listed on the Mexican Stock Exchange. Issuers of securities in Mexico are required to make public disclosure and provide periodic information that is different from disclosures required in countries with highly developed capital markets such as the United States. Our financial statements are prepared in accordance with IFRS, which differs significantly from U.S. GAAP. The financial results reported using IFRS may differ substantially from results that would have been obtained using U.S. GAAP. We have not provided a reconciliation of any financial information to U.S. GAAP. Investors may experience difficulties in enforcing civil liabilities against us or our directors, executive officers and controlling persons. We are organized under the laws of Mexico. Most of our directors, executive officers and controlling persons reside outside the U.S., a significant portion of the assets of our directors, executive officers and controlling persons, and substantially all of our assets, are located outside the U.S. As a result, it may be difficult to effect service of process within the United States upon these persons or to enforce against them or us in U.S. courts judgments predicated upon the civil liability provisions of the federal securities laws of the United States. We have been advised by our Mexican counsel that there is doubt as to the enforceability, in original actions in Mexican courts, of liabilities predicated solely on the U.S. federal securities law and as to the enforceability in Mexican courts of judgments of U.S. courts obtained in actions predicated upon the civil liability provisions of U.S. federal securities laws. Risks Relating to the Notes Our significant debt could adversely affect our financial health and prevent us from fulfilling our obligations, including those under the Notes we are offering. We have a significant amount of debt. As of March 31, 2015, after giving pro forma effect to the sale of the Notes offered hereby and the application of the gross proceeds thereof, our total consolidated indebtedness would have been U.S.$ 415.1 million, including indebtedness incurred under our Euro commercial paper program and with Banco Santander, S.A., as well as the debt of our subsidiary Inmobiliaria del Sudeste, S.A. de C.V. See “Description of Other Indebtedness.” Our debt level could have important consequences to our business; for example it could: • require us to use a large portion of our cash flow to pay principal and interest on debt, including the Notes, our Euro commercial paper, and any amounts we may draw under our revolving credit facility with Banco Santander, S.A., which will reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions, research and development expenditures and other business activities; • restrict us from making strategic acquisitions or exploiting business opportunities; • place us at a competitive disadvantage compared to our competitors that have less debt; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• limit, along with the financial and other restrictive covenants related to our debt, our ability to borrow additional funds, make capital expenditures, dispose of assets or pay cash dividends; and • increase our vulnerability to adverse economic, financial, industry or competitive conditions, including increases in interest rates. Our ability to meet our payment and other obligations under our debt instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that additional capital will be available to us, in an amount sufficient to enable us to meet our payment obligations under the Notes and our other debt and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, including the Notes, sell assets, reduce or delay capital investments, or seek to raise additional capital. There can be no assurance that we will be able to refinance any of our indebtedness on commercially reasonable terms, or at all. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the Notes and our other debt. In addition, a substantial portion of our debt is issued in U.S. dollars. If the peso devalues with respect to the U.S. dollar, our debt service requirements will increase, which would adversely affect our results of operations and cash flows. Our debt agreements contain covenant restrictions that may limit our ability to operate our business. The indenture governing the Notes contains, and any of our other future debt agreements may contain, covenant restrictions that limit our ability to operate our business, including restrictions on our ability to: • incur additional debt or issue guarantees; • create liens; • make certain loans or investments; • enter into sale-leaseback transactions; • enter into transactions with our affiliates; • sell certain assets; • redeem or repurchase capital stock or make other restricted payments; • agree to payment restrictions affecting the restricted subsidiaries; • declare or pay dividends or make other distributions to shareholders; and • merge or consolidate with any entity. Our ability to comply with these covenants is dependent on many factors, some of which are beyond our control. As a result of these covenants, our ability to respond to changes in business and economic conditions and to obtain additional financing, if needed, may be significantly restricted, and we may be prevented from engaging in transactions that might otherwise be beneficial to us. In addition, our failure to comply with these covenants could result in a default under our debt agreements, which could permit the holders to accelerate our obligation to repay the debt and may be cross-defaulted to other debt, including the Notes. Our assets or cash flow may not be sufficient to fully repay borrowings under our outstanding debt agreements if accelerated upon an event of default, and there is no guarantee that we would be able to repay, refinance or restructure the payments on those debt agreements. See “Description of Other Indebtedness.”

The Notes will mature after our other indebtedness currently outstanding. Our indebtedness incurred under our revolving credit agreement with Banco Santander, S.A. and our Euro commercial paper program, as well as the debt of our subsidiary Inmobiliaria del Sudeste, S.A. de C.V., will mature before the Notes. Therefore, if the proceeds of this offering are not sufficient, we may be required to repay all of such indebtedness and other obligations before we are required to repay the balance of the interest due on, and the principal of, the Notes. As a result, we may not have sufficient cash to pay the interest on the Notes or to repay all amounts owing on the Notes at maturity. There can be no assurance that we will have the ability to borrow or otherwise raise the amounts necessary to repay or refinance such amounts. We cannot assure compliance with the requirements to maintain the listing of our shares in the Mexican stock market. Companies listed on the Mexican Stock Exchange are required to meet certain listing requirements, including maintaining at least 100 shareholders. We have fewer than 100 shareholders. As a result, we are not in compliance with the listing requirements and therefore CNBV can request us to adopt corrective measures, or even order the delisting if such corrective measures are not successfully implemented. Although we believe such delisting is unlikely, we cannot assure that we would be able to take successful measures to cure such a default. A delisting of our shares could require us to carry out a mandatory repurchase of our shares. Certain significant shareholders may exercise substantial influence in a manner that differs from your interests as a noteholder. As of April 6, 2015, to the best of our knowledge, (i) a group of members of the Azcárraga Andrade family, who are also relevant officers and directors of Grupo Posadas, S.A.B. de C.V., (ii) an investment company administered by Accival, and (iii) a trust administered by Banco Nacional de México, S.A., integrante del Grupo Financiero Banamex, División Fiduciaria, each own more than 10% of our capital stock. The shareholders or group of shareholders may exercise a substantial influence in a manner that differs from your interests as a noteholder. In addition, since a variety of decisions related to our business are confirmed with the shareholders, we may experience delays in making certain business decisions as a result of our corporate structure. We cannot assure you that the credit ratings for the Notes will not be lowered, suspended or withdrawn by the rating agencies. The credit ratings of the Notes may change after issuance. Such ratings are limited in scope, and do not address all material risks relating to an investment in the Notes, but rather reflect only the views of the rating agencies at the time the ratings are issued. An explanation of the significance of such ratings may be obtained from the rating agencies. We cannot assure you that such credit ratings will remain in effect for any given period of time or that such ratings will not be lowered, suspended or withdrawn entirely by the rating agencies, if, in the judgment of such rating agencies, circumstances so warrant. Any lowering, suspension or withdrawal of such ratings may have an adverse effect on the market price and marketability of the Notes. Despite our current indebtedness levels, we may still be able to incur substantially more debt. This could exacerbate further the risks associated with our substantial leverage. We and our subsidiaries may be able to incur substantial additional indebtedness, including secured indebtedness, in the future. The terms of the indenture will restrict, but will not completely prohibit, us from doing so. In addition, the indenture will allow us to issue additional notes under certain circumstances, which will also be guaranteed by the guarantors. The indenture will also allow us to incur certain secured debt which would be effectively senior to the Notes. In addition, the indenture will not prevent us from incurring other liabilities that do not constitute indebtedness. See “Description of the Notes.” If new debt or other liabilities are added to our current debt levels, the related risks that we now face could intensify.

The Notes and the guarantees will be structurally subordinated to our secured debt and to certain claims preferred by statute. Our obligations under the Notes, and the obligations of the guarantors under the guarantees, are unsecured. As a result, the Notes will be structurally subordinated to all of our and the guarantors’ secured debt to the extent of the value of the collateral securing such debt. As of March 31, 2015, after giving pro forma effect to the sale of the Notes offered hereby and the application of the gross proceeds thereof, we and the guarantors would have no secured debt outstanding. However, we currently have a Ps.200 million revolving credit facility with Banco Santander, S.A. which is secured by a mortgage on the Fiesta Inn Aeropuerto hotel, which is owned by our subsidiaries Gran Operadora Posadas, S.A. de C.V., Operadora del Golfo de México, S.A de C.V., and YIPA, S.A. de C.V. We may draw amounts under our revolving credit facility or incur additional secured indebtedness in the future as permitted under the indenture governing the Notes. In the event that we or our subsidiaries are not able to repay amounts due under such secured debt obligations, creditors could proceed against the collateral securing such indebtedness. In that event, any proceeds upon a realization of the collateral would be applied first to amounts due under the secured debt obligations before any proceeds would be available to make payments on the Notes. If there is a default, the value of this collateral may not be sufficient to repay both our secured creditors and the holders of the Notes. Additionally, the claims of holders of the Notes will rank effectively junior to certain obligations that are preferred by statute, including certain claims relating to taxes and labor. Certain of our subsidiaries are not guarantors and our obligations with respect to the Notes will be structurally subordinated to all liabilities of these non-guarantor subsidiaries. We have incurred and may incur further secured debt in the future. The guarantors of the Notes include only some of our subsidiaries. However, our financial information (including our financial statements included herein) is presented on a consolidated basis. As of and for the three months ended March 31, 2015, our non-guarantor subsidiaries represented 21.0% and 16.8% of our total revenues and assets, respectively. As of March 31, 2015, after giving pro forma effect to the sale of the Notes offered hereby and the Concurrent Tender Offer, our guarantor subsidiaries would have no debt outstanding and our non-guarantor subsidiaries would have approximately U.S.$2.6 million outstanding debt, which is structurally senior to the Notes. In addition, the indenture will, subject to certain limitations, permit these subsidiaries to incur indebtedness and will not contain any limitation on the amount of other liabilities, such as trade payables, that these subsidiaries may incur. Any right that we or the subsidiary guarantors have to receive assets of any of the non-guarantor subsidiaries upon the liquidation or reorganization of those subsidiaries, and the consequent rights of holders of Notes to realize proceeds from the sale of any of those subsidiaries’ assets, will be structurally subordinated to the claims of that subsidiary’s creditors, including trade creditors and holders of debt of that subsidiary. We have entered into a Ps.200 million revolving credit facility with Banco Santander, S.A. which is secured by a mortgage on the Fiesta Inn Aeropuerto hotel, which is owned by our subsidiaries Gran Operadora Posadas, S.A. de C.V., Operadora del Golfo de México, S.A de C.V., and YIPA, S.A. de C.V. In addition, we may incur additional debt in the future which may, subject to the terms of the contractual restrictions binding on us at that time, be secured with mortgages or other liens on our assets (including liens on our hotel properties). Secured creditors will be preferred to the holders of the Notes in respect of the assets provided as collateral and such assets may not be available to holders of the Notes for collection or foreclosure. We may be unable to make a change of control offer required by the indenture governing the Notes which would cause defaults under the indenture governing the Notes. The terms of the Notes will require us to make an offer to repurchase the Notes upon the occurrence of a change of control at a purchase price equal to 101% of the principal amount of the Notes, plus accrued interest to the date of the purchase. Any financing arrangements we may enter may require repayment of amounts outstanding in the event of a change of control and limit our ability to fund the repurchase of the Notes in certain circumstances. It is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of Notes, or that restrictions in our credit facilities and other financing arrangements will not allow the repurchases. See “Description of the Notes—Repurchase at the Option of Holders—Change of Control.”

The guarantees may not be enforceable. The guarantees provide a basis for a direct claim against the guarantors; however, it is possible that the guarantees may not be enforceable under Mexican law. While Mexican law does not prohibit the making of guarantees and, as a result, does not prevent the guarantees from being valid, binding and enforceable against the guarantors, in the event that a guarantor becomes subject to a concurso mercantil (reorganization proceeding) or to quiebra (bankruptcy), the relevant guarantee may be deemed to have been a fraudulent transfer and declared void, based upon the guarantor being deemed not to have received fair consideration in exchange for such guarantee. If any such event were to occur, the creditworthiness of the Notes and the market value of the Notes in the secondary market may be materially and adversely affected. The collection of interest on interest may not be enforceable in Mexico. Mexican law does not permit the collection of interest on interest and, as a result, the accrual of default interest on past due ordinary interest accrued in respect to the Notes may be unenforceable in Mexico. If we or any of the subsidiary guarantors were to be declared insolvent or bankrupt, holders of the Notes may find it difficult to collect payment on the Notes. Under the Ley de Concursos Mercantiles (Mexican Bankruptcy Law), if we or the subsidiary guarantors are declared bankrupt or become subject to concurso mercantil (judicial reorganization), our obligations and the obligations of the subsidiary guarantors in respect of the Notes, (i) would be converted into pesos and then from pesos into Unidades de Inversión (inflation indexed units), or UDIs, and would not be adjusted to take into account any devaluation of the peso relative to the U.S. dollar occurring after such conversion, (ii) would be satisfied at the time claims of all our creditors are satisfied, (iii) would be subject to the outcome of, and priorities recognized in, the relevant proceedings, (iv) would cease to accrue interest from the date a concurso mercantil is declared and (v) would be subject to certain statutory preferences, including tax, social security and labor claims and claims of secured creditors. In addition, creditors of the Company and/or the subsidiary guarantors may hold negotiable instruments or other instruments governed by Mexican law that grant rights to attach the assets of ours and/or the subsidiary guarantors at the inception of judicial proceedings in the relevant jurisdiction, which attachment is likely to result in priorities benefitting those creditors when compared to the rights of holders of the Notes. Provisions of Mexican law may make it difficult for holders of the Notes to convert payments they receive in pesos into U.S. dollars or to recognize the full value of payments to them. We are required to make payments in respect of the Notes in U.S. dollars. However, under the Ley Monetaria de los Estados Unidos Mexicanos (Mexican Monetary Law), obligations to make payments in Mexico in foreign currency, whether by agreement or upon enforcement of a judgment, may be discharged in pesos at the exchange rate for pesos prevailing at the time and place of payment or judgment. Accordingly, we will be legally entitled to make payment of amounts due on the Notes in pesos if payment of the Notes is sought in Mexico through the enforcement of a non-Mexican judgment or otherwise. If we elect to make payments due on the Notes in pesos in accordance with the Mexican Monetary Law, we can make no assurance that the amounts paid may be converted by the payee into U.S. dollars or that, if converted, such amounts would be sufficient to purchase U.S. dollars equal to the amount of principal, interest or additional amounts due on the Notes. An active trading market may not develop for the Notes, which may hinder your ability to liquidate your investment. The Notes are a new issue of securities with no established trading market. We have applied to list the Notes on the Official List of the Luxembourg Stock Exchange and to trade the Notes on the Euro MTF Market. We cannot assure you, however, that an active trading market for the Notes will develop or be sustained. The initial purchasers have informed us that they intend to make a market in the Notes after the completion of this offering. However, the initial purchasers are not obligated to do so and may cease their market-making at any time. In addition, the liquidity of the trading market in the Notes, and

the market price quoted for the Notes, may be adversely affected by changes in the overall market for fixed income securities and by changes in our financial performance or prospects or in the prospects for companies in our industry in general. As a result, we cannot assure you that an active trading market will develop for the Notes. If no active trading market develops, you may not be able to resell the Notes at their fair market value or at all. The reoffering and resale of the Notes is subject to significant legal restrictions. The Notes may not be freely transferred. The Notes have not been registered under the Securities Act or any U.S. state securities laws or any other jurisdiction’s securities laws and, unless so registered, may not be offered or sold within the U.S., or to, or for the benefit of, a U.S. citizen, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable U.S. state securities laws. Prospective investors should be aware that investors may be required to bear the financial risks of this investment for an indefinite period of time. See “Transfer Restrictions” for a full explanation of such restrictions.

USE OF PROCEEDS

After deducting the discount and fees to the initial purchasers and the estimated offering expenses, we expect the net proceeds from the sale of the Notes will be approximately U.S.$344.3 million, which we will apply first to purchase the outstanding U.S.$310 million 7.875% Existing Notes that are validly tendered in the Concurrent Tender Offer and to pay the related tender fees and the tender expenses, then to pay the U.S.$47.2 million principal amount outstanding of our Euro commercial paper maturing on November 2015 and then for general corporate purposes.

EXCHANGE RATES Since November 1991, Mexico has had a free market for foreign exchange. From November 1991 to December 21, 1994, Banco de México kept the peso-U.S. dollar exchange rate within a range prescribed by the government through intervention in the foreign exchange market. Within the band, Banco de México generally intervened to reduce day-to-day fluctuations in the exchange rate. In December 1994, the government suspended intervention by Banco de México and allowed the peso to float freely against the U.S. dollar. The peso declined sharply in December 1994 and continued to fall under conditions of high volatility in 1995. In 1996, the peso fell more slowly and was less volatile. Relative stability characterized the foreign exchange markets during the first three quarters of 1997. The fall of the Hang Seng Index of the Hong Kong Stock Exchange on October 24, 1997 marked the beginning of a period of increased volatility in the foreign exchange markets with the peso falling approximately 10.0% in just a few days. During 1998, the foreign exchange markets experienced volatility as a result of the financial crisis in Asia and Russia and the financial turmoil in countries such as Brazil and Venezuela. For the last few years, the Mexican government has maintained a policy of non- intervention in the foreign exchange markets, other than conducting periodic auctions for the purchase of U.S. dollars, and has not had in effect any exchange controls (although such controls have existed and have been in effect in the past). We cannot assure you that the Mexican government will maintain its current policies with regard to the peso or that the peso will not depreciate or appreciate significantly in the future Solely for the convenience of the reader, certain amounts presented in Mexican pesos in this offering memorandum as of and for the year ended December 31, 2014 and the three months ended March 31, 2015 have been converted into U.S. dollars at specified exchange rates. Unless otherwise indicated, the exchange rate used for purposes of these convenience translations is the Official Exchange Rate as of such dates. You should not construe our conversions as representations that the Mexican peso amounts actually represent the U.S. dollar amounts presented, or that they could be converted into U.S. dollars at the specified rate or at the dates indicated or at all. The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rates for the Official Exchange Rate, all expressed in nominal pesos per U.S. dollar.

Exchange rate(1) Year ended December 31, High Low Average(2) Period end 2010 ……………………………………………………………… 13.18 12.16 12.63 12.36 2011 ……………………………………………………………… 14.24 11.50 12.43 13.99 2012 ……………………………………………………………… 14.39 12.63 13.17 13.01 2013 ……………………………………………………………… 13.44 11.98 12.77 13.08 2014 ……………………………………………………………… 14.79 12.85 13.30 14.72 Month ended January 31, 2015 ……………………………………………….. 14.99 14.56 14.69 14.69 February 28, 2015 ……………………………………………..... 15.11 14.75 14.92 14.92 March 31, 2015 ………………………………………………….. 15.58 14.93 15.23 15.15 April 30, 2015 ……………………………………………………. 15.45 14.80 15.23 15.22 May 31, 2015 ………………………………………………...….. 15.49 15.02 15.25 15.37 June 30, 2015 (through June 25, 2015) ………………………. 15.70 15.28 15.46 15.48

(1) The exchange rates are the exchange rate published by the Banco de México in the Federal Official Gazette for the payment of obligations denominated in non-Mexican currency payable in Mexico. (2) The average rate means the daily average of the exchange rates on each day during the relevant period.

CAPITALIZATION The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2015 (i) on a historical basis, and (ii) as adjusted to give effect to this offering and the use of net proceeds therefrom, including the Concurrent Tender Offer and the payment of our outstanding Euro commercial paper. Since March 31, 2015, there has been no material change to our capitalization, except as otherwise disclosed herein. This table should be read in conjunction with the information contained in “Description of Other Indebtedness,” “Management’s Discussion and Analysis of Financial Condition and Results of Operation–Liquidity and Capital Resources” and our financial statements and notes thereto included in this offering memorandum.

As of March 31, 2015 Actual As Adjusted Actual As Adjusted (in millions of pesos) (in millions of U.S. dollars)(1)

Cash and cash equivalents……….. 592 1,486 39 98 Cash investments…………………... 450 450 30 30 Short-term debt (including current portion of long-term debt)(2)….. 718 718 47 47 Long-term debt Long-term bank and other debt……. – – – – Medium and long-term notes ……… – – – – Senior Notes 2017………………..….. 4,698 619 310 41 Senior Notes offered hereby…………………………..….. – 5,304 – 350 Debt issuance costs………………… -125 -350 -8 -23 Total Debt…………………………….. 5,291 6,291 349 415

Stockholders´ Equity Capital stock……………………...….. 496 496 33 33 Reserve for repurchase of shares… 552 552 36 36 Retained earnings ...... ….. 2,599 2,599 172 172 Contributions for future capital increases………………………….. 13 13 1 1 Shares held in trust……………...….. – – – – Additional paid-in capital ...... ….. 157 157 12 12 Accumulated other comprehensive income items ……………………… 27 27 2 2 3,845 3,845 256 256 Non-controlling interest…………….. 198 198 13 13 Total Stockholders´ equity……….. 4,043 4,043 269 269

Total capitalization……………..….. 9,334 10,333 618 684

(1) Converted into U.S. dollars, solely for the convenience of the reader, using an exchange rate of Ps.15.1542 per U.S. dollar, the Official Exchange Rate in effect on March 31, 2015. These conversions should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the specified rate or at the dates indicated or at all. See “Exchange Rates.” (2) Includes Ps.2.2 million (U.S.$0.1 million) short-term of the convertible loan of Inmobiliaria del Sudeste, S.A. de C.V. There are no amounts outstanding under our revolving credit facility with Banco Santander, S.A.

SELECTED FINANCIAL AND OPERATING INFORMATION The following tables set forth our summary historical and other financial data as of and for the periods indicated. The summary historical financial data for the years ended December 31, 2012, 2013 and 2014 were derived from the audited consolidated financial statements as of and for the years then ended, as audited by Galaz, Yamakazi, Ruiz Urquiza, S.C., a member of Deloitte Touche Tohmatsu Limited. Our audited consolidated financial statements have been prepared in accordance with IFRS. The summary historical financial data as of March 31, 2015 and for the three months ended March 31, 2014 and March 31, 2015 was derived from our unaudited condensed consolidated interim financial statements as of and for the periods then ended. Our unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS No 34, Interim Financial Reporting. The following information is qualified by reference to, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes beginning on page F-1 of this offering memorandum. The historical results are not necessarily indicative of results to be expected in any future period.

Statements of Comprehensive Income (Loss) Data:

Year Ended December 31, 2012 2013 2014 2014 Ps. Ps. Ps. (U.S.$)(1) (in thousands, except as otherwise indicated)

Consolidated net income (loss) ……………. 1,355,564 (1,757,814) 718,241 48,800

Three months ended March 31, 2014 2015 2015 Ps. Ps. (U.S.)(2) (in thousands, except as otherwise indicated)

Revenues: Hotel operation ………………………………………………. 644,303 751,624 49,598 Hotel management, brand and other ……………………… 247,056 331,338 21,864 Vacation Club ………………………………………………… 450,921 658,411 43,447 Other revenues ………………………………………………. 2,560 11,730 774 1,344,840 1,753,103 115,684 Operating expenses: Hotel operation cost and expenses ………………………... 242,660 271,116 17,890 Hotel management cost and expenses …………………… 273,135 303,923 20,055 Vacation Club cost and expenses …………………………. 374,755 487,442 32,165 Administrative ………………………………………………… 33,698 47,081 3,107 Sales, advertising and promotion ………………………….. 27,282 36,531 2,411 Maintenance and energy ……………………………………. 72,348 71,896 4,744 Property taxes and insurance ………………………………. 6,125 7,781 513 Corporate expenses …………………………………………. 57,238 83,035 5,479 Depreciation and amortization ……………………………… 95,937 87,822 5,795 Real estate leasing ………………………………………….. 82,068 96,980 6,400 Other expenses, net …………………………………………. 25,241 3,596 237 1,290,487 1,497,203 98,798 Operating income ……………………………….. 54,353 255,900 16,886 Interest expense …………………………………………………... 97,317 109,620 7,234 Interest income ……………………………………………………. (7,695) (15,233) (1,005) Commissions and financial expenses …………………………... 12,236 16,062 1,060 Exchange result, net (3) ………………………………………….. (8,727) 127,346 8,403 93,131 237,795 15,692 Equity in results of associated companies ……………………... (6,382) 0 0 Income (loss) before income tax …………………….. (45,160) 18,105 1,195 Income tax expense (benefit) ……………………………………. (13,548) 72,594 4,790 Consolidated loss from continuing operations …………..…….. (31,612) (54,489) (3,596) Loss from discontinued operations, net of income tax ……….. (537) (69) (5)

Consolidated net loss .………..……………………….. (32,149) (54,558) (3,600)

Statements of Financial Position Data:

As of December 31, 2012 2013 2014 2014 Ps. Ps. Ps. (U.S.$)(1) (in thousands, except as otherwise indicated) Assets Current assets: Cash and cash equivalents …………………………...... 1,431,867 706,365 997,792 67,794 Investments in securities …………….………………..…… 48,110 525,351 519,073 35,268 Accounts and notes receivable, net ………………………. 1,704,108 2,251,204 2,627,080 178,494 Inventories …………………………………………………… 44,375 35,803 34,068 2,315 Prepaid expenses …………………………………………… 77,370 121,866 133,311 9,058 Vacation Club inventory ……………………………………. 70,395 105,996 286,968 19,498 Other current assets ………………………….………...... 21,268 35,383 27,733 1,884 Assets classified as held for sale …………………………. 1,364,958 0 50,910 3,459 Total current assets ………………………………………… 4,762,451 3,781,968 4,676,935 317,770 Long-term notes receivable, net ……………………...... 1,355,028 1,513,309 1,726,722 117,320 Long-term accounts receivable ……………………...... 319,938 396,679 0 0 Vacation Club inventory in construction …………………. 272,600 239,944 303,150 20,597 Property and equipment, net (5) …………………...... 7,367,586 6,337,625 6,267,293 425,825 Investment in shares of associated companies …………. 40,300 35,437 1,879 128 Other assets ……………………...... 130,496 214,415 269,362 18,302 Deferred tax assets ……………………...... 72,610 4,933 Total non-current assets …………………………………… 9,485,948 8,737,409 8,641,016 587,105 Total assets …………………………………………………. 14,248,399 12,519,377 13,317,951 904,875 Liabilities and stockholders’ equity Current liabilities: Bank loans and current portion of long-term debt ……..... 1,005,842 2,498 1,449,957 98,516 Trade accounts payable ………………………………….... 381,355 348,327 400,101 27,184 Other liabilities and accrued expenses …………………… 954,872 784,931 806,166 54,774 Income tax payable …………………………………………. 45,203 597,538 280,272 19,043 Deferred income of Vacation Club ………………………… 29,266 45,069 65,344 4,440 Current portion of long-term value-added tax ……………. 111,945 101,703 133,539 9,073 Derivative financial instruments …………………………… 19,798 0 0 0 Liabilities directly associated with assets classified as held for sale………………………………………………….. 514,816 0 6,423 436 Total current liabilities (6)………………………...... 3,063,097 1,880,066 3,141,802 213,467 Long-term liabilities: Debt (7) ………………………………………………………. 4,059,456 4,555,080 4,432,316 301,149 Accrued liabilities ……………………………………………. 170,011 276,050 343,898 23,366 Value-added tax payable ……………………………...... 156,796 165,051 248,719 16,899 Deferred income of Vacation Club ……………………….. 256,000 394,198 508,858 34,574 Income tax payable …………………………………………. 99,359 702,233 533,148 36,224 Deferred income tax………………………………………… 1,220,783 1,158,482 0 0 Total long-term liabilities …………………………………… 5,962,405 7,251,094 6,066,939 412,212 Total liabilities ……………………………………………….. 9,025,502 9,131,160 9,208,741 625,679 Stockholders’ equity: Contributed capital: Capital stock …………………………………………………. 489,427 495,937 495,937 33,696 Contributions for future capital increases ………………… 17,523 12,516 12,516 850 Share repurchase reserve …………………………………. 133,509 133,509 16,800 1,141 Shares held in trust …………………………………………. (3,322) (3,322) 0 0 Additional paid-in capital …………………………………… 25,451 157,429 157,429 10,696 662,588 796,069 682,682 46,384 Earned capital: Share repurchase reserve …………………………………. 559,371 559,371 535,556 36,388 Retained earnings …………………………………………... 3,609,315 1,776,394 2,645,031 179,714 Accumulated other comprehensive income items ………. 15,138 25,982 27,244 1,851 4,183,824 2,361,747 3,207,831 217,953

As of December 31, 2012 2013 2014 2014 Ps. Ps. Ps. (U.S.$)(1) (in thousands, except as otherwise indicated)

Total controlling interest …………………………………… 4,846,412 3,157,816 3,890,513 264,337 Non-controlling interest ……………………………………. 376,485 230,401 218,697 14,859 Total stockholders’ equity …………………………………. 5,222,897 3,388,217 4,109,210 279,196 Total liabilities and stockholders’ equity …………………. 14,248,399 12,519,377 13,317,951 904,875

Other Financial Data: EBITDA (8) ………………………………………………….. 1,053,778 1,273,308 953,982 64,817 Other Operating Data:(9) ADR (10) …………………………………………………….. 984 1,040 1,108 75 RevPÄR (11) ………………………………………………… 633 670 703 48 Occupancy (12) ……………………………………………… 64.3% 64.4% 63.5% 63.5%

As of March 31, 2015 Ps. (U.S.$)(2) (in thousands, except as otherwise indicated) Assets Current assets: Cash and cash equivalents ……………………………………… 592,277 39,083 Investments in securities ………………………………………… 450,000 29,695 Accounts and notes receivable, net …………………………… 2,853,462 188,295 Inventories ………………………………………………………… 34,037 2,246 Prepaid expenses ………………………………………………… 187,058 12,344 Vacation Club inventory …………………………………………. 260,359 17,181 Other current assets ……………………………………………... 32,760 2,162 Assets classified as held for sale ………………………………. 57,250 3,778 Total current assets ………………………………………… 4,467,203 294,783 Long-term notes receivable, net ………………………………... 1,804,263 119,060 Vacation Club inventory in construction ……………………….. 314,395 20,746 Property and equipment, net (5) ………………………………... 6,290,120 415,074 Investment in shares of associated companies ………………. 1,879 124 Other assets ……………………………………………………… 285,338 18,829 Deferred tax assets ……………………………………………… 32,001 2,112 Total non-current assets …………………………………… 8,727,996 575,946 Total assets ……………………………………………………………. 13,195,199 870,729 Liabilities and stockholders’ equity Current liabilities: Bank loans and current portion of long-term debt (6) ………… 714,980 47,180 Trade accounts payable …………………………………………. 393,816 25,987 Other liabilities and accrued expenses ………………………… 1,013,111 66,853 Income tax payable ………………………………………………. 278,189 18,357 Deferred income of Vacation Club …………………………….. 363,738 24,002 Current portion of long-term value-added tax …………………. 111,397 7,351 Liabilities directly associated with assets classified as held for sale 4,109 271 Total current liabilities ………………………………………. 2,879,340 190,003 Long-term liabilities: Debt (7) ……………………………………………………………. 4,576,024 301,964 Accrued liabilities ………………………………………………… 349,173 23,041 Value-added tax payable ………………………………………... 243,284 16,054 Deferred income of Vacation Club …………………………….. 562,267 37,103 Income tax payable ………………………………………………. 542,433 35,794 Total long-term liabilities …………………………………… 6,273,181 413,957 Total liabilities ……………………………………………….. 9,152,521 603,959 Stockholders’ equity: Contributed capital: Capital stock ………………………………………………………. 495,937 32,726 Contributions for future capital increases ……………………… 12,516 826 Share repurchase reserve ………………………………………. 16,800 1,109 Shares held in trust ………………………………………………. 0 Additional paid-in capital ………………………………………… 157,429 10,388 682,682 45,049 Earned capital: Share repurchase reserve ………………………………………. 535,556 35,340 Retained earnings ………………………………………………... 2,599,281 171,522 Accumulated other comprehensive income items ………….… 27,076 1,787 3,161,913 208,649 Total controlling interest …………………………………… 3,844,595 253,698 Non-controlling interest …………………………………………. 198,083 13,071 Total stockholders’ equity ………………………………… 4,042,678 266,769

As of March 31, 2015 Ps. (U.S.$)(2) (in thousands, except as otherwise indicated)

Total liabilities and stockholders’ equity ……………………… 13,195,199 870,729

Other Financial Data: EBITDA (8) ....…………………………………………………… 343,722 22,682

Currency Country Recording Functional Reporting

EBITDA ...... 1,053,778 1,273,308 953,982 64,817 150,290 343,722 22,682

As of As of As of December 31, March 31, June 25, 2012 2013 2014 2014 2015 2015 Number of Hotels ...... 105 110 127 115 131 133 Owned hotels ...... 29 16 17 16 17 17 Managed hotels ...... 60 79 97 85 98 99 Leased hotels ...... 16 15 13 14 13 13 Franchised hotels - - - - 3 4 Number of available rooms ...... 17,871 18,943 21,094 19,623 21,742 22,021 Owned hotels ...... 6,210 4,811 4,817 4,811 4,817 4,817 Managed hotels ...... 8,851 11,575 14,002 12,397 14,169 14,295 Leased hotels ...... 2,810 2,557 2,275 2,415 2,275 2,275 Franchised hotels - - - - 481 634 Number of hotels ...... 105 110 127 115 131 133 Live Aqua ...... 2 2 2 2 2 2 Fiesta Americana(1) ...... 16 17 17 17 17 17 Fiesta Americana Vacation Club ...... 6 6 7 6 7 7 Fiesta Inn(2) ...... 61 60 62 61 62 62 One Hotels ...... 18 23 33 27 35 36 Gamma ...... 0 0 4 0 6 7 Other Brands(3) ...... 2 2 2 2 2 2 Number of available rooms ...... 17,871 18,943 21,094 19,623 21,742 22,021 Live Aqua ...... 506 506 506 506 506 506 Fiesta Americana(1) ...... 4,616 4,865 4,889 4,889 4,889 4,889 Fiesta Americana Vacation Club ...... 1,206 1,607 1,613 1,607 1,613 1,613 Fiesta Inn ...... 8,867 8,676 9,091 8,842 9,091 9,091 One Hotels ...... 2,260 2,873 4,061 3,363 4,312 4,438 Gamma ...... 0 0 518 0 915 1,068 Other Brands(3) ...... 416 416 416 416 416 416

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to help you understand and assess the significant changes and trends in the historical results of our operations and financial condition and factors affecting our financial resources. You should read this section in conjunction with our financial statements, including the notes thereto, which are included elsewhere in this offering memorandum. Our audited and unaudited consolidated financial statements have been prepared in accordance with IFRS, which differ in certain significant respects from each other and from U.S. GAAP. See “Presentation of Financial and Operating Information” and “Risk Factors—Risks Relating to Mexico—Our corporate disclosures, including our financial statements, may be different in significant respects than that of issuers in other countries.” Overview We believe we are the leading operator of hotels in Mexico based on number of rooms, geographic coverage and market share. We distinguish ourselves from other operators by offering hotel owners superior management and franchise services including among other things, centralized reservation and distribution networks, marketing programs, revenue-optimization tools, data gathering and customer relationship management capabilities, web-based guest satisfaction systems, robust customer loyalty programs and strong, well-defined brands. Through our subsidiaries, we currently operate 133 hotels (including 7 vacation club resorts), which includes two Fiesta Inn Loft hotels which are extended stay hotels physically attached to two Fiesta Inn hotels, with a total of 22,021 rooms in Mexico and the United States (in the State of Texas). In Mexico we operate 132 hotels with a total of 21,818 rooms (including our vacation club units). In addition, we own one hotel with 203 rooms in Texas. Of the 133 hotels we operate, 17 are owned, 13 are leased, 99 are managed-only hotels, and 4 are franchised. Our hotels are located in a mix of urban and coastal destinations serving both leisure and business travelers, with approximately 82% of our rooms located in urban destinations and 18% in coastal destinations. See “Business—Hotel Business” for a description of each of the structures under which we operate our hotel business. We also operate a vacation club business through Fiesta Americana Vacation Club, or FAVC. FAVC markets and sells memberships that grant a 40-year right to use vacation club resorts that we own and operate in upscale destinations in Mexico, including Los Cabos, Cancún, Acapulco, Kohunlich and Cozumel, as well as a vacation club program called Kivac, which consists of the sale of points which may be redeemed within five years of sale for accommodations in any of our hotels. In addition to FAVC and Kivac, we operate a luxury vacation club business called The Front Door which provides services similar to FAVC but is targeted to a more exclusive and luxury market. Together with the strategic expansion of our hotel operation and vacation club business, we have sought to build strong brand names and to foster customer recognition through consistency of service. We believe we have a unique mix of strong hotel brands with at least one option for each customer, and we consider our brands to be one of our greatest assets. Basis of Preparation of the Consolidated Financial Statements Our financial statements and other financial information have been prepared in accordance with IFRS, and are presented in pesos. IFRS differs in certain respects from U.S. GAAP. Consolidation of financial statements. Our consolidated financial statements include the financial statements of Grupo Posadas, S.A.B. de C.V. and the subsidiaries we control. Control is achieved when we: • Have power over the investee; • Are exposed, or have rights, to variable returns from its involvement with the investee; • Have the ability to use our power to affect our returns.

Profit or loss and each component of other comprehensive income are attributed to the owners of Grupo Posadas, S.A.B. de C.V. and to the non-controlling interests. All intragroup amounts and transactions between members of Grupo Posadas, S.A.B. de C.V. and the subsidiaries we control are eliminated in full on consolidation. Overview of Macroeconomic Conditions Almost all of our operations and our sales are in Mexico. As a result, our business, results of operations, financial condition and prospects are, to a great extent, tied to the general condition of the Mexican economy and the purchasing power of the Mexican population. In the past, the Mexican economy has been affected by adverse factors, including: • exchange rate instability and devaluations of the peso against the U.S. dollar and other currencies; • inflation and high interest rates; • uncertainty about Mexico's political, social and economic future, especially in the years immediately preceding and following presidential and congressional elections; • volatility and uncertainties in the global stock and credit markets; and • economic and political uncertainties in emerging or developing economies. If inflation or interest rates in Mexico increase significantly, or if the economies of Mexico or the United States fall into a recession or political conditions deteriorate, our business, results of operations, financial condition and prospects could suffer material adverse consequences because, among other things, demand for our hotel rooms and vacation club products may be reduced. See “Risk Factors— Risks relating to Mexico.” Factors Affecting Our Results of Operations Our revenues are primarily derived from the following sources: (1) hotel revenues at our owned and leased properties; (2) management, brand and other revenues, which include revenues from businesses which are ancillary to our hotel operations and comprise services rendered both to related parties and unrelated parties; and (3) vacation club membership revenues. In general, our hotel and management business line results are affected by: • occupancy and room rates achieved by our hotels that we operate, • our ability to manage costs, • the respective percentages in our portfolio of our owned, leased managed and franchised hotels, • changes in the number of available hotel rooms, • quantity and pricing of vacation club membership sales, and • timing of revenue recognition from ongoing vacation club projects. The following factors, which are not within our control, affect our revenues: • global economic conditions affecting the travel and hospitality industry, • supply and demand change for hotel rooms in our markets, • the financial condition of the airline industry, whether airlines will continue to serve the geographic markets where we operate and the impact of the airline industry on the lodging industry in our markets, • the effects of general health alerts, epidemics and virulent outbreaks, • natural phenomena such as hurricanes or earthquakes;

• terrorism, violence or other public safety risks that may affect travel and demand for lodging, • competition from within our industry, including new competitors in our markets, and • the availability of capital resources, including equity investment and financing on acceptable terms, to finance growth. Unfavorable changes in these factors could negatively impact hotel room demand and pricing, our ability to manage costs and our capacity to continue with our expansion plans. The following table sets forth, for the periods indicated, our average daily rate per room, or ADR, for hotels in Mexico, calculated by dividing total room revenues over such period by total room nights sold during such period; revenue per available room, or RevPAR, calculated by multiplying ADR by the occupancy rate; and occupancy, calculated for a period by dividing total room nights sold during the period by total rooms available for each day during the period. Our ADR, RevPAR and occupancy for hotels in Mexico is set forth on a consolidated basis by our urban and coastal properties for the last three years and for the three months ended March 31, 2014 and March 31, 2015. ADR, RevPAR and Occupancy Data(1)

For the years ended For the three December 31, months ended March 31, 2012 2013 2014 2014 2015 (amounts in pesos, except percentages) Total ADR (2) 984 1,040 1,108 1,141 1,218 RevPAR (3) 633 670 703 695 760 Occupancy(4) 64.3% 64.4% 63.5% 60.9% 62.4%

Urban ADR (2) 917 962 1,014 1,020 1,035 RevPAR (3) 591 612 635 599 622 Occupancy(4) 64.4% 63.6% 62.7% 58.7% 60.2%

Coastal ADR (2) 1,389 1,495 1,633 1,726 2,076 RevPAR (3) 882 1,045 1,112 1,290 1,572 Occupancy(4) 63.5% 69.9% 68.1% 74.7% 75.7%

(1) Includes only data for hotels in Mexico. (2) ADR means average daily rate per room and is determined by dividing total room revenues by total room nights sold during a period. (3) RevPAR means revenue per available room and is the product of multiplying ADR by the occupancy rate. (4) Occupancy is determined by dividing total room nights sold by total rooms available.

In addition to our core hotel and vacation club management business, we have also marketed our management skills and technology platforms developed to support our hotel operating business by establishing a number of related businesses: • Soluciones de Lealtad, S.A. de C.V., or Ampersand, manages loyalty programs for diverse related and unrelated businesses; • Konexo Centro de Soluciones, S.A. de C.V., or Konexo, provides call center and contact services; and • Conectum, S.A. de C.V., or Conectum, offers business process outsourcing services, or shared services, for diverse industries.

Our current plan is to use such service businesses to provide support services to our owned and managed properties. The following is a more detailed explanation of our revenues: Hotel operation. We generate revenues from our owned and leased hotels which include revenues from room rentals, food and beverage sales and other sources, including telephone, guest services, conference room rentals, gift shops and other amenities. With one exception, we do not have, nor do we seek to acquire, equity interests in hotels that we do not or will not operate. Revenues from hotel operation include revenues generated by those hotels to which we hold title or in which we have an equity interest of 50% or greater in the titleholder. Revenues from hotels and other businesses in which we have less than a 50% equity interest are presented under the line item Equity in results of associated companies net of all related expenses. Revenues from hotel operation also include revenues from our leased hotels. We operate and derive profits from our leased hotels as if such hotels were owned by us. Under our lease contracts, we pay a fixed rent to the hotel owner and, under the majority of such contracts, the owner benefits from the successful operation of the hotel through additional variable rent payments. Hotel management, brand and other. We receive fees pursuant to long-term management contracts for all of the hotels we operate. Our management contracts provide for the payment of fees for our operation based on certain specified criteria and the payment of expenses for the provision of services, and are structured according to three different models (i) traditional, (ii) fixed fee and (iii) percentage of gross operating profits. Our traditional management contracts typically involve (i) a base fee calculated as a percentage of a hotel’s gross operating profit, (ii) a management fee calculated as a percentage of a hotel’s total revenue, (iii) a brand fee calculated as a percentage of a hotel’s room revenue, (iv) several variable charges for the provision of different services such as reservations, technology, procurement and collections and (v) the payment of other expenses such as a common advertising fund, loyalty programs and sales fees. Our fixed fee management contracts typically involve (i) a base fee calculated as a percentage of a hotel’s gross operating profit, (ii) a management fee calculated as a percentage of a hotel’s total revenue, (iii) a brand fee calculated as a percentage of a hotel’s room revenue, (iv) a single fixed charge for the provision of different services such as reservations, technology, procurement, collections and (v) the payment of other expenses such as a common advertising fund, loyalty programs and sales fees. Our percentage of gross operating profits management contracts typically involve (i) a fee calculated as a percentage of a hotel’s gross operating profit and (ii) the payment of other expenses such as a common advertising fund, loyalty programs and sales fees. Revenues from hotel management may also include payments we receive in connection with early termination of management contracts. As of March 31, 2015, the fees we received pursuant to long-term management contracts for the hotels we operate were divided as follows: (i) 55% traditional model, (ii) 10% fixed fee model and (iii) 35% percentage of gross operating profits model. Because we have entered into management contracts with all of the hotels we operate, we receive management and other fees from our owned and leased hotels. Fees we receive from our owned and leased hotels are paid to us on substantially the same basis as the management fees we receive from unrelated third parties. Under IFRS, pursuant to criteria established in IAS 27, Consolidated and Individual Financial Statements, such transactions are eliminated in consolidation, as well as other significant intercompany balances. We receive fees pursuant to our long-term franchise contracts for all of the hotels we franchised. In general, our franchise contracts provide for the payment of fees and expenses based on (i) a percentage of a hotel’s room revenues, (ii) a fixed reservation fee, (iii) a fee for personnel training and (iv) the payment of other expenses such as a common advertising fund, loyalty programs and sales fees. Also our services businesses historically supported our hotel management business and we have separately marketed these services to third parties. We consolidate revenues from Ampersand and Konexo and include such consolidated revenues in our hotel management, brand and other revenues line item.

Vacation Club. Revenues from our Vacation Club line item consist primarily of revenues from the operation of FAVC and The Front Door which generate revenues from selling and financing vacation club memberships. Revenues from Kivac are also included. Other revenues. Revenues from our other revenues line item consist primarily of revenues from other ancillary activities. Effect of Devaluation and Inflation on Our Revenues, Costs and Operating Margins Historically, when the rate of devaluation in any fiscal period exceeds the rate of inflation for such period, the value of transactions denominated in U.S. dollars increases when converted to constant pesos. The effect of a sharply lower value of the peso against the U.S. dollar is to increase the revenues from our coastal hotels and vacation club business (from which we derive revenues primarily denominated in U.S. dollars). Generally, costs associated with our coastal hotels and our vacation club business do not increase proportionally during such periods, because (i) the substantial majority of our operating costs at our coastal hotels and our vacation club business are peso-denominated and (ii) the increase in our labor costs generally lags behind the rate of inflation. However, we also have lease agreements payable in U.S. dollars and, in the context of a devaluation of the peso, the lease payment obligations become relatively more burdensome for us. The combined effect of these factors is to increase our operating margins and operating cash flows during such periods, offsetting negative effects that lower occupancy levels or a recessionary climate may have on the margins of urban hotels. In contrast, during periods in which the rate of inflation exceeds the rate of devaluation, U.S. dollar denominated revenues decrease when converted to constant pesos, while peso-denominated costs increase proportionately to inflation. With the addition of more urban hotels (from which we derive revenues primarily denominated in pesos), we have managed to achieve a more balanced portfolio than in the past, providing a partial hedge against negative effects on operating margins which may be caused either by a devaluation or by an appreciation of the peso. Effect of Devaluation on Our Indebtedness In periods of peso devaluation, our net foreign exchange losses on our U.S. dollar denominated indebtedness tend to be higher and our costs of servicing such indebtedness tend to increase. In contrast, in periods of peso appreciation, the improvement in the value of the peso relative to the U.S. dollar results in a net foreign exchange gain for us. Historically, our policy has been to maintain a significant portion of our debt in U.S. dollars, see “—Liquidity and Capital Resources.” Of our total indebtedness as of December 31, 2014 and March 31, 2015, respectively, 100% of our debt was denominated in U.S. dollars. During 2014, we recognized a Ps.427.9 million foreign exchange loss and, over the three months ended March 31, 2015, we recognized a Ps.127.3 million foreign exchange loss. From time to time we have and may enter into foreign currency exchange derivative contracts to balance our currency exposure or to hedge our exposure to fluctuations in the value of the peso against the U.S. dollar. However, as of December 31, 2014, and March 31, 2015, respectively, we had no derivative contract positions. See “Risk Factors—We are exposed to currency and interest rate risk on our debt, and we have entered into derivatives contracts in the past.” Seasonality As of the date of this offering memorandum, of the 22,021 hotel rooms we operate, approximately 82% are in urban or suburban locations and cater primarily to business travelers. These hotel operations have not experienced significant seasonal fluctuations aside from minor reductions in occupancy during the holiday season from mid-December through mid-January. The remaining hotel rooms we operate are in coastal resort locations. Our coastal hotel operations generally experience two peak seasons. The first peak, the traditional winter season, occurs during the months of December through April and results primarily from foreign tourism. The second peak occurs during the summer months of July through August and results from Mexican and foreign tourism. This seasonality can be expected to cause quarterly fluctuations in our revenues. See “Risk Factors—The hotel industry is seasonal.” Critical Accounting Policies Beginning in 2012, our financial statements are prepared in conformity with IFRS. IFRS require that management make certain estimates and use certain assumptions that affect the amounts reported

in the financial statements and their related disclosures; however, actual results may differ from such estimates. In our judgement we have adequately disclosed the following: • information about judicial proceedings, in addition to the estimates made by our management in the process of applying accounting policies for line items that can significantly affect the financial statements; and • information about assumptions and sources of uncertainty of estimates that have a significant risk of resulting in an important adjustment in the carrying value of assets and liabilities over the following year. The following are critical judgements and important sources of uncertainty for which our management has determined an estimate at the dates of the financial statements: • The reserve for doubtful accounts and returns related to FAVC. We anticipate that, after the implementation of certain business strategies related to FAVC receivables, those accounts that are at most 11 months old may be reactivated; accounts aged greater than 11 months are normally cancelled. However, estimates of the reserve for doubtful accounts are recorded based on the entire portfolio. The average credit term related to amounts owed for hotel services is 22 days. We do not charge interest on outstanding amounts. Normally, amounts owed within this portfolio are not aged significantly, though occasionally, we have written-off uncollectible amounts. We also perform an analysis of sales of Vacation Club memberships to identify sales whose collectability is uncertain. A reserve for returns is recognized based on the historical return experience and is calculated based on the estimated future cash flows expected to be received from the sale. Changes in macroeconomic conditions can significantly affect the rate of returns and sales and, consequently the amount of the reserve for doubtful accounts and returns, which can have a significant impact on our financial statements. • Revenue recognition for FAVC and Kivac. Revenue from the operation of FAVC is recognized as rental income, separating the portion of the contract assigned to land (which is generally a minimal amount) and the portion that is assigned to the building, which is recognized as a financial lease. Revenue from the sale of points of Kivac is recognized once the service is provided, including an estimate of those points we anticipate may never be redeemed. Changes in the redemption patterns of points can impact the timing of revenue recognition. • Financial projections for asset impairment. At the end of each reporting period, we review the carrying amounts of our tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset (or the cash-generating unit to which it belongs) is estimated in order to determine the extent of the impairment loss (if any). If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. • The future benefit of tax losses. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Projections of taxable income are prepared for purposes of making this analysis, which include estimates of revenue growth projections, discounted using an appropriate discount rate. • The effects of our contingencies. We apply judgment in determining the impact of potential losses that may arise out of litigation and regulatory proceedings. We assess the probability of an unfavorable outcome, including based on advice from our internal and external counsel. To the extent a loss is probable, we estimate the potential outcome based on the most likely

estimate of the potential loss and a provision is recognized. Final settlement amounts for contingencies may differ materially from those estimates we have recognized. • Labor obligations. For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations carried out at the end of each annual reporting period. Actuarial assumptions include return on investments within the plans, the rate of increase in pensionable salaries, the rate of increase in the consumer price index, and the discount rate applied in discounting liabilities. For each of these assumptions there is a range of possible values and, in consultation with our actuaries, management decides the point within that range that most appropriately reflects our circumstances. Changes in these assumptions can have a significant impact on the net liability or asset recognized in our statement of financial position. • Redemption of loyalty program points. We record a liability for the estimated cost of providing awards for our Loyalty Program members. The amount of the liability is determined annually by independent actuaries, in close consultation with management. Variables reviewed include comparison of the cost estimates to actual costs incurred and the redemption assumptions to actual redemption experience. Changes in the minimum award levels or in the lives of the awards would also require us to reevaluate the liability, potentially resulting in a significant impact in the year of change as well as in future years. • The residual value of properties. The charge of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The residual values of our assets are determined by management at the time assets are acquired and reviewed annually for appropriateness. Increasing an asset’s residual value would result in a reduced depreciation charge in the consolidated income statement. Historically, changes in the residual value of our properties have not resulted in material changes to our depreciation charge. • Classification criteria of the operating segments of the issuer. The operating segment information is presented according to the information presented to and analyzed by our management, which they use to assess performance of our segments and allocation of resources. • The estimated amount of investments in securities other than cash equivalents. Judgment is applied in determining whether an investment meets the criteria as a cash equivalent or an investment in securities, based on the liquidity of the investment and management’s intention to use the resources generated from the investment to meet short-term commitments or to maintain such resources to obtain benefits from capital appreciation. We believe the estimates used and assumptions made were adequate under the circumstances. IFRS Our consolidated financial statements for the years ended December 31, 2012, 2013 and 2014 were prepared under IFRS. In 2014, we applied a number of amendments to IFRS and new interpretations issued by the International Financial Accounting Board that are mandatorily effective for accounting periods beginning after January 1, 2014: • Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities. The amendments to IFRS 10 define an investment entity and require a reporting that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss and separate financial statements. • Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities. The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities.

• Amendments to IAS 19 Defined Benefit Plans–Employee Contributions. The amendments to IAS 19 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee • IFRIC 21 Levies. IFRIC 21 addresses when to recognize a liability to pay a levy imposed by a government, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. Taxes In accordance with Mexican federal tax laws, we are subject to income taxes (ISR) and were subject, until 2013, to Business Flat Rate Tax (IETU). ISR takes into account the taxable and deductible effects of inflation, among other items. The ISR rate has been 30% since 2012. Until 2013, we filed our ISR tax returns and paid ISR on a consolidated basis with our Mexican subsidiaries. As of December 31, 2013, the tax consolidation rules were repealed, and as a consequence we must pay the income tax determined that was monetarily deferred until December 31, 2013, in a term of five fiscal years that started in 2014. This tax attributable to the termination of the consolidation regime was recorded in the consolidated statement of comprehensive income (loss) for the year ended December 31, 2013, under the category of income tax expense and amounts to Ps.882.3 million. As of December 31, 2014 and March 31, 2015, the balance of the liability related to this tax obligation was Ps.813.4 million and Ps.820.6 million, respectively. The short and long-term liabilities as of December 31, 2014, amount to Ps.280.3 million and Ps.533.1 million, respectively. Likewise, pursuant the new 2014 Income Tax Law (Ley del Impuesto Sobre la Renta), we must continue paying the tax that under the tax consolidation regime we deferred in the fiscal years prior to and including 2007. This is a consequence of (i) our holding company structure which was recognized for tax purposes until December 31, 2013, and (ii) the fact that we were subject to the payment scheme contained in Article 4, Section VI of the transitional provisions of the Income Tax Law of December 7, 2009, or article 70-A of the Income Tax Law of 2013 which was repealed.. IETU was a tax imposed on cash flows resulting from the sale of goods, the rendering of independent services and the granting of temporary use or enjoyment of goods, under the terms of the IETU Law, less certain authorized deductions. IETU was repealed as of January 1, 2014. Therefore, this tax was applicable until December 31, 2013 with respect to revenues, deductions and certain tax credits with respect to cash flows of each fiscal year. The IETU rate was 17.5%. Until December 31, 2013, the tax payable on our earnings was the greater of ISR or IETU. Until December 31, 2012, based on financial projections, we estimated that the tax we would effectively pay would be ISR. However we recognized both deferred ISR and deferred IETU in our accounting records given that we incurred a small portion of IETU related to certain subsidiary entities. Since December 31, 2013, we only calculate deferred ISR as a result of the elimination of IETU. The Income Tax Law of 2014 also provided an option for corporate groups to jointly calculate ISR in accordance with tax integration rules. The new rules allow “integrated” companies that are 80% directly or indirectly owned by an “integrating” company, to obtain certain benefits with respect to the payment of ISR, if the entities within the same corporate group register gains or losses within the same fiscal year. In that case, payment of ISR may be deferred for three years and ISR, as updated pursuant to the applicable rules, may be paid on the date on which the tax return corresponding to the fiscal year following such three-year period must be filed. We have decided to take advantage of these new rules and have therefore calculated ISR for 2014 as described above. In December 2013, the 0% rate for VAT (Impuesto al Valor Agregado or IVA) which was applicable to the provision of hotel services to groups of foreigners was repealed and was replaced by a tax stimulus which has been in effect since January 1, 2014. This tax stimulus requires charging 16% of IVA to services provided to such groups. The tax stimulus permits a credit of such 16% of IVA if certain specific requirements are met.

In addition to ISR and IVA, our activities may be subject to local taxes, such as the Tax on Accommodation (Impuesto sobre Hospedaje), and other taxes levied on other taxable activities which we may occasionally carry out, such as gambling and lottery activities, contests or others.

Results of operations for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 Events influencing our performance in the first three months of 2015 In the three months ended March 31, 2015, we had a 128.7% growth in EBITDA compared to the three months ended March 31, 2014. The increase in EBITDA is mainly attributable to better performance of our hotels, particularly those in coastal locations. Our net debt to EBITDA leverage ratio improved 0.5 times for the three months ended March 31, 2015 against the comparable period of the previous year, despite a 44 cent or 3.0% depreciation of the peso against the U.S. dollar during the three months ended March 31, 2015. The net loss for the three months ended March 31, 2015 was Ps.54.6 million and was due to an exchange loss of Ps.127 million as a consequence of the depreciation of the peso against the U.S. dollar and to tax expense of Ps.72.6 million. In 2015, we reached a partial settlement with the federal tax authorities of Mexico with respect to the audit of our subsidiary Turística Hotelera los Cabos Siglo XXI, S.A. C.V. The Mexican tax authorities determined a potential tax credit of Ps.243.5 million. The adoption of a conclusive agreement was requested before the office of the Attorney General for Taxpayer Protection (Tax Ombudsman) and we reached a preliminary agreement with SAT to pay Ps.41.8 million in order to settle the total claim. As of March 31, 2015, we had paid Ps.18.6 million of the settlement amount; the payment of the remaining Ps.23.2 million is still pending approval from SAT.

The following table sets forth our results of operations derived from our three principal operating business lines and certain other data for the periods specified:

Three months ended March 31, 2014 2015 Ps. Ps. (in thousands of pesos)

Revenues: Hotel operation …………………………………………………… 644,303 751,624 Hotel management, brand and other ………………………….. 247,056 331,338 Vacation Club …………………………………………………….. 450,921 658,411 Other revenues …………………………………………………... 2,560 11,730 1,344,840 1,753,103 Operating expenses: Hotel operation cost and expenses ……………………………. 242,660 271,116 Hotel management cost and expenses ……………………….. 273,135 303,923 Vacation Club cost and expenses ……………………………... 374,755 487,442 Administrative ……………………………………………………. 33,698 47,081 Sales, advertising and promotion ……………………………… 27,282 36,531 Maintenance and energy ……………………………………….. 72,348 71,896 Property taxes and insurance ………………………………….. 6,125 7,781 Corporate expenses …………………………………………….. 57,238 83,035 Depreciation and amortization …………………………………. 95,937 87,822 Real estate leasing ……………………………………………… 82,068 96,980 Other expenses, net …………………………………………….. 25,241 3,596 1,290,487 1,497,203 Operating (loss) income …………………………………… 54,353 255,900 Interest expense ………………………………………………………. 97,317 109,620 Interest income ………………………………………………………… (7,695) (15,233) Commissions and financial expenses ………………………………. 12,236 16,062 Exchange result, net …………………………………………………. (8,727) 127,346 93,131 237,795 Equity in results of associated companies …………………………. (6,382) 0 Income (loss) income before income tax ………………… (45,160) 18,105 Income tax expense (benefit)::……………………………………….. (13,548) 72,594 Consolidated loss from continuing operations ……………………... (31,612) (54,489) Loss from discontinued operations, net of income tax…………….. (537) (69)

Consolidated net loss…………..…………………………… (32,149) (54,558)

Information by operating segment for the three months ended March 31, 2015 is as follows:

Hotel Hotel management, Vacation Total 2015 Corporate Total Eliminations operation brand and Club consolidated other

Total revenues 753,929 530,832 11,730 658,411 1,954,902 (201,799) 1,753,103 Cost and general 641,627 370,087 512,835 1,524,549 (201,799) 1,322,750 expenses Corporate 83,035 83,035 83,035 expenses Depreciation and 87,822 87,822 87,822 amortization Other expenses 3,596 3,596 3,596

Operating 112,302 160,745 (162,723) 145,576 255,900 0 255,900 income (loss)

Information by operating segment for the three months ended March 31, 2014 is as follows:

Hotel Hotel management, Vacation Total 2014 Corporate Total Eliminations operation brand and Club consolidated other

Total revenues 651,439 419,086 2,560 450,921 1,524,006 (179,166) 1,344,840 Cost and general 569,003 327,060 395,174 1,291,237 (179,166) 1,112,071 expenses Corporate 57,238 57,238 57,238 expenses Depreciation and 95,937 95,937 95,937 amortization Other expenses 25,241 25,241 25,241

Operating 82,436 92,026 (175,856) 55,747 54,353 0 54,353 income (loss)

The tables above reflect our financial information by operating segment. The information for each individual segment does not include the effects of elimination of intercompany transactions; such eliminations are provided in a separate column to arrive at the consolidated totals. For this reason, amounts in the individual segment information above do not tie directly to the information for those segments in the consolidated statements of comprehensive income (loss). The discussions below generally refer to the results of our segments as presented net of eliminations, as within the consolidated statement of comprehensive income (loss). When we provide information or discussion of amounts prior to the effect of intercompany eliminations, as reported within the tables herein, we refer to such tables. Total Revenue Our total revenues increased for the three months ended March 31, 2015 by 30.4% to Ps.1,753.1 million from Ps.1,344.8 million in the three months ended March 31, 2014. This increase is primarily attributable to hotels with better operational statistics across the board as well as a stronger pace in membership sales in our vacation club membership business. The increase in RevPAR to Ps.760 for the first three months ended March 31, 2015 from Ps.695 for the first three months ended March 31, 2014 primarily resulted from a better mix in the ADR and occupancy indicators accompanied by more visits to Mexico by international tourists. Hotel operation Hotel operation includes revenues and expenses derived from the operation of owned and leased hotels. The operating data under hotel operation is only for owned and leased hotels in Mexico.

Revenues for the three months ended March 31, 2015 increased by 16.7% from Ps.644.3 million in the first three months ended March 31, 2014 to Ps.751.6 million in the first three months ended March 31, 2015, mainly as a result of higher RevPAR. The revenue increase is primarily attributable to a 3.1 percentage point increase in occupancy and a 22.7% increase in the RevPAR (effective rate) to Ps.1,005 for the first three months ended March 31, 2015 from Ps.819 for the first three months ended March 31, 2014 with 5,434 average number of available rooms for the first three months ended March 31, 2015, 0.6% less rooms than the 5,465 available rooms for the first three months ended March 31, 2014. The results of urban hotels showed an improvement in comparison to those recorded during the first three months ended March 31, 2014. The RevPAR rate was higher by 14.2% for the first three months ended March 31, 2015, Ps.772 for the first three months ended March 31, 2015, compared to Ps.676 for the first three months ended March 31, 2014. This increase was due to a (i) an increase of 9.6% in the ADR to Ps.1,195 for the first three months ended March 31, 2015 compared to Ps.1,090 for the first three months ended March 31, 2014, (ii) a 2.6 percentage point increase in the occupancy factor to 64.6% for the first three months ended March 31, 2015 compared to 62.0% for the first three months ended March 31, 2014, partially offset by (iii) a 4.5% decrease in the average number of available rooms, 4,191 for the first three months ended March 31, 2015 compared to 4,002 for the first three months ended March 31, 2014. Coastal hotels operated on average 12.4% more rooms, 1,432 for the first three months ended March 31, 2015 and 1,274 for the first three months ended March 31, 2014. These hotels recorded a 24.6% ADR increase to Ps.2,029 for the first three months ended March 31, 2015 compared to Ps.1,628 for the first three months ended March 31, 2014 and a 2.5 percentage point increase in occupancy to 81.6% for the first three months ended March 31, 2015 compared to 79.1% for the first three months ended March 31, 2014. This resulted in a 28.5% increase in RevPAR in comparison with the first three months ended March 31, 2014 to Ps.1,656 for the first three months ended March 31, 2015 compared to Ps.1,289 for the first three months ended March 31, 2014. Departmental costs and expenses in our hotel operation business consist of wages related to room staff and food and beverage personnel, food and beverage costs and other expenses such as commissions to agencies, reservation fees, room amenities and laundry services. Departmental costs and expenses were Ps.271.1 million during the three months ended March 31, 2015, representing an 11.7% increase as compared to Ps.242.7 million during the three months ended March 31, 2014. Departmental costs and expenses increased as a result of higher occupancy in comparison with the same period in 2014. Departmental profits (revenues minus departmental costs and expenses) were Ps.480.5 million for the three months ended March 31, 2015, representing a 19.6% increase when compared to Ps.401.6 million in the comparable period in 2014. General expenses related to our hotel operation business consist of administrative expenses, sales, advertising and promotional expenses as well as maintenance and energy costs. In the aggregate, such expenses increased by 16.6% to Ps.155.5 million during the three months ended March 31, 2015 from Ps.133.3 million in the comparable period of 2014. By category, such expenses changed as follows: (i) administrative expenses, which were Ps.47.1 million for the first three months ended March 31, 2015 and Ps.33.6 million for the three months ended March 31, 2014, increased by 39.7%, (ii) sales, advertising and promotion expenses, which were Ps. 36.5 million for the first three months ended March 31, 2015, and Ps. 27.2 million for the first three months ended March 31, 2014, increased by 33.7%, and (iii) maintenance and energy expenses, which were Ps. 71.8 million for the first three months ended March 31, 2015 and Ps. 72.3 million for the first three months ended March 31, 2014. Maintenance and energy costs decreased by 0.6% despite a higher occupancy as a result of better operational practices such as the implementation of programs to increase the efficiency in energy use and investments in more efficient equipment. While these expenses appear to have important percentage increases, they continue to represent the same percentage of total revenues for the three months ended March 31, 2015, and March 31, 2014, respectively. Administrative and sales expenses represented 4.8% and 4.5% of our total revenues for the three months ended March 31, 2015, and March 31, 2014, respectively, while maintenance and energy expenses represented 4.1% of our total revenues for three months ended March 31, 2015 and 5.4% of our total revenues for the three months ended March 31, 2014.

Expenses related to our hotel operation business include property taxes, payment of insurance premiums and other (income) expenses. When applicable, gains or losses derived from the sale of assets are also included in this line item. No assets were sold during the three months ended March 31, 2015. These expenses increased by 27.9% to Ps. 7.8 million in the three months ended March 31, 2015 from Ps. 6.1 million in the comparable period of 2014. However when these expenses are compared as a percentage of total revenues, they represent a slight decrease, representing 0.4% of the total revenues for the three months ended March 31, 2015 and 0.5% of total revenues for the three months ended March 31, 2014. Hotel management, brand and other Hotel management, brand and other includes management fees for all the hotels we operate, as well as revenues from franchises and brand services along with our loyalty management (Ampersand) and call center (Konexo). The operating data under hotel management, brand and other is for all the hotels we manage in Mexico. Revenues increased 34.1% to Ps.331.3 million in the three months ended March 31, 2015 from Ps.247.1 million in the three months ended March 31, 2014. Higher revenues were primarily attributable to better performance of all of our hotels. The revenue increase is primarily attributable to a 1.5 percentage point increase in occupancy and a 9.3% increase in the RevPAR to Ps.760 for the first three months ended March 31, 2015 from Ps.695 for the first three months ended March 31, 2014 with 19,534 average number of available rooms for the first three months ended March 31, 2015, 12.8% more rooms than the 17,320 available rooms for the first three months ended March 31, 2014. The results of urban hotels showed an improvement in comparison to those recorded during the first three months ended March 31, 2014. The RevPAR of urban hotels was greater by 4.0% for the first three months ended March 31, 2015 at Ps.622 for the first three months ended March 31, 2015 compared to Ps.599 for the first three months ended March 31, 2014. This was due to a (i) 12.1% increase in the average number of available rooms to 16,705 for the first three months ended March 31, 2015 compared to 14,901 for the first three months ended March 31, 2014, (ii) an increase of 1.4% in the ADR to Ps.1,035 for the first three months ended March 31, 2015 compared to Ps.1,020 for the first three months ended March 31, 2014 and (iii) a 1.5 percentage point increase in the occupancy factor to 60.2% for the first three months ended March 31, 2015 compared to 58.7% for the first three months ended March 31, 2014. Coastal hotels room operation increased by 16.9% to 2,829 for the first three months ended March 31, 2015 compared to 2,419 for the first three months ended March 31, 2014. These hotels registered a 20.3% ADR increase to Ps.2,076 for the first three months ended March 31, 2015 compared to Ps.1,726 for the first three months ended March 31, 2014 and a 1.0 percentage point increase in occupancy, 75.7% for the first three months ended March 31, 2015 and 74.7% for the first three months ended March 31, 2014. This resulted in a 21.9% increase in RevPAR in comparison with the first three months ended March 31, 2014 to Ps.1,572 for the first three months ended March 31, 2015 compared to Ps.1,290 for the first three months ended March 31, 2014. Four new hotels opened during the three months ended March 31, 2015, two under management contracts and two under franchise agreements under our Gamma brand. For the three months ended March 31, 2015, revenues from Ampersand and Konexo increased 95.9% when compared to the three months ended March 31, 2014, representing less than 10% of total revenues for our hotel management, franchise brand and other business line during the three months ended March 31, 2015. For a more detailed discussion about these businesses see "Business– Other Related Services Businesses." Direct costs and corporate expenses relating to our hotel management, brand and other business line include primarily the costs and expenses of our corporate sales, hotel operations and administration and hotel human resources departments and of our Ampersand and Konexo businesses. Such costs and expenses increased 11.3% to Ps.303.9 million during the three months ended March 31, 2015 from Ps.273.1 million in the comparable period of 2014. The increase in these costs and expenses represents only one third of the increase recorded in revenues for this business segment. When we compare the margins in the “Information by operating segment tables according to IFRS”, which are prior to giving

effect to the intercompany eliminations of revenues and expenses, in the three month period of 2015 a 30% margin was recorded versus a 22% margin for the same period of 2014. Vacation Club Our Vacation Club business line primarily includes our vacation properties comprised of the Fiesta Americana Vacation Club, The Front Door and Kivac programs. Revenues for our Vacation Club business line increased 46% during the three months ended March 31, 2015 to Ps.658.4 million from Ps.450.9 million during the comparable period for 2014. The increase was primarily propelled by a better pace in the volume of membership’s sales in all programs mentioned above, higher occupancy in our vacation club properties and the reopening of the Cozumel Dive Resort which was closed during 2014 in connection with its remodeling. Expenses for our Vacation Club business line mainly include expenses relating to vacation club sales, financing, administration and resort operation expenses. These expenses increased 30.1% to Ps.487.4 million during the three months ended March 31, 2015 from Ps.374.7 million in the comparable period of 2014. Expenses for our Vacation Club business line have been stable, representing 27.8% of total revenues for the three months ended March 31, 2015, and the comparable period of 2014. During the three months ended March 31, 2015, cancellation rates from the sale of memberships have remained at the same level as 2014 period due to stable market conditions and approximately 91% of total outstanding receivables are current. Other revenues Revenues from our other revenues line item consist primarily of revenues from ancillary activities. Revenues for the three months ended March 31, 2015, increased by 350.0% from Ps.2.6 million in the three months ended March 31, 2014, to Ps.11.7 million in the first three months ended March 31, 2015. The revenue increase is primarily attributable to a value added tax refund from our subsidiary Gran Inmobiliaria de Coahuila, S.A. de C.V. which merged into our subsidiary Promotora Inmobiliaria Hotelera during the three month period ended March 31, 2015. Corporate expenses Corporate expenses include our corporate overhead such as salaries, administrative expenses, legal fees and severance payments of our corporate finance, corporate human resources and technology departments, as well as the office of the Chief Executive Officer. Corporate expenses amounted to Ps.83 million during the three months ended March 31, 2015, a 45.1% increase when compared to Ps.57.2 million for the three months ended March 31, 2014. The increase is a result of severance payments due to a redundancy reduction program launched late in 2014. As a percentage of total revenue, corporate expenses represented 4.7% of total revenues during the three months ended March 31, 2015. Depreciation, amortization and real estate leasing We had depreciation, amortization and real estate leasing expenses of Ps.184.8 million during the three months ended March 31, 2015, an increase of 3.8% from Ps.178 million in the comparable period of 2014. The increase in these expenses was primarily attributable to the impact of the depreciation of the peso against the U.S. dollar with respect to the U.S. dollar-denominated leases of hotels in which we are the lessee. Operating income Our operating income consolidates the operating income of our hotel operation; hotel management, brand and other; Vacation Club revenues business lines and deducts our corporate expenses and depreciation, amortization and real estate leasing expenses. Accordingly, as a result of the foregoing, consolidated operating income was Ps.255.9 million during the three months ended March 31, 2015, a 370.4% increase when compared to Ps.54.4 million during the three months ended March 31, 2014. Other expenses, net Other expenses, net include primarily all amortized commissions, premiums and fees related to new loans or debt issuances, pre-operating expenses and other.

Our other expenses, net decreased by 86.1% during the three months ended March 31, 2015 to Ps.3.5 million when compared to Ps.25.2 million during the three months ended March 31, 2014. The decrease is predominantly attributable to the value added tax non-deductible charge accounted for in 2014. Net financing result Our net financing result was Ps.237.8 million for the three months ended March 31, 2015, a 155.4% increase when compared to Ps.93.1 million for the three months ended March 31, 2014. Net interest expense increased 5.3% to Ps.94.4 million during the three months ended March 31, 2015 from Ps.89.6 million in the comparable period of 2014, mainly due to the depreciation of the peso against the U.S. dollar. The exchange and conversion effects related to transactions denominated in foreign currency was a loss of Ps.127.3 million during the three months ended March 31, 2015 when compared to a gain of Ps.8.7 million during the comparable period of 2014. This is due to devaluation of the peso against the U.S. dollar. Taxes Taxes accrued were Ps.72.6 million for the three months ended March 31, 2015, compared to a tax benefit of Ps.13.5 million for the comparable period of 2014 as a result of a higher operating profit and the effect of deferred income taxes for the first quarter of 2015. In 2015, we reached a partial settlement with the federal tax authorities of Mexico with respect to the audit of our subsidiary Turística Hotelera los Cabos Siglo XXI, S.A. C.V. The Mexican tax authorities determined a potential tax credit of Ps.243.5 million. The adoption of a conclusive agreement was requested before the office of the Attorney General for Taxpayer Protection (Tax Ombudsman) and we reached a preliminary agreement with SAT to pay Ps.41.8 million in order to settle the total claim. As of March 31, 2015, we had paid Ps.18.6 million of the settlement amount; the payment of the remaining Ps.23.2 million is still pending approval from SAT. Consolidated net loss As a result of the factors described above, our net consolidated loss for the three months ended March 31, 2015 was Ps.54.6 million driven by the exchange loss of Ps.127.3 million and the increase in tax expense, which compares unfavorably to our Ps.32.1 million net loss for the three months ended March 31, 2014.

Results of operations for the year ended December 31, 2014 compared to the year ended December 31, 2013 The following table sets forth our results of operations derived from our three principal operating business lines and certain other data for the periods specified:

Year Ended December 31, 2013 2014 Ps. Ps. (in thousands of pesos)

Revenues: Hotel operation …………………………………………………… 2,673,704 2,691,647 Hotel management, brand and other ………………………….. 1,200,437 1,107,921 Vacation Club …………………………………………………….. 1,894,629 1,996,686 Sales of non- strategic properties ……………………………… 2,781,588 26,197 Other revenues …………………………………………………... 25,827 8,550,358 5,848,278 Operating expenses: Hotel operation cost and expenses ……………………………. 1,007,563 1,004,529 Hotel management cost and expenses ……………………….. 1,300,426 1,116,372 Vacation Club cost and expenses …………………………….. 1,429,250 1,520,736 Cost of sales of non- strategic properties ……………………... 2,216,418 26,197 Administrative ……………………………………………………. 137,977 177,299 Sales, advertising and promotion ……………………………… 110,563 105,726 Maintenance and energy ……………………………………….. 292,641 288,674 Property taxes and insurance ………………………………….. 25,329 23,130 Corporate expenses …………………………………………….. 247,157 256,202 Depreciation and amortization …………………………………. 420,057 409,265 Impairment of assets ……………………………………………. 894,831 0 Real estate leasing ……………………………………………… 326,513 329,761 Other expenses, net …………………………………………….. 183,213 45,669 8,591,938 5,303,560 Operating (loss) income …………………………………… (41,580) 544,718

Interest expense ………………………………………………………. 393,659 417,669 Interest income ………………………………………………………… (110,875) (22,509) Commissions and financial expenses ………………………………. 57,711 60,763 Exchange result, net …………………………………………………. 29,996 427,934 Effects of valuation of financial instruments ………………………... (2,209) 0 368,282 883,857 Equity in results of associated companies …………………………. (4,863) (12,595) Loss before income tax ………….....……………………… (414,725) (351,734) Income tax expense (benefit).………………………………………... 1,161,883 (1,061,257) Consolidated (loss) income from continuing operations ………..… (1,576,608) 709,523 (Loss) income from discontinued operations, net of income tax … (181,206) 8,718

Consolidated net (loss) income …………………………… (1,757,814) 718,241

Information by operating segment for the year ended December 31, 2014 is as follows:

Hotel Sale of Hotel management, Vacation non- Total 2014 Corporate Total Eliminations operation brand and Club strategic consolidated other assets

Total revenues 2,746,820 1,822,798 25,827 1,970,489 26,197 6,592,131 (743,853) 5,848,278 Cost and general 2,350,664 1,394,370 1,565,046 26,197 5,336,277 (743,853) 4,592,424

expenses Corporate 256,202 256,202 256,202 expenses Depreciation 409,265 409,265 409,265 and amortization Other expenses 45,669 45,669 45,669

Operating 396,156 428,428 (685,309) 405,443 0 544,718 0 544,718 income (loss)

Information by operating segment for the year ended December 31, 2013 is as follows:

Hotel Sale of Hotel management, Vacation non- Total 2013 Corporate Total Eliminations operation brand and Club strategic consolidated other assets

Total revenues 2,708,706 2,043,439 1,776,043 2,781,588 9,309,776 (759,418) 8,550,358 Cost and general 2,351,678 1,597,414 1,440,589 2,216,417 7,606,098 (759,418) 6,846,680

expenses Corporate 247,157 247,157 247,157 expenses Depreciation and 1,314,888 1,314,888 1,314,888

amortization Other expenses 183,213 183,213 183,213

Operating 357,028 446,025 (1,745,258) 335,454 565,171 (41,580) 0 (41,580) income (loss)

Hotel operation Hotel operation includes revenues and expenses derived from the operation of owned or leased hotels. The operating data under hotel operation is only for owned and leased hotels in Mexico. Revenues for the year ended December 31, 2014 increased by 0.7% to Ps.2,691.6 million from Ps.2,673.7 million in the year ended December 31, 2013. From an operating standpoint, the revenue increase is primarily attributable to (i) a 0.6 percentage point increase in occupancy, (ii) a 12.6% increase in the RevPAR to Ps.831 for the year ended December 31, 2014 from Ps.738 for the year ended December 31, 2013, partially offset by (iii) a 4.2% decrease in the average of available rooms from 5,668 for the year ended December 31, 2013 to 5,429 for the year ended December 31, 2014. The results of urban hotels showed an improvement in comparison to those recorded during the year ended December 31, 2013. The RevPAR of urban hotels was greater by 11.3% for the year ended December 31, 2014, Ps.742 for the year ended December 31, 2014 compared to Ps.667 for the year ended December 31, 2013. This was due to an increase of 9.1% in the ADR to Ps.1,099 for the year ended December 31, 2014 compared to Ps.1,007 for the year ended December 31, 2013, (ii) a 1.3 percentage point increase in the occupancy factor to 67.5% for the year ended December 31, 2014 compared to 66.2% for the year ended December 31, 2013, partially offset by a 10.5% decrease in the average of available rooms to 4,154 for the year ended December 31, 2014 compared to 4,643 for the year ended December 31, 2013. Coastal hotels operated on average 24.4% more rooms – 1,275 for the year ended December 31, 2014 compared to 1,025 for the year ended December 31, 2013 – due to the transfer of the hotel Fiesta Americana Grand Los Cabos Golf & Spa from the Vacation Club business which, from July 1, 2012 until December 2013, had been marketed by the Vacation Club. These hotels recorded a 9.6% ADR increase to Ps.1,514 for the year ended December 31, 2014 compared to Ps.1,381 for the year ended December 31, 2013, partially offset by a 2.8 percentage point decrease in occupancy to 74.0% for the year ended December 31, 2014 compared to 76.8% for the year ended December 31, 2013. This resulted in a 5.6% increase in RevPAR in comparison with the year ended December 31, 2013 to Ps.1,119 for the year ended December 31, 2014 compared to Ps.1,060 for the year ended December 31, 2013, which was driven by the consolidation of the shift of three hotels from the European plan to the all inclusive format (which provides for food and beverage and other related costs to be included in the base room rate paid by the guest), as well as an increase in tourist flow to beach destinations, mainly from the United States and Brazil. Departmental costs and expenses in our hotel operation business consist of food and beverage costs, wages related to room staff and food and beverage personnel and other expenses such as commissions to agencies, reservation fees, room amenities and laundry services. Departmental costs and expenses were Ps.1,004.5 million during the year ended December 31, 2014, representing a 0.3% decrease when compared to Ps.1,007.5 million during the year ended December 31, 2013. Departmental costs and expenses remained flat in line with the revenues from hotel operation after the reduction in the number of our owned hotels in comparison to the year ended December 31, 2013. Departmental profits (revenues minus departmental costs and expenses) were Ps.1,687.1 million in the year ended December 31, 2014, representing a 1.3% increase when compared to Ps.1,666.1 million in the year ended December 31, 2013. General expenses related to our hotel operation business consist of administrative expenses, sales, advertising and promotion expenses and maintenance and energy costs. In aggregate, such expenses increased 5.6% to Ps.571.7 million during the year ended December 31, 2014 from Ps.541.2 million during the year ended December 31, 2013. By category, such expenses increased as follows: (i) administrative expenses, which were Ps.177.3 million in the year ended December 31, 2014 and Ps.138.0 million in the year ended December 31, 2013, an increase of 28.5%, (ii) sales, advertising and promotion expenses, which were Ps.105.7 million in the year ended December 31, 2014 and Ps.110.6 million in the year ended December 31, 2013, a decrease of 4.4% and (iii) maintenance and energy expenses, which were Ps.288.7 million in the year ended December 31, 2014 and Ps.292.6 million in the year ended December 31, 2013, a decrease of 1.4%. Sales, advertising and promotion and maintenance and energy expenses decreased primarily as a result of a lower number of our owned hotels, better

operational practices such as the implementation of programs to increase the efficiency in energy use and investments in more efficient equipment; administrative expenses increased in line with the expansion of our hotel operation activities and the increase in revenue from this business line. Expenses related to our hotel operation business include payment of real estate taxes, insurance premiums and legal and auditors’ fees. When applicable, gains or losses derived from the sale of assets are also included in this item. Such expenses decreased by 8.7% from 2014 to 2013 due to a lower number of leased hotels. Hotel management, brand and other Hotel management, brand and other includes management and brand services along with our loyalty management (Ampersand) and call center (Konexo) businesses. The operating data under hotel management, brand and other is for all the hotels we manage in Mexico. Revenues for the year ended December 31, 2014 decreased by 7.7% to Ps.1,107.9 million for the year ended December 31, 2014 compared to Ps.1,200.4 million for the year ended December 31, 2013 mainly due to a resizing of the Konexo business unit as a significant contract was not renewed for 2014, offset by a 9.1% increase in the average number of available rooms to 18,259 for the year ended December 31, 2014 compared to 16,732 for the year ended December 31, 2013 and a 4.9% increase in RevPAR, Ps.703 for the year ended December 31, 2014 compared to Ps.670 for the year ended December 31, 2013. Direct costs and corporate expenses related to Hotel management, brand and other business line include, primarily, costs and expenses of its corporate sales, hotel operations, as well as costs related to human resources departments as well as its Ampersand and Konexo businesses. According to the summary of operating results, these costs and expenses decreased by 14.2% to Ps.1,116.4 million for the year ended December 31,2014 from Ps.1,300.4 million for the comparable period of 2013. The decrease in these costs and expenses is primarily attributable to the resizing of the Ampersand and Konexo businesses and the shift in the focus of these businesses to the provision of services to our own operations. For urban hotels the average number of available rooms presented an increase of 8.3% to 15,678 for the year ended December 31, 2014 compared to 14,475 for the year ended December 31, 2013, with an improvement of 5.4% in the average rate to Ps.1,014 for the year ended December 31, 2014 compared to Ps.962 for the year ended December 31, 2013, partially offset by a decrease in occupancy of 0.9 percentage points to 62.7% for the year ended December 31, 2014 compared to 63.6% for the year ended December 31, 2013, which ultimately resulted in a RevPAR increase of 3.9% to Ps.635 for the year ended December 31, 2014 compared to Ps.612 for the year ended December 31, 2013. Coastal hotels presented an increase of 14.3% in the available rooms average to 2,581 for the year ended December 31, 2014 compared to 2,258 for the year ended December 31, 2013. The average rate increased 9.3% to Ps.1,633 for the year ended December 31, 2014 compared to Ps.1,495 for the year ended December 31, 2013 with a lower occupancy of 1.8 percentage points to 68.1% for the year ended December 31, 2014 compared to 69.9% for the year ended December 31, 2013 which resulted in a RevPAR increase of 6.4% to Ps.1,112 for the year ended December 31, 2014 compared to Ps.1,045 for the year ended December 31, 2013. Vacation Club Our Vacation Club business line primarily includes our vacation properties comprised of the Fiesta Americana Vacation Club, The Front Door and Kivac programs. Revenue from the Vacation Club increased by 5.4% to Ps.1,996.7 million in the year ended December 31, 2014, from Ps.1,894.6 million in the year ended December 31, 2013. Growth defined the vacation properties business, with an increase in the number of members to more than 50,000 in the year ended December 31, 2014. Kivac reported approximately 19,000 clients. Expenses for the Vacation Club business line mainly include expenses related to sales, financing, administration and operating expenses for our destinations. These costs increased by 6.4% to Ps.1,520.7 million in the year ended December 31, 2014 from Ps.1,429.3 million for the year ended December 31, 2013.

As of December 31, 2014 the portfolio profile of Vacation Club, which is valued at approximately U.S.$188 million, was improved substantially and reveals its health since 89% of such portfolio falls within the regular collection period of less than 90 days. Sale of non-strategic properties Revenue for the sale of non-strategic properties during the year ended December 31, 2014 was Ps.26.2 million, a 99.0% decrease compared to Ps.2,781.6 million for the year ended December 31, 2013, as a result of the sale of a land parcel located in the State of Quintana Roo in which the Costa Maya hotel was previously located. The Ps.2,781.6 million revenue for the sale of non-strategic properties during the year ended December 31, 2013 was a result of the sale of 14 of our hotels to FibraHotel. Other revenues Revenues from our other revenues line item consist primarily of revenues from ancillary activities. Revenues for the year ended December 31, 2014 were Ps.25.8 million, compared to Ps.0 for the year ended December 31, 2013, as a result of the payment of a dividend corresponding to the sale of 2 hotels to FibraHotel by a company in which we have a non-controlling interest of 25%. Corporate expenses Corporate expenses include our corporate overhead such as salaries, administrative expenses, legal fees and severance payments of our corporate finance, corporate human resources and technology departments, as well as the office of the Chief Executive Officer. Corporate expenses in the year ended December 31, 2014 represented Ps.256.2 million, a 3.7% increase compared to Ps.247.2 million for the year ended December 31, 2013. As a percentage of our revenues, corporate expenses represented 4.4% of our total income for the year ended December 31, 2014. The increase in corporate expenses is the result of expenses that have been incurred in connection with the reorganization of our management team, which included severance payments. Depreciation, amortization and real estate leasing We had depreciation, amortization and real estate leasing expenses of Ps.739.0 million in the year ended December 31, 2014, a 1.0% decrease in comparison to the Ps.746.6 million during 2013 mainly due to a lower depreciation as a result of a lower number of leased hotels. Operating income (loss) Our operating income (loss) consolidates the operating income of our hotel operation; hotel management, brand and other; Vacation Club and other revenues business lines and deducts our corporate expenses and depreciation, amortization and real estate leasing expenses. Accordingly, as a result of the foregoing, consolidated operating income was Ps.544.7 million in the year ended December 31, 2014 compared to an operating loss of Ps.41.6 million in the year ended December 31, 2013. The loss in the year ended December 31, 2013 was mainly related to our recognition of an impairment in the value of our assets in the amount of Ps.894.8 million, as a result of the sale of the shares of our non- strategic assets of a subsidiary (Antigua Inmobiliaria Hotelera, S.A. de C.V.) and the refurbishment of the Fiesta Americana Villas Cozumel hotel. Other expenses, net Other expenses, net include primarily all amortized commissions, premiums and fees related to new loans or debt issuances and pre-operating expenses. Our other expenses, net decreased by 75.1% during the year ended December 31, 2014 to Ps.45.7 million compared to Ps.183.2 million during the year ended December 31, 2013. The decrease is mainly attributable to the foreclosure in 2013 on certain of our shares which secured certain of our obligations in connection with the development of a land plot located in the Riviera Maya commonly known as Chemuyil.

Net financing result Our net financing result was Ps.883.8 million in the year ended December 31, 2014, a 140.0% increase as compared to Ps.368.3 million in the year ended December 31, 2013. Interest expense increased by 6.1% to Ps.417.7 million in the year ended December 31, 2014, in comparison to Ps.393.6 million for the comparable period of 2013. Currency exchange effects related to transactions denominated in foreign currency resulted in a loss of Ps.427.9 million in the year ended December 31, 2014, compared to a loss of Ps.30.0 million in the year ended December 31, 2013. The aforementioned increases were mainly due to the depreciation of the peso against the U.S. dollar by 12.6% during the year ended December 31, 2014. Taxes The enactment of new tax laws in Mexico and the repealing of the tax rules regarding consolidation in 2013, effective in 2014, had various consequences on our tax expense during the years ended December 31, 2013 and 2014. Under the Income Tax Law (LISR) in effect in 2014, the tax consolidation scheme was eliminated and, therefore, we are obligated to pay the deferred tax up to December 31, 2013, during the following five years starting in 2014. This deconsolidation tax of Ps.882.2 million was recognized under income taxes in the consolidated statement of comprehensive income (loss) for the year ended December 31, 2013. Similarly, the 2014 LISR eliminated the incentives that allowed the gain on the sale or contribution of real property to a qualified Real Estate Company (SIBRAs) in exchange for shares in the SIBRA to be deferred for tax purposes until the sale of the shares held in the SIBRA occurs. Consequently, if the conditions for deferral of the gain for tax purposes has not been fulfilled as of December 31, 2016, the tax must be accrued on that date. The tax liability for the gain on certain SIBRA transactions we entered into was not fully recorded previously because we had no plans to sell the shares or the assets related to these transactions. Consequently, due to the change in circumstances, we recorded a deferred tax of Ps.1,297.4 million in 2013. However, based on a series of additional analyses and the tax attributes we complied with during 2014, Ps.1,043.6 million was canceled in the consolidated statement of comprehensive income, resulting in an income tax benefit for the year ended December 31, 2014. Additionally, as a result of the negotiation of the settlement of certain income tax proceedings with the Mexican tax authorities originating from their audits in connection with the years 2004 to 2008, we recognized Ps.125.6 million of income tax expense for the year ended December 31, 2013. Income from discontinued operations, net of income tax In September 2014, we executed an agreement to fully terminate the escrow guaranty related to the sale of our hotel operation business in South America, pursuant to which termination we received U.S.$16.6 million. This amount was partially offset by a related payable, resulting in a net gain on the transaction of Ps.8.7 million included in discontinued operations. Consolidated net income (loss) As a result of the factors described above, our net consolidated income for the year ended December 31, 2014 was Ps.718.2 million, a change from the Ps.1,757.8 million net loss for the year ended December 31, 2013.

Results of operations for the year ended December 31, 2013 compared to the year ended December 31, 2012 The following table sets forth our results of operations derived from our three principal operating business lines and certain other data for the periods specified:

Year Ended December 31, 2012 2013 Ps. Ps. (in thousands of pesos)

Revenues: Hotel operation ……………………………………………………….. 3,026,383 2,673,704 Hotel management, brand and other ………………………………. 1,268,734 1,200,437 Vacation Club ………………………………………………………… 1,844,757 1,894,629 Sales of non- strategic properties ………………………………….. 0 2,781,588 Other revenues ………………………………………………………. 6,139,874 8,550,358 Operating expenses: Hotel operation cost and expenses ………………………………… 1,069,259 1,007,563 Hotel management cost and expenses ……………………………. 1,459,605 1,300,426 Vacation Club cost and expenses ………………………………….. 1,250,621 1,429,250 Cost of sales of non- strategic properties ………………………….. 0 2,216,418 Administrative ………………………………………………………… 240,699 137,977 Sales, advertising and promotion …………………………………... 130,342 110,563 Maintenance and energy ……………………………………………. 331,797 292,641 Property taxes and insurance ………………………………………. 29,560 25,329 Corporate expenses …………………………………………………. 212,070 247,157 Depreciation and amortization ……………………………………… 431,511 420,057 Impairment of assets ………………………………………………… 0 894,831 Real estate leasing …………………………………………………… 331,154 326,513 Other expenses, net …………………………………………………. 30,989 183,213 5,517,607 8,591,938 Operating income (loss)………………………………………... 622,267 (41,580) Interest expense …………………………………………………………… 610,174 393,659 Interest income …………………………………………………………….. (27,139) (110,875) Commissions and financial expenses …………………………………… 173,847 57,711 Exchange result, net ……………………………………………………… (152,200) 29,996 Effects of valuation of financial instruments …………………………….. (80,613) (2,209) 524,069 368,282 Equity in results of associated companies ……………………………… (2,119) (4,863) Income (loss) before income tax ……………………………… 96,079 (414,725) Income tax expense ………………………………………………………. 616,559 1,161,883 Consolidated loss from continuing operations ………………..……….. (520,480) (1,576,608) Income (loss) from discontinued operations, net of income tax ……... 1,876,044 (181,206)

Consolidated net income (loss) ……………………………….. 1,355,564 (1,757,814)

Information by operating segment for the year ended December 31, 2013 is as follows:

Hotel Sale of Hotel management, Vacation non- Total 2013 Corporate Total Eliminations operation brand and Club strategic consolidated other assets

Total revenues 2,708,706 2,043,439 1,776,043 2,781,588 9,309,776 (759,418) 8,550,358 Cost and general 2,351,678 1,597,414 1,440,589 2,216,417 7,606,098 (759,418) 6,846,680

expenses Corporate 247,157 247,157 247,157 expenses Depreciation and 1,314,888 1,314,888 1,314,888

amortization Other expenses 183,213 183,213 183,213

Operating 357,028 446,025 (1,745,258) 335,454 565,171 (41,580) 0 (41,580) income (loss)

Information by operating segment for the year ended December 31, 2012 is as follows:

Hotel Sale of Hotel management, Vacation non- Total 2012 Corporate Total Eliminations operation brand and Club strategic consolidated other assets

Total revenues 3,071,734 2,231,270 1,716,785 7,019,789 (879,915) 6,139,874 Cost and general 2,648,964 1,761,306 1,312,682 5,722,952 (879,915) 4,843,037

expenses Corporate 212,070 212,070 212,070 expenses Depreciation and 431,511 431,511 431,511

amortization Other expenses 30,989 30,989 30,989

Operating 422,770 469,964 (674,570) 404,103 622,267 0 622,267 income (loss)

The tables above reflect our financial information by operating segment. The information for each individual segment does not include the effects of elimination of intercompany eliminations; such eliminations are provided in a separate column to arrive at the consolidated totals. For this reason, amounts in the individual segment information above do not tie directly to the information for those segments in the consolidated statements of comprehensive income (loss). The discussions below generally refer to the results of our segments as presented net of eliminations, as within the consolidated statement of comprehensive income (loss). When we provide information or discussion of amount prior to the effect of intercompany eliminations, as reported within the tables herein, we refer to such tables. Total Revenue Our total revenue increased by 39.3% from Ps.6,139.9 million in the year ended December 31, 2012 to Ps.8,550.3 million in the year ended December 31, 2013, mainly as a result of the sale of 14 hotels to FibraHotel. During the year ended December 31, 2013 Ps.2,781.6 million were recorded as total revenues for the sale of these non-strategic hotels.

Hotel operation Hotel operation includes revenues and expenses derived from the operation of owned and leased hotels. The operating data under hotel operation is only for owned and leased hotels in Mexico. Revenues for the year ended December 31, 2013 decreased by 11.7% to Ps.2,673.7 million from Ps.3,026.4 million for the year ended December 31, 2012. From an operating standpoint, although a significant portion of the operating indicators discussed below improved, the hotel operation segment revenues decreased as a result of the sale of 14 of our hotels during the year ended December 31, 2014. In addition to the foregoing, the revenue decrease is primarily attributable to the following: a 26.8% decrease in the average number of available rooms to 5,668 average available rooms for the year ended December 31, 2013 compared to 7,740 average available rooms operated in the year ended December 31, 2012, partially offset by (i) a 1.1 percentage point increase in occupancy from 67.0% in the year ended December 31, 2012 to 68.1% in the year ended December 31, 2013, and (ii) a 12.2% increase in RevPAR from Ps.658 for the year ended December 31, 2012 to Ps.738 for the year ended December 31, 2013. The results of urban hotels recorded a significant improvement in the year ended December 31, 2013 compared to the results recorded for the year ended December 31, 2012. The RevPAR of urban hotels was greater by 6.4% for the year ended December 31, 2013 to Ps.667 for the year ended December 31, 2013 compared to Ps.627 for the year ended December 31, 2012. This was due to a an increase of 7.5% in the ADR to Ps.1,007 for the year ended December 31, 2013 compared to Ps.937 for the year ended December 31, 2012, partially offset by (i) a 29.9% decrease in the average of available rooms to 4,643 for the year ended December 31, 2013 compared to 6,628 for the year ended December 31, 2012 and (ii) a 0.7 percentage point decrease in the occupancy factor to 66.2% for the year ended December 31, 2013 compared to 66.9% for the year ended December 31, 2012. Coastal hotels operated on average 7.8% less rooms, due to the transfer of substantially all of the Fiesta Americana Cozumel Reef hotel to the Vacation Club business, which as of July 1, 2012 began to be marketed by this business unit. This was partially offset by the fact that these hotels recorded a 10.6% increase in the average rate to Ps.1,381 for the year ended December 31, 2013 compared to Ps.1,249 for the year ended December 31, 2012 together with 9.4 percentage points increase in occupancy to 76.8% for the year ended December 31, 2013 compared to 67.3% for the year ended December 31, 2012. The foregoing resulted in a RevPAR increase of 26.0% to Ps.1,060 for the year ended December 31, 2013 compared to Ps.841 for the year ended December 31, 2012, which was driven by the shift to the all inclusive format (which provides for food and beverage and other related costs to be included in the base room rate paid by the guest), as well as an increase in tourist flow to coastal destinations, mainly from the United States and Brazil. Departmental costs and expenses in our hotel operation business consist of food and beverage costs, wages related to room staff and food and beverage personnel and other expenses such as commissions to agencies, reservation fees, room amenities and laundry services. Departmental costs and expenses were Ps.1,007.6 million for the year ended December 31, 2013, showing a decrease of 5.8% in comparison with the Ps.1,069.3 million for the year ended December 31, 2012. Departmental costs and expenses decreased as a result of a lower amount of hotel operation in comparison with the year ended December 31, 2012. Departmental profits (revenues minus departmental costs and expenses) were Ps.1,666.1 million for the year ended December 31, 2013, representing a 14.9% decrease in comparison with Ps.1,957.1 million for the year ended December 31, 2012. General expenses related to our hotel operation business consist of administrative expenses, sales, advertising and promotion expenses and maintenance and energy costs. In aggregate, these expenses decreased by 23.0% to Ps.541.2 million in for the year ended December 31, 2013 from Ps.702.8 million for the year ended December 31, 2012. By category, these expenses varied as follows: (i) administrative expenses decreased by 42.7% to Ps.138.0 for the year ended December 31, 2013 from Ps.240.7 million for the comparable period of 2012, (ii) sales, advertising and promotion expenses decreased 15.2% to Ps.110.6 million for the year ended December 31, 2013 from Ps.130.3 million for the year ended December 31, 2012, and (iii) maintenance and energy costs decreased by 11.8% from Ps.331.8 million for the year ended December 31, 2012 to Ps.292.6 million for the year ended December 31, 2013. General expenses decreased primarily as a result of a lower number of our owned hotels,

better operational practices such as the implementation of programs to increase the efficiency in energy use and investments in more efficient equipment. Expenses related to our hotel operation business include payment of real estate taxes, insurance premiums and other. Other expenses primarily consist of rental payments and auditing and legal fees. When applicable, gains or losses derived from the sale of assets are also included in this item. Other expenses decreased 14.5% to Ps.25.3 million in the year ended December 31, 2013 from Ps.29.6 million in the comparable period of 2012 mainly due to the sale of 14 hotels to FibraHotel during the year ended December 31, 2013 which reduced the amount of expenses related to ownership of hotels, such as payment of real estate taxes. Hotel management, brand and other Hotel management, brand and other includes management and brand services along with our loyalty management (Ampersand) and call center (Konexo) businesses. The operating data under hotel management, brand and other is for all the hotels we manage in Mexico. Revenues for the year ended December 31, 2013 decreased by 5.4% to Ps.1,200.4 million from Ps.1,268.7 million for the year ended December 31, 2012. The decrease in revenues is primarily attributable to the resizing of the Ampersand and Konexo businesses and the shift in the focus of these businesses to the provision of services to our own operations, offset by the 5.9% growth in the consolidated RevPAR of our hotels to Ps.670 for the year ended December 31, 2013 compared to Ps.633 for the year ended December 31, 2012, which in turn was due to a similar occupancy rate and an increase in the average rate of 5.7% to Ps.1,040 for the year ended December 31, 2013 compared to Ps.984 for the year ended December 31, 2012. Seven new hotels under management contracts opened during the year ended December 31, 2013, adding 894 rooms. Direct costs and corporate expenses relating to our hotel management, brand and other business line include primarily the costs and expenses of our corporate sales, hotel operations and administration and hotel human resources departments. They also include the costs and expenses of our Ampersand and Konexo businesses. Such costs and expenses decreased 10.9% to Ps.1,300.4 million for the year ended December 31, 2013 from Ps.1,459.6 million for the year ended December 31, 2012. The decrease in these costs and expenses is primarily attributable to the resizing of the Ampersand and Konexo businesses and the shift in the focus of these businesses to the provision of services to our own operations. For urban hotels, the average number of available rooms presented a 4.1% increase with a 5.0% improvement in the ADR to Ps.962 for the year ended December 31, 2013 compared to Ps.917 for the year ended December 31, 2012, together with a 0.8 percentage point occupancy decrease to attain a 3.6% higher RevPAR to Ps.612 for the year ended December 31, 2013 compared to Ps.591 for the year ended December 31, 2012. Coastal hotels recorded a 4.5% decrease in the average number of available rooms, as a result of the shift of the hotel in Cozumel and due to the fact that, as of October 1, 2013, a hotel located in Mazatlán ceased to be operated. The ADR increased 7.6% to Ps.1,495 for the year ended December 31, 2013 compared to Ps.1,389 for the year ended December 31, 2012, together with a greater occupancy of 6.4 percentage points to 69.9% for the year ended December 31, 2013 compared to 63.5% for the year ended December 31, 2012, thereby increasing the RevPAR by 18.5% to Ps.1,045 for the year ended December 31, 2013 compared to Ps.882 for the year ended December 31, 2012. Vacation Club Our Vacation Club business line primarily includes our Fiesta Americana Vacation Club. Revenues for our Vacation Club increased 2.7% to Ps.1,894.6 million for the year ended December 31, 2013 from Ps.1,844.7 million for the year ended December 31, 2012. Growth defined the vacation properties business line with a 14% increase in members during the year ended December 31, 2013, reaching approximately 43,700 members. In 2013 we launched a new product called The Front Door within our Vacation Club business line which is similar to the Fiesta Americana Vacation Club (FAVC) product but is focused to a more exclusive and luxury market. In connection therewith, in April 2013 we acquired 16 apartments in Puerto Vallarta

with a total investment of U.S.$5.6 million, which have been devoted to the Private Residence Club under The Front Door brand and which are available since August 13, 2013. Expenses for our Vacation Club business line mainly include expenses relating to vacation club sales, financing, administration and resort operation expenses. These costs increased more than our revenues in a 14.3% to Ps.1,429.3 million for the year ended December 31, 2013 from Ps.1,250.6 million for the year ended December 31, 2012. We have during these years successfully implemented various control strategies in order to reduce cancellations by including a reservation amendment fee, as well as by converting our customers’ liabilities in U.S. dollars into pesos at a higher interest rate. As of December 31, 2013, 164 new rooms were added by opening the Nima Bay hotel in Puerto Vallarta and, as of that date, operations in the third phase of the Fiesta Americana Vacation Villas in Los Cabos, which includes 148 rooms. The portfolio profile which as of December 31, 2013 was valued in excess of U.S.$171 million substantially improved and reveals the soundness and health of the portfolio. Its delinquency levels are comparable to those recorded before 2008, which was when our portfolio was operating at its peak. These delinquency levels are below international industry standards. Sale of non-strategic properties Revenue for the sale of non-strategic properties during the year ended December 31, 2013 was Ps.2,781.6 million compared to Ps.0 for the year ended December 31, 2012, as a result of the sale of 14 of our hotels to FibraHotel. Other revenues There were no revenues for the years ended December 31, 2013 and December 31, 2012. Corporate expenses Corporate expenses generally include our corporate overhead such as salaries, administrative expenses, legal fees and other payments for our corporate finance, corporate human resources and technology departments, and the office of the Chief Executive Officer. Corporate expenses amounted to Ps.247.2 million for the year ended December 31, 2013 which is a 16.6% increase compared to Ps.212.1 million for the year ended December 31, 2012. Corporate expenses represented 2.9% of our total revenues for the year ended December 31, 2013. This increase is the result of expenses that have been incurred in connection with the reorganization of our management team, which included severance payments. Depreciation, amortization and real estate leasing We had depreciation, amortization, and real estate leasing expenses of Ps.746.6 million for the year ended December 31, 2013; an increase of 2.1% from Ps.762.7 million in 2012. These amounts represent similar percentage of total revenues for the years ended December 31, 2013 and December 31, 2012. Asset impairment As a result of the sale of the shares of our non-strategic assets subsidiary (Antigua Inmobiliaria Hotelera, S.A. de C.V.) and the refurbishment of the Fiesta Americana Villas Cozumel hotel, we recorded an impairment in the value of our assets in the amount of Ps.894.8 million for the year ended December 31, 2013. Operating income Our operating income consolidates the operating income of our hotel operation; hotel management, brand and other; Vacation Club and other revenues business lines and deducts our corporate expenses and depreciation, amortization and real estate leasing expenses. Accordingly, as a result of the foregoing, our consolidated operating income was a loss of Ps.41.6 million for the year ended December 31, 2013 as compared to a profit of Ps.622.3 million for the year ended December 31, 2012.

Other expenses, net Other expenses, net include primarily all amortized commissions, premiums and fees related to new loans or debt issuances and pre-operating expenses. Our other expenses, net increased by 490.9% during the year ended December 31, 2013 to Ps.183.2 million when compared to Ps.31.0 million during the year ended December 31, 2012. The increase is mainly attributable to the foreclosure in 2013 on certain of our shares which secured certain of our obligations in connection with the development of a land plot located in the Riviera Maya commonly known as Chemuyil. Net financing result Our net financing result was Ps.368.3 million for the year ended December 31, 2013, a 29.7% decrease as compared to Ps.524.1 million for the year ended December 31, 2012. Net interest expense reduced by 35.5% to Ps.393.7 million for the year ended December 31, 2013 from Ps.610.2 million for the year ended December 31, 2012, mainly as a result of the important reduction in overall debt that we accomplished during the fourth quarter of the year ended December 31, 2012. The exchange and conversion effects related to transactions denominated in foreign currency were a loss of Ps.30.0 million for the year ended December 31, 2013 compared to a gain of Ps.152.2 million for the year ended December 31, 2012. This is due to the impact of the depreciation of the peso of 1.0% during the year ended December 31, 2013, compared to an appreciation of 6.9% in the same period of the previous year. Taxes As a consequence of the enactment of new tax laws in Mexico and the repealing of the tax rules regarding consolidation, we recorded Ps.882.3 million of taxes payable related to deconsolidation effects, and additional taxes of Ps.125.6 million as a result of the tax amnesty expense. We are obligated to pay the deferred tax as assessed on December 31, 2013 during the following five fiscal years starting on the year commencing January 1, 2014. Income from discontinued operations, net of income tax For the years ended December 31, 2013 and 2012, the revenue and expenses of our South American assets which were sold, were reported as discontinued operations. This resulted in a net tax gain of Ps.1,876.0 million for the year ended December 31, 2012. Certain price adjustments in connection with the sale of our South American have been guaranteed with amounts on deposit in an escrow account. The excess minimum reserve amount of the escrow was released in 2014. Consolidated net income (loss) As a result of the factors described above, our net consolidated loss for the year ended December 31, 2013 was Ps.1,757.8 million, and Ps.1,355.6 million net income for the year ended December 31, 2012. Liquidity and Capital Resources Overview We have successfully transitioned from an enterprise that primarily owns hotels to a company whose growth and revenue derive mainly from hotel management and other related services. While capital expenditures under our management model are substantially lower than under our hotel operation model, in order to keep our owned hotels attractive and competitive, we continue spending to maintain, modernize and refurbish our owned hotels. In addition, to continue growing our vacation club business, we make expenditures in the development of new units for sale. All of these expenses create a continuing need for cash. To the extent we cannot fund expenditures from cash generated by operations, funds must be borrowed or otherwise obtained through other financing. As a holding company, our ability to meet our debt and other obligations is dependent on the earnings and cash flows of our subsidiaries. We maintain centralized control of our enterprise’s finances, regulating cash flows of each of our subsidiaries in relation to income forecasts and expense budgets periodically submitted by each subsidiary. We also centralize control of obtaining and administering our various credit lines.

Liquidity Cash flow from operating activities is generated primarily from operating income from our owned and leased hotels, management revenues and the sale and financing of vacation club memberships. In certain years, we have also generated resources from the sale of non-strategic assets. These are the principal sources of cash used to fund our operating expenses, interest payments on debt, capital expenditures, dividend payments and income taxes. The following table sets forth the generation and application of cash for the years ended December 31, 2012, 2013 and 2014 and for the three months ended March 31, 2014 and 2015.

For the years ended Three months December 31, ended March 31, 2012 2013 2014 2014 2015 (in thousands of pesos)

Net cash provided by (used in) operating activities ...... 1,339,325 (201,546) 347,962 411,627 416,712 Net cash provided by (used in) investing activities ...... 2,673,393 771,492 (382,389) (183,264) (33,424) Net cash provided by (used in) financing activities ...... (2,953,037) (1,297,237) 314,535 (7,811) (788,803) Adjustment to cash flows due to exchange rate fluctuations ...... (11,832) 1,789 11,319 0 0 Cash and cash equivalents at period end ...... 1,431,867 706,365 997,792 926,917 592,277

Operating Activities In the three months ended March 31, 2015, our net cash provided by operating activities was Ps.416.7 million, increasing from the Ps.411.6 million over the same period of 2014. This increase is mainly attributable to our results of operations for that period, adjusted by Ps.396 million in non-cash items, Ps.141 million in exchange rate fluctuations, Ps.73 million in taxes and a Ps.75 million reduction in working capital. See “—Three months Ended March, 2015 Compared with the Three months Ended March, 2014.” Net cash provided by operating activities was Ps.348.0 million in 2014, compared to cash used in operating activities of Ps.201.5 million in 2013 and Ps.1,339.3 million in 2012. Our higher net cash provided by operating activities in 2014 was primarily due to higher net income adjusted for Ps.342 million non-cash items, Ps.586 million in exchange rate fluctuations and Ps.712 million used for working capital. In 2013, lower cash used in operating activities was primarily due to our net income adjusted for Ps.2,404 million non-cash items, mainly Ps.1,315 million in depreciation and asset impairment, Ps.1,162 million in taxes, Ps.565 million in asset sales and Ps.848 million in a reduction in working capital. In 2012, net cash from operating activities was Ps.1,339.3 million due to our net income adjusted for Ps.133 million in non- cash items, Ps.1,876 million in discontinued operations from our South American hotel operations, Ps.617 million in taxes, Ps.431 million in depreciation and asset impairment and Ps.116 million in uses for working capital. Investing Activities In the three months ended March 31, 2015, net cash used in investing activities was Ps.33.4 million compared to Ps.183.3 million for the three months ended March 31, 2014. This decrease was primarily due to a slower pace in the use of cash in connection with the refurbishment of our hotels. During the three months ended March 31, 2015, we incurred expenses mainly in the renovation of three owned hotels under the Fiesta Inn and Fiesta Americana brands. In 2014, net cash used in investing activities was Ps.382.4 million and comprised maintenance capital expenditures for our owned hotels and capital expenditures for the renovation of hotels. In 2013, net cash provided by investing activities was Ps.771.5 million, primarily from the cash received from the sale of 14 hotels to FibraHotel, offset by capital expenditures for our owned hotels. In 2012, net cash provided by investing activities was Ps.2,673.4 million and was primarily generated from the proceeds from the sale of our South American operations.

Financing Activities In the three months ended March 31, 2015, net cash used in financing activities was Ps.788.8 million compared to Ps.7.8 million during the three months ended March 31, 2014. The increase in cash used in financing activities mainly includes the payment of the U.S.$51.7 million outstanding principal amount of our 2015 Senior Notes which were due on January 15, 2015. We did not declare or pay any dividends during the three months ended March, 2015. During 2014, net cash generated by financing activities was Ps.314.5 million and included proceeds from borrowings to pay the outstanding principal amount of our 2015 Senior Notes in January 2015. In 2013, net cash used in financing activities was Ps.1,297.2 million and was used primarily to prepay convertible debentures and bank loans and to pay closing costs of a cross-currency swap. In 2012 net cash used in financing activities was of Ps.2,953.0 million and was used primarily to pay amounts due in connection with the tender offer for our 2015 Senior Notes, prepaying an unsecured peso-denominated note (Certificado Bursátil) and other bank loans. Indebtedness The following table sets forth information regarding our consolidated long-term debt as of March. 31, 2015: Amounts (In thousands of Ps.) Currency Average cost (2) Maturity Senior Notes(1) ...... 4,697,802 USD 7.875% 2017 Inmobiliaria del Sudeste, S.A. de C.V. Convertible Loan ...... 2,190 USD LIBOR + 3% 2018

Total 4,699,992 ______(1) The amount is not net of the related Ps.124 million offering fees and expenses which were capitalized during the three-month period ended March 31, 2015. (2) The average cost does not include costs related to tax indemnities such as tax gross-ups or other indemnities. During 2014, we performed the following actions regarding our indebtedness: • We issued on February 20, 2014 U.S.$35 million principal amount of our Existing Notes as part of a private exchange for U.S.$31.6 million principal amount of our 9.25% 2015 Senior Notes. This issuance was a reopening of our U.S.$225 million Existing Notes which we issued in December 2012 and U.S.$50 million principal amount of our Existing Notes which we issued in January 2013. • We issued on November 28, 2014 U.S.$47.2 million principal amount of 6% commercial paper due November 18, 2015 under our Euro commercial paper program. We used the funds obtained from the issuance under our Euro commercial paper program to fund the payment of the U.S.$51.7 million outstanding principal amount of our 2015 Senior Notes which were due on January 15, 2015. We intend to repay the outstanding amount of U.S.$47.2 million with the proceeds of this offering. • In September 2014, we entered into a Ps.200 million 12-month revolving credit agreement with Banco Santander, S.A. which was secured by a mortgage on the Fiesta Inn Aeropuerto hotel, which is owned by our subsidiaries Gran Operadora Posadas, S.A. de C.V., Operadora del Golfo de México, S.A de C.V., and YIPA, S.A. de C.V. As of December 31, 2014, March 31, 2015 and the date of this offering memorandum, the outstanding balance was Ps.0. During 2015, we performed the following actions regarding our indebtedness: • In January 2015, we paid the U.S.$51.7 million principal outstanding amount of our 2015 Senior Notes which were due on January 15, 2015.

Contractual obligations The following is a summary of our contractual obligations as of March 31, 2015 without giving effect to this offering:

Payments due by Period (in thousands of pesos) Less than 1-3 3-5 More than Contractual obligations Total 1 year years Years 5 years

Short-term debt (includes short-term portion of long- term debt)(1) 712,790 712,790 - - - Long-term debt (2) 4,576,024 - 4,576,024 - - Convertibles (3) 2,190 - - 2,190 - Operating lease (4) 1,211,439 323,816 642,557 245,066 - Capital lease 167,088 32,734 126,359 7,995 - Total obligations (2) 6,669,531 1,069,340 5,344,940 255,251 -

(1) Ps.42.4 of interest until maturity is not included. (2) Total obligations are net of Ps.124.8 million net of commissions in issuances of our loans in compliance with IFRS accounting. Ps.1,000.2 million of interest until maturity is not included. (3) Includes the convertible loan of Inmobiliaria del Sudeste, S.A. de C.V. (4) Obligations have been determined based on fixed leases, thus not considering variable portions. Our operating lease obligations include fixed lease payments deriving from long-term agreements of our leased hotels. Some of these leasing agreements provide for payments in U.S. dollars and, for purposes of this table, they are converted to pesos at the exchange rate as of March 31, 2015. Capital lease obligations include capital lease agreements of up to three years related primarily to the leasing of computing equipment for our hotels and corporate offices. In the ordinary course of business, we also enter into long-term supply arrangements for different services and with several suppliers which are not reflected in the table above. In addition, our obligations under derivative financial instruments are described below under “— Market Risk Disclosure—Derivative Financial Instruments.” Market Risk Disclosure Derivative financial instruments Historically, a portion of our total revenues have been either directly or indirectly denominated in U.S. dollars. For the year ended December 31, 2014, approximately 17% of our revenues were U.S. dollar-denominated. Room rates at our coastal hotels (primarily at our Cancún and Los Cabos resorts) are U.S. dollar-denominated, as they were at the hotels we sold in Brazil and Argentina. Additionally, the sale and financing of Vacation Club memberships have been quoted in U.S. dollars. Given that a portion of our revenues are denominated directly or indirectly in U.S. dollars and to minimize our exposure to highly volatile peso interest rates, our policy has been to maintain a significant portion of our debt in U.S. dollars. We have achieved this by borrowing U.S. dollar denominated debt when credit market conditions allow for it, or, entering into cross-currency swaps where we generally pay U.S. dollar amounts based on fixed interest rates and receive peso amounts based on peso variable interest rates. Our derivative financial instruments have been contracted in the over-the-counter market with international financial institutions. In particular, when entering into these recent cross-currency swaps, we attempt to hedge the positions by matching cash flows on our derivative transactions with cash flows on our indebtedness; however, for accounting purposes, some of our derivative financial instruments have not been designated as hedges because they do not always meet all of the accounting requirements established by IFRS.

During 2013, one cross-currency swap with a U.S.$9.4 million notional amount equivalent to U.S.$97.5 million was unwound. After such transaction, we currently have no derivative financial instruments in effect. Therefore our liability for outstanding swap positions was Ps.0 and Ps.0 as of December 31, 2014 and March 31, 2015, respectively. Interest Rate Risk As of March 31, 2015, substantially all of our outstanding indebtedness was fixed rate and, therefore, we do not believe we are exposed to significant interest rate risk. We do not currently hedge our interest rate risk. Exchange Rate Risk As of March 31, 2015, all of our outstanding indebtedness was denominated in U.S. dollars. We do not currently hedge our exchange rate risk. Our financing is in the same currency as a certain portion of the source of payment given that a percentage of our revenues is denominated in U.S. dollars. A depreciation (or appreciation) of 10% in the peso against the U.S. dollar would result in an additional foreign exchange loss (or gain) in the results and equity for the year ended December 31, 2014 of approximately Ps.366.6 million. Off-Balance Sheet Arrangements Except for the operating lease agreements disclosed in the table above in “–Contractual Obligations”, we currently have no off-balance sheet arrangements.

BUSINESS Overview We are the largest and one of the fastest growing hospitality companies in Mexico, with 133 hotels, resorts and vacation properties in our portfolio comprising 22,021 rooms. In the nearly 45 years since opening our first hotel, we have defined the hospitality industry in Mexico and established a portfolio of 10 highly recognizable brands. Our flagship brands, Fiesta Americana and Fiesta Americana Grand, are the most recognized hotel brands in Mexico. Our middle-scale brand, Fiesta Inn, is among the largest brands in its category across Mexico based on total number of rooms. In the luxury, lifestyle resort category, our Live Aqua brand is among the highest regarded of our brands and we expect to further bolster its profile in the coming years through development initiatives that are currently in process. Of our 133 hotels, 17 are owned, 13 are leased, 99 are managed-only hotels and four are franchised. Our hotels are located in a mix of urban and coastal destinations serving both leisure and business travelers across Mexico, with approximately 82% of our rooms located in urban destinations and 18% in coastal destinations. Currently we have more than 13,000 employees serving our guests on a daily basis at our properties and in our corporate headquarters and over 1.5 million members in our loyalty programs, which position us among the leading hospitality providers in Mexico. Our shares are listed on the Mexican Stock Exchange under the ticker “POSADAS” with a market capitalization as March 31, 2015 of Ps.14,283.0 million or U.S.$942.5 million. We are the leading operator of hotels in Mexico based on number of rooms, geographic coverage and market share. We distinguish ourselves from other operators by offering hotel owners superior management and franchise services including centralized reservation and distribution networks, marketing programs, revenue-optimization tools, data gathering and customer relationship management capabilities, web-based guest satisfaction systems, robust customer loyalty programs and strong, well- defined brands. According to our internal market studies, as of December 31, 2014, we were the leading hotel operator in Mexico with 27% of the total managed hotel rooms in the country. Our Fiesta Americana, Fiesta Inn and One Hotels brands rank first with 23%, 35% and 58% of the total managed rooms in the upscale, middle-scale and economy classes, respectively. In the luxury class, our Fiesta Americana Grand and Live Aqua brands rank second and sixth, respectively, with 18% and 7% of the total luxury managed rooms in Mexico, respectively. We have achieved a leadership position by implementing strategies and following opportunities that have allowed us to grow consistently, with a diversified and balanced portfolio of owned, leased, managed and franchised hotels, in both urban and coastal destinations. As part of our corporate strategy, we have continued to focus on our core strategic markets and strengthening of our overall company risk profile. We believe that our ongoing shift to a more asset-light business model, in combination with our leading position in the Mexican market, enhances our ability to become more resilient to industry cycles while also providing us with flexibility to take advantage of future growth opportunities. We also operate a vacation club business through Fiesta Americana Vacation Club (FAVC). FAVC markets and sells memberships that grant a 40-year, point-based right to use vacation club resorts that we own and operate in resort destinations in Mexico, including Los Cabos, Puerto Vallarta, Cancún, Acapulco, Kohunlich and Cozumel, as well as other affiliated properties around the world. We also offer a vacation club product called Kivac, which consists of the sale of points which may be redeemed within five years of sale for accommodation in any of our hotels. Kivac was created to generate a new distribution channel for our hotels’ unused inventory and targets a market for which FAVC membership may be too expensive or long in duration. Kivac has proven to be very popular in the mid-scale market, particularly in urban locations. In 2013, we launched a new product called The Front Door within our Vacation Club business line which is similar to the FAVC product but targets a more exclusive and luxury market. Collectively, our Vacation Club business represented 34.1% and 37.6% of our revenues for the year ended December 31, 2014 and for the three months ended March 31, 2015, respectively. In addition, we have successfully developed management services and technology platforms to support our hotel operating business, by establishing a number of related services businesses and units

to support our core business lines: Ampersand manages loyalty programs for diverse related and unrelated businesses; Konexo provides call center and contact services for related and unrelated businesses; and Conectum offers business process outsourcing services, or shared services, for diverse industries. Collectively, the Ampersand, Konexo, and Conectum services businesses represented 5.8% and 7.2% of our revenues for the year ended December 31, 2014 and for the three months ended March 31, 2015, respectively. Together with the strategic expansion of our hotel operations and vacation club business, we have sought to build strong, well-positioned brand names and to foster customer recognition through consistency of service. We believe we have a unique mix of strong hotel brands within the 3, 4 and 5-star tiers, providing a range of options for our customers. We consider our brands to be one of our greatest assets. We operate substantially all of our hotels in Mexico under the Fiesta Americana, Fiesta Americana Grand, Fiesta Inn, One Hotels, Live Aqua, Gamma and The Explorean brand names. Our Hotel Brands • Fiesta Americana and Fiesta Americana Grand are our flagship brands. We currently operate 22 hotels under these brands, including five hotels under the Fiesta Americana brand devoted to the FAVC. Hotels operating under these brands offer deluxe, large scale, full-service accommodations to the high-end leisure traveler segment in coastal destinations and to the high-end business traveler segment in major urban centers. We currently operate three hotels under the Fiesta Americana Grand brand. The Fiesta Americana hotels are upper-scale class hotels, and the Fiesta Americana Grand hotels are luxury class hotels. According to the Mexican classification system, Fiesta Americana properties are five-star hotels and Fiesta Americana Grand properties are Gran Turismo hotels, which exceed the five-star category. The hotels range from approximately 80 to 650 rooms. The Fiesta Americana and Fiesta Americana Grand brands represented, as of March 31, 2015, 22.5% of our total hotel rooms. Approximately 24.0% of the hotels in our development pipeline will be operated under the Fiesta Americana and Fiesta Americana Grand brands. We are currently redesigning our Fiesta Americana and Fiesta Americana Grand concept logo and décor and have begun remodeling our hotels to reflect the updated look. • Fiesta Inn hotels are middle-scale class hotels offering modern, comfortable accommodations and efficient service primarily to the domestic and regional business traveler segment. We position our Fiesta Inn properties as business class hotels. According to the Mexican classification system, Fiesta Inn properties are four-star hotels. We currently operate 62 hotels in Mexico under the Fiesta Inn brand, and these hotels are normally located in small, mid-size or main urban destinations or suburbs of major urban areas. Fiesta Inn hotels compete primarily with other moderately priced Mexican and international chains, as well as with moderately priced Mexican independent hotels. The hotels range from approximately 90 to 220 rooms. The Fiesta Inn brand represented, as of March 31, 2015, 41.8% of our total hotel rooms. Approximately 26.0% of the hotels in our development pipeline will be operated under the Fiesta Inn brand. • One Hotels is an innovative chain of economy class hotels in Mexico that offers guests a modernly designed and comfortable accommodation at an affordable rate. The warm atmosphere, efficient service and functional design is ideal for business travelers who desire a convenient location and restful accommodations at an accessible price. According to the Mexican classification system, One Hotels properties are three-star hotels. One Hotels compete primarily with other economy class independent hotels. We currently operate 36 hotels under the One Hotels brand. The hotels range from approximately 100 to 140 rooms. The One Hotels brand represented, as of March 31, 2015,19.8% of our total hotel rooms. Approximately 34.0% of the hotels in our development pipeline will be operated under the One Hotels brand. • Live Aqua is an upscale, luxury, lifestyle resort hotel brand. The Live Aqua concept seeks to create a memorable experience through pampering details–including fine dining,

aromatic scents, spirit-renewing sanctuaries and comfortable settings–and superior service. According to the Mexican classification system, Live Aqua properties are lifestyle hotels. We have two Live Aqua hotels, the 371-room Live Aqua hotel in Cancún and the 135-room Live Aqua in the exclusive business district of Bosques de las Lomas in Mexico City. In 2015, we entered into an exclusive license contract for use of the Live Aqua brand in the United States. As a result of this alliance, we expect to receive income from royalties and other related services from the hotels to be developed in the United States. The Live Aqua brand represented, as of March 31, 2015, 2.3% of our total hotel room inventory. Approximately 8.0% of the hotels in our development pipeline will be operated under the Live Aqua brand. • Gamma is a new brand which targets independent hotel owners and is based on a franchise model. According to the Mexican classification system, Gamma properties are four-star hotels. The hotel owners have two options under this brand: (i) an operating plan and license under which we assume hotel operations on their behalf, or (ii) a pure franchise model under which they maintain their own operation but we offer them access to the distribution and marketing systems of our Fiesta Americana and Fiesta Inn brands. As of March 31, 2015, six hotels operated under our Gamma brand, representing 4.2% of our total hotel rooms. Approximately 8.0% of the hotels in our development pipeline will be operated under the Gamma brand by Fiesta Inn. • The Explorean is a brand directed at international and domestic tourists with a focus on adventures accessible to a wide range of people. According to the Mexican classification system, The Explorean properties are five-star hotels. We have two Explorean hotels, one in Cozumel and one in Kohunlich, ranging from 40 to 56 rooms. The Explorean brand represented, as of March 31, 2015, 0.4% of our total hotel room inventory. Our ongoing growth will be driven by increasing the number of properties managed and franchised under our brand portfolio. This strategy means allocating capital expenditure to certain selected expansion projects and focusing on investing in the maintenance of already existing properties. In particular, as of the date of this offering memorandum, we plan to expand in Mexico primarily by operating and franchising 38 additional hotels with 5,964 rooms. This will represent an approximately 27.0% increase in the number of rooms we offer, with 56.0% of the new rooms corresponding to our economy and business brands, including the Gamma brand under Fiesta Inn. Of these hotels, three will operate as a Live Aqua, three as Fiesta Americana Grand, five under the Fiesta Americana brand, one as FAVC, 10 under the Fiesta Inn brand, three under the new Gamma brand as Fiesta Inn and 13 under the One Hotels brand. In keeping with our strategy of operating a greater number of hotels with minimum investment, we plan to be the operator or franchiser of these new rooms through franchise, management and lease agreements with third party investors. We estimate that total investment for this development plan in Mexico will be approximately U.S.$567 million, of which we estimate that we will contribute approximately 15.3% or U.S.$87 million, mainly from our cash flow generation and by contributing in kind certain of our existing owned real estate assets to the development of such plan, with the remainder contributed by the owners of the hotels we will manage and franchise. We anticipate opening these hotels within 24 months following the date of this offering memorandum. Since 2013, we have made significant investments in development projects for the enhancement of our Fiesta Americana and Fiesta Americana Grand brands. We have also designed and launched Fiesta Inn Loft for extended-stay travelers, and designed Fiesta Inn Express, which offers a more limited range of services and infrastructure than Fiesta Inn but maintains the same quality standards with respect to rooms and common areas. We have also developed the design and implemented the necessary infrastructure to provide hotel franchise services under our brands, including the Gamma brand. Our Other Brands • Fiesta Rewards is our hotels’ customer loyalty program. Launched in 1989, Fiesta Rewards was the first customer loyalty program developed in Mexico, and today we believe it is Mexico’s largest hotel loyalty program based on redemption numbers. The program is point-based and offers points for every hotel stay. Points can, in turn, be redeemed for a variety of rewards including free hotel stays, airline tickets, car rentals,

electronics, clothing and fashion products. Fiesta Rewards has established partnerships with American Airlines AAdvantage, Avis, Accor Le Club, American Express, Thanks Again and other programs and companies for use in our Fiesta Rewards program. As of March 31, 2015, our Fiesta Rewards program had approximately 1.5 million members. Fiesta Rewards represents approximately 34.0% of the occupancy of all of our hotels and is one of the most important competitive advantages of our urban hotels. Fiesta Rewards also has a co-branded credit card with Banco Santander, the Santander-Fiesta Rewards Card, which has over 133,000 cardholders in Mexico and also generates points to be redeemed in our program. • Fiesta Americana Vacation Club is the vacation club business within our hospitality portfolio. FAVC members receive an annual allocation of points that they can redeem over a period of 40 years to stay at our FAVC properties, any of our managed hotels, and through FAVC’s affiliation with Resorts Condominium International (RCI), Hilton Hotels Corp. and any RCI-affiliated or Hilton Grand Vacation Club Resort throughout the world. As of March 31, 2015, FAVC had over 30,600 members. • Kivac is a vacation club product that we launched in 2010 and consists of the sale of points that may be redeemed within five years of sale for accommodations in any of our hotels or in certain other hotels. As of March 31, 2015, Kivac had over 20,000 members. • The Front Door is our new luxury vacation club business. The Front Door provides similar services to FAVC with a particular focus on a more exclusive and luxury market. The Front Door members can redeem their annual allocation of points to stay at our apartments in Marina Vallarta and Cozumel dedicated to this business line, as well as other upscale properties managed by us and other properties affiliated with The Registry Collection throughout the world. As of March 31, 2015, The Front Door had approximately 270 members.

consideration, which is an indicator based on the percentage of people who have expressed that a particular brand would be either their first choice or one that they would seriously consider for their next trip. Our diversified brand portfolio targets a range of market segments throughout Mexico—including business and leisure travelers in urban destinations in upscale, moderately priced categories, and groups, conventions and leisure travelers in urban and coastal destinations. In addition to benefiting from Mexico’s position as the 10th leading destination in the world for tourism, our portfolio is positively impacted by the growth in foreign direct investment in urban areas of Mexico related to diverse economic sectors such as automotive, energy and manufacturing. • Highly scalable and efficient operating model. In recent years we have been able to expand our hotel business mainly by increasing our operation of hotels developed with investment capital provided by third parties. Our movement from a capital-intensive business model towards a service-focused business model has allowed us to significantly reduce our capital expenditures and reposition ourselves as an asset-light company with a highly scalable and efficient operating structure. • Proprietary state-of-the-art technological infrastructure. We have invested and continue to invest in technology platforms to achieve greater operating efficiencies, enhanced distribution capabilities and revenue management tools. We believe that these investments have made our distribution network competitive with most international hotel companies, which has given us a strong advantage over our Mexican competitors. We have reduced our distribution costs by centralizing and consolidating the room inventory data from our entire hotel portfolio into a repository solution called the Inventario Central Posadas (Posadas Central Inventory), or ICP, which allows us easy access to revenue management and inventory data. We have enhanced our profitability through real-time dynamic pricing of our room inventory. Of the total reservations at our managed hotels, 77% are received through our voice and web-based direct distribution channels at a very competitive average cost, while 23% are received through indirect third-party channels, including wholesalers, global distribution systems and online travel agencies, allowing us to maximize revenue. We have also achieved cost reductions by centralizing and consolidating accounting, payroll, strategic sourcing and receivables processing. We believe we are one of the few hotel operators in the industry that has developed such systems. We have created our systems in partnership with technology industry leaders such as Oracle, Savvis, Pros and VFM Leonardo, among others. • Preeminent vacation club offering significant synergies. Our Vacation Club business enhances the profitability of our existing core hotel portfolio by leveraging synergies stemming from both businesses. Since its inception, FAVC has provided us with a new market niche, replicating the business model followed by major global chains. FAVC has allowed us to reduce cyclicality in our coastal properties due to its flexibility and create a loyal client base that values high-end service. We also extended the vacation club concept with the implementation of Kivac, which has generated a new distribution channel for our hotels’ unused inventory and targets a market for which FAVC membership may be too expensive or long in duration. In addition, since 2013 with the launch of our new product called The Front Door within our Vacation Club business line, we provide a similar service to the FAVC product but with a particular focus on a more exclusive and luxury market. • Mexico’s largest loyalty program based on redemption numbers and a portfolio of value-creating ancillary service-based businesses. We have created a loyal customer base through our Fiesta Rewards guest loyalty program. As of March 31, 2015, our Fiesta Rewards program had approximately 1.5 million members. Fiesta Rewards has established partnerships with American Airlines AAdvantage, Avis, Accor Le Club, American Express, Thanks Again and other programs and companies for use in our Fiesta Rewards program. Our Fiesta Rewards program allows us to retain valued customers while generating stable cash flows during cyclical periods. Fiesta Rewards also has a co-branded credit card with Banco Santander, the Santander-Fiesta Rewards

Card, which has over 133,000 cardholders in Mexico and also generates points to be redeemed in our program. We have capitalized on our position as the leading hotel operator in Mexico by marketing our management skills and technology platform, originally developed to support our hotel operating business, and establishing a number of value-creating services businesses that set us apart from the industry. • Consistent market outperformer. The effectiveness of our overall strategy and our business model, as well as the success of our distribution and loyalty programs, is supported by our consistent outperformance of our competitors in the Mexican market, as reflected in our occupancy and RevPAR data. The average occupancy at our managed hotels has consistently been higher than occupancy at hotels managed by our competitors in Mexico. For the twelve month period ended March 31, 2015, the occupancy average at our managed hotels, excluding new hotel openings during such twelve month period, was 64%, compared to 58% for the Mexican market’s average. Historically, the RevPAR penetration average at our managed properties has been over 100% and, for the three month period ended March 31, 2015, our RevPAR penetration average was 112%. • Highly respected and influential management team. Our management team has extensive industry expertise and is well respected among peers and investors. With some of the lowest turnover rates in the industry, our management team has been able to reduce organizational volatility, thereby facilitating our pursuit of longer-term goals and objectives. Our Chairman, Pablo Azcárraga Andrade, and our Chief Executive Officer, José Carlos Azcárraga Andrade, have been with us 30 years and 24 years, respectively, and members of our top management team collectively have an average of 18 years of industry experience. Our Business Strategy Our long-term strategic plan is to continue to be the leading hotel operator and a major tourism- related services provider in Mexico. We focus on maximizing shareholder value and return on capital by optimizing the use of our talent, third party management contracts, real estate and advanced proprietary operating systems. As part of our portfolio management strategy, we continuously examine our business units to address issues of market dynamics, demand, supply and competition. Several of our key strategies are highlighted below: • Continue to consolidate and expand our hotel network through the addition of long-term hotel management and franchise contracts. An important part of our growth strategy is to utilize our strong brand recognition, solid reputation, centralized resources and extensive management experience to enter into additional hotel management and franchise contracts and, by extension, reduce our investment in owned hotels. We believe that we are an attractive option for hotel owners who seek profitable investments with a stable revenue stream. Management and franchise contracts with hotels owned by third parties, including hotels that we lease from third parties, help improve our profitability by generating revenue streams with minimal additional capital investment by us. As of the date of this offering memorandum, our development pipeline is comprised of plans to operate 38 new hotels with 5,964 rooms, which will represent an increase of approximately 27.0% in our total number of rooms. Approximately 60.0% of these hotels are Fiesta Inn and One Hotels, which are our economy and budget-brand tiers and 8.0% of these hotels are Gamma hotels which are our franchised hotels. We estimate our pipeline hotels to represent a total investment of U.S.$567 million, of which we estimate that we will contribute approximately 15.3% or U.S.$87 million, mainly from our cash flow generation and by contributing in kind certain of our existing owned real estate assets to the development of such plan, with the remainder contributed by the owners of the hotels we will manage and franchise. We anticipate opening these hotels within 24 months following the date of this offering memorandum.

• Continue to increase capital efficiency. The continued shift to an asset-light model and a focus on our Mexican operations has resulted in reduced operational risk, as well as diminished capital expenditure requirements. Furthermore, the sale in 2012 of our South American hotel operations for approximately U.S.$278 million, in combination with the sale to FibraHotel of 14 of our hotels in 2013 and the sale of two additional hotels in 2014 by a subsidiary in which we held a non-controlling interest and the sale of our corporate headquarters, have provided us with significant proceeds that have helped to reduce our overall indebtedness. Lastly, we are currently in the process of reprofiling debt to reschedule our existing maturities, which will further help to improve our capital structure. We expect that these initiatives, paired with greater EBITDA, will provide additional financial flexibility to achieve our strategy as well as enhance our shareholder returns. • Continue to enhance our operational efficiency. We are in the process of implementing an internal corporate restructuring in order to reorganize the number of our subsidiaries and the functions that some of them perform in our structure and to transform the Company into a stock holding company and therefore transfer, to the extent possible, our hotel management, brand licensing and franchising businesses to one or more of our subsidiaries which will, as a result of such transfer, receive the revenues from such operations. We expect that this corporate restructuring will allow us to reduce the number of our subsidiaries to 37 from 142, consolidate our hotel operations and payroll activities in a single entity, eliminate 70% of our intercompany transactions and close 273 bank accounts. This corporate restructuring is expected to be completed in 2016. As of the date of this offering memorandum, we have completed six mergers. In addition, we implement strategies and make investments aimed at improving our operational procedures and reducing our operating costs, including redirecting bookings at our properties from third-party intermediaries which charge us booking fees to our own reservation systems and reducing headcount to avoid redundancy. • Continue to penetrate the moderately priced business traveler segment. We have successfully addressed the needs of the domestic and regional business traveler, and our success has allowed us to diversify our operations. We believe the domestic business travel segment continues to be underserved and represents attractive growth opportunities to us going forward. In 1993 we began to serve this segment in Mexico through our Fiesta Inn brand. Building on the success of Fiesta Inn, in 2007 we launched One Hotels, an economy class line in Mexico, catering to business travelers with lower budgets. We currently operate 62 Fiesta Inns and 36 One Hotels serving this market segment. We plan to continue expanding our Fiesta Inn brand in the moderately priced business traveler segment and to expand our One Hotels economy class budget brand, primarily through third-party owned hotels, by opening 10 Fiesta Inn hotels (including 2 Fiesta Inn Loft hotels) and 13 One Hotels within 24 months following the date of this offering memorandum. • Continue to develop our vacation club portfolio. We have been able to build a solid and profitable vacation club business by leveraging our brand positioning. Our strong brand names have helped us significantly increase our customer base while providing our customers a unique experience with unparalleled flexibility. We believe that the vacation club business enhances the profitability of our existing asset base by leveraging synergies stemming from both businesses. We will selectively continue converting, developing and constructing resorts or new vacation club units in appealing destinations. We currently have seven vacation club resorts in Acapulco, Los Cabos, Cancún, Kohunlich, Puerto Vallarta and Cozumel. A recent example of our innovative approach to the vacation club business is our new product called The Front Door within our Vacation Club which was launched in 2013 and complements our previously existing FAVC and Kivac vacation club programs.

• Enhance the guest experience. We believe our knowledge of our guests’ preferences and patterns grants us a significant competitive advantage. For more than 20 years, we have consistently invested in customer loyalty programs, such as our Fiesta Rewards program, thereby creating repeat users of our hotels. Using the knowledge of our customers as a foundation, we have built a detailed database that feeds into our proprietary guest experience customer relationship management system, which allows us to anticipate each customer's pre-stay, in-stay and post-stay needs, preferences and desires. This platform allows us to tailor our services to each guest based on experience, thus creating a unique bond with our customers. In addition, we closely monitor and study global trends in the hotel industry in terms of customer experience and seek to improve our customers’ stay at our properties by providing unique attention to their needs through our selection of furniture, beds, pillows, services and food and beverages. We have also implemented a service culture which is focused on creating out of the ordinary and spontaneous experiences with bespoke elements and details based on each client. • Use our leading sector and geographical expertise to selectively develop and acquire strategic assets. Our management team possesses significant market knowledge, an average of 18 years of industry experience and strong relationships within the Mexican real estate and hospitality sector. We intend to identify opportunistically unique asset acquisitions that are consistent with our overall risk profile, as well as our asset-light strategy. We have successfully partnered with FibraHotel, Fibra Danhos and FibraUno, three Mexican REITs whose stock trades on the Mexican Stock Exchange, with whom we have entered into real estate sale and purchase, leasing and hotel management transactions in connection with our business, and we have successfully renewed our management contracts with many of the owners of the hotels we have operated throughout the years. • Focus on strengthening the core capabilities of our services platforms. We have successfully designed and developed specific services platforms, such as Ampersand, Konexo and Conectum, to support our day-to-day operations and, to a lesser extent, offer our management experience to third parties. We intend to continue strengthening and developing these services platforms through marginal investments. History Grupo Posadas, S.A.B. de C.V. was incorporated under the laws of Mexico on April 18, 1967 when Gastón Azcárraga Tamayo formed Promotora Mexicana de Hoteles, S.A., or Promotora, to build and operate a flagship hotel in Mexico City. This hotel, which first opened as the Fiesta Palace in 1970, is known today as the Fiesta Americana Reforma. In 1979, Promotora opened the first hotel under the Fiesta Americana brand name in Puerto Vallarta through a joint venture company called Operadora Mexicana de Hoteles, S.A. de C.V., or Operadora. Americana Hotels Inc., a subsidiary of American Airlines, was Promotora’s joint venture partner in Operadora. In 1982, Promotora acquired a 50% equity interest in Posadas de México, S.A. de C.V., or Posadas de México, then a franchisee of a Holiday Inn hotel in Mexico. At the time of the acquisition, Promotora was the largest hotel operator in Mexico, with a portfolio consisting of 12 Fiesta Americana hotels and one Holiday Inn hotel. Throughout the 1980s, Promotora focused on the development of the Fiesta Americana brand, although it continued as a Holiday Inn franchisee in a few select locations. In 1983, Promotora acquired Americana Hotels’ interest in Operadora and in 1990 it acquired the other 50% interest in Posadas de México. In 1989, we launched our Fiesta Rewards customer loyalty program to help foster a loyal customer base. The point-based program offers a certain number of points for every U.S. dollar spent on stays and consumption in our hotels and in certain subscriber restaurants, bars and spas, among other places. The points can, in turn, be redeemed for a variety of attractive rewards including, among other things, free hotel stays, airline reservations, car rentals and fashion products.

In 1992, Promotora changed its corporate name to Grupo Posadas, S.A.B. de C.V and we listed our common stock on the Mexican Stock Exchange. In 1993, we began to target the business traveler market through our Fiesta Inn brand when we opened our first Fiesta Inn hotel in an urban location. In 1998, we started our expansion into South America with the acquisition of the Caesar Park chain. As part of the acquisition we added hotels in Brazil and Argentina to our portfolio and also obtained the rights to the Caesar Park brand name throughout Latin America (except that the Caesar Park hotel then operating in Panama City, Panama was not a part of this acquisition). We entered the vacation club business in 1999 when we opened our first Fiesta Americana Vacation Club resort in Los Cabos. We have since added other vacation club resorts in Cancún, Acapulco, Puerto Vallarta, Kohunlich and recently in Cozumel. In 2001, we opened our first Caesar Business hotel in Brazil and, in 2007, we opened our first hotel in Chile, the Caesar Business hotel in Santiago. Also, in 2001, we started to deploy our Inventario Central Posadas (Posadas Central Inventory), or ICP, to consolidate room inventory data from our hotel portfolio into a single database. In 2003, we began the implementation of Conectum, our business process outsourcing service company. In 2005, we launched Live Aqua, a deluxe, lifestyle brand with a resort in Cancún. In 2007 we opened our first One Hotels, a 3-star tier budget brand catering to the business traveler who looks for affordable, well-located accommodations. We also launched our Konexo and Ampersand businesses in 2007. In 2006, and in order to comply with the new provisions of the Mexican Securities Market Law we adopted the form of “sociedad anónima bursatil” or S.A.B., therefore changing our corporate name to Grupo Posadas, S.A.B. de C.V. In 2010, we acquired ownership of real property located on the Riviera Maya, with plans to develop a tourism complex including resorts providing hotel services, vacation club and other types of vacation properties. Likewise, we launched our product Kivac, which allows buyers to purchase points redeemable within five years of purchase for lodging at any of our hotels. In 2010, we also initiated conversion of three of our coastal hotels to the all-inclusive category, which we completed in 2011. We also purchased ownership of the shares of one of our subsidiaries (Sudamérica en Fiesta S.A.) that was owned by IFC. On August 13, 2010, we sold our participation in Nuevo Grupo Aeronáutico, S.A. de C.V. (formerly Grupo Mexicana de Aviación, S.A. de C.V., or Mexicana) to third parties, for a nominal amount. Before the sale and as of December 31, 2009, we held a 30.41% interest in Mexicana, accounting for such investment under the equity method. As of December 31, 2008, our equity investment in Mexicana was fully reserved and has had no material impact on the consolidated net income of the Company since that date. In 2011, we entered into an alliance with Santander Bank to issue a co-branded credit card under the shared brand Santander-Fiesta Rewards, the brand name under which our client loyalty program operates. In this same year, the Fiesta Inn concept was refreshed and re-launched. In 2011, José Carlos Azcárraga Andrade was appointed Chief Executive Officer, and our shareholders voted to unify Series L shares (shares with limited vote) into Series A. As a result, all shareholders hold the same rights. In 2011 and 2012, we purchased 100% of the shares of the owner of one of our hotels in Cancún, Fiesta America Condesa Cancún. On July 16, 2012, we announced that we had reached an agreement with Accor, S.A. (Accor), one of the world’s leading hotel management companies, to sell our operations in South America, and the sale to Accor was consummated on October 10, 2012. In order to guarantee funding of post-closing purchase price adjustments and indemnification obligations typical in this type of transaction, an escrow account was established with a portion of the purchase price, with Accor as the primary beneficiary, with an original balance of U.S.$32.0 million. These funds were to be released to us on various dates from October 2014 through 2019, upon satisfaction of certain conditions established in the sale contract. In

September 2014, we entered into an agreement with Accor to fully terminate the escrow guarantee account related to the sale of the hotel operation business in South America and as a result we recovered U.S.$16.6 million. In 2012, we decided to operate the Fiesta Americana hotel located in Cozumel, Quintana Roo, within our Vacation Club business and, during 2013, we started converting this hotel into a Vacation Club property. Given the increasing popularity of the “all-inclusive” format, in 2013 we converted our Fiesta Americana Grand hotel in Los Cabos and our Fiesta Americana hotel in Cozumel to this format. In 2013 we launched a new product called The Front Door within our Vacation Club business line which is similar to the Fiesta Americana Vacation Club (FAVC) product but focuses on a more exclusive and luxury market. In connection with this product, in April 2013 we acquired 16 apartments in Puerto Vallarta with a total investment of U.S.$5.6 million, which have been devoted to the Private Residence Club under The Front Door brand and which have been available since August 2013. We estimate the average sale per customer to be of approximately U.S.$140,000 versus the current average sale per customer of U.S.$15,000 of the current program. In the fourth quarter of 2013, we purchased the plots of land for the construction of two Fiesta Americana Grand Villas projects in Nuevo Vallarta, Nayarit, and Acapulco Diamante, for U.S.$12.7 million and U.S.$9.9 million, respectively. These projects together could represent an increase of more than 50% in our total Vacation Club units. We expect to complete the development of the Acapulco Diamante project by December 2017. We currently do not have a definitive project in place for Nuevo Vallarta, Nayarit and we continue to explore different options in connection with such project. In December 2013, we sold to third parties certain non-strategic real estate assets for a total consideration of Ps.680 million; including a parcel of land called “Chemuyil” in the State of Quintana Roo, Mexico. Such parcel of land was sold free from any lien, including any lien for the benefit of the Institute for the Administration of the State Patrimony of the State of Quintana Roo or IPAE (Instituto para la Administración del Patrimonio Estatal del Estado de Quintana Roo), since the IPAE exercised its rights to collect liquidated damages in the amount of U.S.$10 million against our subsidiary Promotora Ecotur, S.A. de C.V., attributable to an alleged breach of construction agreements in such parcel of land, by foreclosing on certain shares of Grupo Posadas, S.A.B. de .C.V. which were placed in a guarantee trust. After the foreclosure no obligations were outstanding with the IPAE. In 2013, we sold 14 of our hotels which were operated under the Fiesta Inn and One brands to FibraHotel, a Mexican hotel real estate investment trust, or REIT. In 2013, we also sold to FibraUno our corporate offices located in the Lomas de Chapultepec neighborhood of Mexico City for a price of U.S.$15 million and leased them from FibraUno for a period of 10 years. In 2014, we terminated the lease agreement for the corporate offices located in Lomas de Chapultepec and entered into an agreement with FibraUno whereby we leased our current corporate offices located in the Santa Fe neighborhood of Mexico City for a term of 10 years. During 2013, we launched our new hotel brand, Gamma, through which we intend to develop a marketing system for our services based on franchise arrangements. Gamma was created to target business opportunities we recognize exist with respect to good quality hotels located in Mexico which are already in the market but may lack access to state-of-the-art systems and distribution channels to compete with major hotel operators. Most of these arrangements will allow the hotel owner or titleholder to continue operating the hotel, improve its quality standards and at the same time leverage the infrastructure and market strengths of Grupo Posadas, while preserving the hotel’s distinctive local touches. During 2014, we opened 18 new hotels, including four conversions to the Gamma brand, representing a total of 2,296 additional rooms. The new hotels are the Fiesta Inn Mérida, One Mexico City Alameda, One Silao, One Guadalajara Periferico Vallarta, One La Paz, One Villahermosa Center, One Vallarta Airport, Gamma Fiesta Inn Morelia Belo, One Queretaro South Downtown, One Cancún Centro, Gamma Fiesta Inn Ciudad Obregon, Gamma Fiesta Inn Leon, Gamma Fiesta Inn Tijuana, Fiesta

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Inn Queretaro, Centro Sur, The Explorean Cozumel, One Monclova, One Leon Poliforum and Fiesta Inn Plaza Central. During 2014, we allocated our hotel in Cozumel to the Vacation Club business. In 2014, we announced our intention to carry out an internal corporate restructuring in order to reorganize the number of our subsidiaries and the functions that some of them perform in our structure and to transform the Company into a stock holding company and therefore transfer, to the extent possible, our hotel management, brand licensing and franchising businesses to one or more of our subsidiaries which will, as a result of such transfer, receive the revenues from such operations. We expect that this corporate restructuring will allow us to reduce the number of our subsidiaries to 37 from 142, consolidate our hotel operations and payroll activities in a single entity, eliminate 70% of our intercompany transactions and close 273 bank accounts. This corporate restructuring is expected to be completed in 2016. As of the date of this offering memorandum, we have completed six mergers. In 2014, a company in which we have a non-controlling interest of 25% sold two hotels to FibraHotel. In September 2014, our hotels on the Baja California peninsula suffered significant damage. Those hotels have insurance coverage for property damage and consequential losses, and we filed claims under those policies in the amount of U.S.$14.6 million. The claims are still being negotiated, and we have received U.S.$4.1 million as an advance payment. In 2013 and 2014, we invested in or refurbished the following owned or leased hotels: Fiesta Inn Monterrey Valle, Fiesta Americana Mérida, Fiesta Americana Guadalajara, Fiesta Inn Aeropuerto Ciudad de México in Mexico City, Fiesta Inn Centro Histórico in Mexico City and Fiesta Inn Cuautitlán, which is currently being remodeled. On November 28, 2014, we issued U.S.$47.2 million of Euro commercial paper maturing on November 18, 2015 with an annual interest rate of 6.0%. The interest is recognized in the results as it is accrued and will be paid upon maturity of the principal amount. The proceeds from the issuance of Euro commercial paper were used to repay the remaining U.S.$51.7 million principal amount outstanding of our 2015 Senior Notes, which had a maturity date of January 15, 2015. In 2015, we entered into an exclusive license contract for use of the Live Aqua brand in the United States. As a result of this alliance we expect to receive income from royalties and other related services from the hotels to be developed in the United States. During 2015, we have opened six hotels representing a total of 927 rooms, of which three are One Hotels under operating contracts and three are Gamma hotels under a franchise contract. In addition, one Gamma hotel under an operating contract became a franchised hotel. Principal Business Activities We believe that we are the leading operator of hotels in Mexico based on number of rooms, geographic coverage and market share. We distinguish ourselves from other operators by offering hotel owners superior management and franchise services including among other things, centralized reservation and distribution networks, marketing programs, revenue-optimization tools, data gathering and customer relationship management capabilities, web-based guest satisfaction systems, robust customer loyalty programs and strong, well-defined brands. Through our subsidiaries, we currently operate 133 hotels (including 7 vacation club resorts), which amount includes two Fiesta Inn Loft hotels which are extended stay hotels physically attached to two Fiesta Inn hotels, with a total of 22,021 rooms in Mexico and the United States (in the State of Texas). In Mexico we operate 132 hotels with a total of 21,818 rooms (including our vacation club units). In addition, we own one hotel with 203 rooms in Texas. Of the 133 hotels we operate, 17 are owned, 13 are leased, 99 are managed-only hotels, and 4 are franchised. Our hotels are located in a mix of urban and coastal destinations serving both leisure and business travelers, with approximately 82% of our rooms located in urban destinations and 18% in coastal destinations.

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The following table sets forth the number of our hotels as of the date of this offering memorandum:

Brand Class Mexico USA Total Hotels Rooms Hotels Rooms Hotels Rooms

Fiesta Americana Upper-Scale 13 3,628 13 3,628 Grand Fiesta Americana Luxury 4 1,261 4 1,261 FA Vacation Club Luxury 7 1,613 7 1,613 Fiesta Inn Medium-Scale 62 9,091 62 9,091 Live Aqua Luxury 2 506 2 506 One Hotels Economy 36 4,438 36 4,438 Gamma Hotels Medium-Scale 7 1068 7 1068 Other brands — 1 213 1 203 2 416

Total 132 21,818 1 203 133 22,021 % of Total 99% 1% 100%

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The following map shows the number and brand of the hotels we operate as of June 25, 2015:

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Hotel Business Owned hotels. We have 17 owned hotels in our portfolio representing 4,817 rooms and 21.9% of our total rooms. As of March 31, 2015, we had 17 owned hotels in our portfolio representing 4,817 rooms and 22.2% of our total rooms. We continuously refurbish our owned hotels in order to maintain consistent quality standards. In 2014, we spent 7.5% of our owned hotels’ revenues on capital improvements. Our owned hotels contributed approximately 23.5% and 21.1% of our revenues during the three months ended March 31, 2014 and during the three months ended March 31, 2015, respectively. Leased hotels. We have 13 leased hotels in our portfolio representing approximately 2,275 rooms and 10.3% of our total rooms. As of March 31, 2015, we had 13 leased hotels in our portfolio representing 2,275 rooms and 10.5% of our total rooms. Our lease contracts typically have a 10-year term and are generally renewable for an additional five-year period. The lease payments we are required to make under these agreements are generally equal to the greater of the specified fixed lease amount and a specified percentage of the hotel’s total revenues. Certain of the lease agreements also require us to invest a percentage of the hotel’s gross revenues to apply toward the costs of maintenance and refurbishing. As of March 31, 2015, the average remaining term of our existing lease agreements was approximately 3.6 years, not taking into account any extension rights we may choose to exercise. Our leased hotels contributed approximately 24.4% and 21.8% of our revenues during the three months ended March 31, 2014 and during the three months ended March 31, 2015, respectively. Managed hotels. We have 99 managed hotels in our portfolio (not including our owned and leased hotels, all of which we also manage) representing approximately 14,295 rooms and 65% of our total rooms. As of March 31, 2015, we had 98 managed hotels in our portfolio representing 14,169 rooms and 65.2% of our total rooms. We enter into management contracts with all of the hotels we operate. Our management contracts are typically fifteen years in duration and are generally renewable for an additional five-year period. The agreements provide us with authority over all necessary activities for the operation of the hotels, including procuring food, beverages and other inventories, marketing the hotels, establishing room rates, processing reservations and staffing the hotels (although we do not directly employ the vast majority of the staff at any given hotel). Our management services include branding, distribution, marketing, customer loyalty programs, standards, consulting, on-site selection and research and development support. We receive fees pursuant to long-term management contracts for all of the hotels we operate. Our management contracts provide for the payment of fees for our operation based on certain specified criteria and the payment of expenses for the provision of services, and are structured according to three different models (i) traditional, (ii) fixed fee and (iii) percentage of gross operating profits. Our traditional management contracts typically involve (i) a base fee calculated as a percentage of a hotel’s gross operating profit, (ii) a management fee calculated as a percentage of a hotel’s total revenue, (iii) a brand fee calculated as a percentage of a hotel’s room revenue, (iv) several variable charges for the provision of different services such as reservations, technology, procurement and collections and (v) the payment of other expenses such as a common advertising fund, loyalty programs and sales fees. Our fixed fee management contracts typically involve (i) a base fee calculated as a percentage of a hotel’s gross operating profit, (ii) a management fee calculated as a percentage of a hotel’s total revenue, (iii) a brand fee calculated as a percentage of a hotel’s room revenue, (iv) a single fixed charge for the provision of different services such as reservations, technology, procurement, collections and (v) the payment of other expenses such as a common advertising fund, loyalty programs and sales fees. Our percentage of gross operating profits management contracts typically involve (i) a fee calculated as a percentage of a hotel’s gross operating profit and (ii) the payment of other expenses such as a common advertising fund, loyalty programs and sales fees. Revenues from hotel management may also include payments we receive in connection with early termination of management contracts. As of March 31, 2015, the fees we received pursuant to long-term management contracts for the hotels we operate were divided as follows: (i) 55% traditional model, (ii) 10% fixed fee model and (iii) 35% percentage of gross operating profits model. Moreover, these agreements generally require that the hotel owners, or the owners of the leasehold interest in a hotel, as the case may be, invest a specified percentage of annual revenues to refurbish and maintain the hotels in accordance with operating standards we establish. As of March 31, 2015, the average remaining life of our existing management agreements with third parties was 10.1 years. Our managed hotels contributed approximately 9.4% and 8.3% of our revenues during the three months ended March 31, 2014 and during the three months ended

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March 31, 2015, respectively. See note 4.c to our audited financial statements in this offering memorandum for information relating to the methods applied to consolidate our operating results. Franchised hotels. We have 4 franchised hotels in our portfolio representing 634 rooms and 2.87% of our total rooms. As of March 31, 2015, we had 3 franchised hotels in our portfolio representing 481 rooms and 2.2% of our total rooms. We receive fees pursuant to our long-term franchise contracts for all of the hotels we franchise. In general, our franchise contracts provide for the payment of fees and expenses based on (i) a percentage of a hotel’s room revenues, (ii) a fixed reservation fee, (iii) a fee for personnel training and (iv) the payment of other expenses such as a common advertising fund, loyalty programs and sales fees. Our franchised hotels contributed approximately 0.03% of our revenues during the three months ended March 31, 2015. We also operate two hotels under other brands, one in Mexico and one in Texas. These hotels are under the Holiday Inn and Ramada franchise brands and we pay franchise fees for the use of these brands. These hotels constitute 1.9% of our total rooms as of the date of this offering memorandum and as of March 31, 2015. These hotels are not a part of our core hotel management business and we continue to explore available options with respect to these properties. The following table sets forth our hotels organized by brand, characterizes each hotel’s location as urban area or coastal region, identifies whether each hotel is owned, leased or managed, indicates the number of rooms per hotel and, for owned hotels, indicates our percentage ownership as of March 31, 2015:

Live Aqua Hotel State Urban/Coastal Type Rooms % Owned

Bosques de las Lomas ...... Distrito Federal Urban Managed 135 0% Cancún ...... Quintana Roo Coastal Leased 371 0%

Fiesta Americana Hotel State Urban/Coastal Type Rooms % Owned

Aguascalientes ...... Aguascalientes Urban Managed 192 0% Centro Monterrey ...... Nuevo León Urban Managed 207 0% Condesa Cancún ...... Quintana Roo Coastal Owned 502 100% Cuernavaca, Hacienda San Antonio El Morelos Urban Managed 112 0% Puente ...... Grand Coral Beach Cancún ...... Quintana Roo Coastal Managed 602 0% Grand Chapultepec ...... Distrito Federal Urban Managed 203 0% Grand Guadalajara Country Club ...... Jalisco Urban Managed 207 0% Los Cabos Golf & Spa Resort Baja California Sur Coastal Owned 249 100% Guadalajara ...... Jalisco Urban Owned 391 100% Hacienda Galindo ...... Querétaro Urban Owned 168 100% Hermosillo ...... Sonora Urban Owned 221 100% Mérida ...... Yucatán Urban Owned 350 51% Puerto Vallarta ...... Jalisco Coastal Managed 291 0% Querétaro ...... Querétaro Urban Managed 173 0% Reforma ...... Distrito Federal Urban Owned 616 100% Santa Fe ...... Distrito Federal Urban Leased 172 0% Veracruz ...... Veracruz Urban Managed 233 0%

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Fiesta Americana Vacation Club Hotel State Urban/Coastal Type Rooms % Owned

Cancún ...... Quintana Roo Coastal Owned 310 100% Condesa Acapulco ...... Guerrero Coastal Owned 560 100% Cozumel Dive Resort ...... Quintana Roo Coastal Owned 174 100% Explorean Cozumel ...... Quintana Roo Coastal Owned 56 100% Explorean Kohunlich ...... Quintana Roo Coastal Owned 40 100% Los Cabos Villas ...... Baja California Sur Coastal Owned 457 100% Puerto Vallarta–Nima Bay ...... Jalisco Coastal Owned 16 100%

Fiesta Inn Hotel State Urban/Coastal Type Rooms % Owned

Aeropuerto Ciudad de México ...... Distrito Federal Urban Owned 327 100% Aguascalientes ...... Aguascalientes Urban Managed 125 0% Cancún Las Américas ...... Quintana Roo Coastal Leased 152 0% Celaya ...... Guanajuato Urban Managed 124 0% Centro Histórico ...... Distrito Federal Urban Leased 140 0% Ciudad del Carmen ...... Campeche Urban Managed 131 0% Ciudad Obregón ...... Sonora Urban Managed 123 0% Ciudad Juárez ...... Chihuahua Urban Managed 166 0% Colima ...... Colima Urban Managed 104 0% Cuautitlán ...... Estado de México Urban Leased 128 0% Cuernavaca ...... Morelos Urban Managed 155 0% Culiacán ...... Sinaloa Urban Leased 146 0% Chetumal ...... Quintana Roo Urban Managed 131 0% Chihuahua ...... Chihuahua Urban Managed 152 0% Coatzacoalcos ...... Veracruz Urban Managed 122 0% Durango ...... Durango Urban Managed 138 0% Ecatepec ...... Estado de México Urban Leased 143 0% Guadalajara ...... Jalisco Urban Managed 158 0% Hermosillo ...... Sonora Urban Managed 155 0% Insurgentes Sur ...... Distrito Federal Urban Leased 162 0% Insurgentes Viaducto ...... Distrito Federal Urban Leased 210 0% León ...... Guanajuato Urban Managed 160 0% Mérida Yucatán Urban Managed 166 0% Mexicali ...... Baja California Urban Managed 150 0% Monclova ...... Coahuila Urban Managed 158 0% Monterrey Centro ...... Nuevo León Urban Managed 231 0% Monterrey Fundidora ...... Nuevo León Urban Managed 155 0% Monterrey La Fe - Aeropuerto ...... Nuevo León Urban Managed 161 0% Monterrey Tecnológico ...... Nuevo León Urban Managed 201 0% Monterrey Valle ...... Nuevo León Urban Owned 177 100% Naucalpan ...... Estado de México Urban Managed 119 0% Nogales ...... Sonora Urban Managed 107 0% Nuevo Laredo ...... Tamaulipas Urban Managed 120 0% Oaxaca ...... Oaxaca Urban Managed 145 0% Pachuca ...... Hidalgo Urban Leased 114 0% Perinorte ...... Distrito Federal Urban Managed 123 0% Perisur Distrito Federal Urban Leased 212 0% Plaza Central Distrito Federal Urban Managed 169 0%

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Fiesta Inn Hotel State Urban/Coastal Type Rooms % Owned

Poza Rica ...... Veracruz Urban Managed 107 0% Puebla las Animas Puebla Urban Leased 140 0% Puebla FINSA ...... Puebla Urban Managed 123 0% Querétaro ...... Querétaro Urban Managed 225 0% Querétaro Centro Sur ...... Querétaro Urban Managed 134 0% Reynosa ...... Tamaulipas Urban Managed 127 0% Saltillo ...... Coahuila Urban Managed 149 0% Santa Fe ...... Distrito Federal Urban Leased 189 0% San Cristóbal de las Casas ...... Chiapas Urban Managed 80 0% San Luis Potosí Glorieta Juárez ...... San Luis Potosí Urban Managed 135 0% San Luis Potosí Oriente ...... San Luis Potosí Urban Leased 140 0% Tampico ...... Tamaulipas Urban Managed 124 0% Tepic ...... Nayarit Urban Managed 139 0% Tijuana Otay ...... Baja California Urban Leased 142 0% Tlalnepantla ...... Estado de México Urban Managed 131 0% Toluca ...... Estado de México Urban Managed 144 0% Toluca Aeropuerto ...... Estado de México Urban Managed 150 0% Toluca Centro ...... Estado de México Urban Managed 85 0% Torreón Galerías ...... Coahuila Urban Managed 146 0% Tuxtla Gutiérrez ...... Chiapas Urban Managed 120 0% Veracruz ...... Veracruz Urban Managed 144 0% Veracruz Malecón ...... Veracruz Urban Managed 92 0% Xalapa ...... Veracruz Urban Managed 119 0% Zacatecas ...... Zacatecas Urban Managed 146 0%

One Hotels Hotel State Urban/Coastal Type Rooms % Owned

Acapulco Costera ...... Guerrero Coastal Managed 126 0% Aguascalientes Ciudad Industrial ...... Aguascalientes Urban Managed 126 0% Aguascalientes San Marcos ...... Aguascalientes Urban Managed 126 0% Cancún Centro ...... Quintana Roo Coastal Managed 126 0% Ciudad del Carmen Concordia ...... Campeche Coastal Managed 126 0% Ciudad de México Patriotismo ...... Distrito Federal Urban Managed 132 0% Ciudad de México Alameda ...... Distrito Federal Urban Managed 117 0% Cuernavaca ...... Morelos Urban Managed 126 0% Culiacán Forum ...... Sinaloa Urban Managed 119 0% Coatzacoalcos Forum ...... Veracruz Urban Managed 126 0% Guadalajara Centro Histórico ...... Jalisco Urban Managed 146 0% Guadalajara Periférico Norte ...... Jalisco Urban Managed 126 0% Guadalajara Periférico Vallarta ...... Jalisco Urban Managed 121 0% Guadalajara Tapatío ...... Jalisco Urban Managed 126 0% Irapuato ...... Guanajuato Urban Managed 126 0% La Paz ...... Baja California Sur Coastal Managed 126 0% León Poliforum ...... Guanajuato Urban Managed 126 0% Monclova ...... Coahuila Urban Managed 66 0% Monterrey Aeropuerto ...... Nuevo León Urban Managed 126 0% Playa del Carmen Centro ...... Quintana Roo Urban Managed 108 0% Puebla FINSA ...... Puebla Urban Managed 126 0%

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One Hotels Hotel State Urban/Coastal Type Rooms % Owned Querétaro Aeropuerto ...... Querétaro Urban Managed 126 0% Querétaro Centro Sur ...... Querétaro Urban Managed 126 0% Querétaro Plaza Galerías ...... Querétaro Urban Managed 126 0% Oaxaca Centro ...... Oaxaca Urban Managed 109 0% Reynosa Valle Alto ...... Tamaulipas Urban Managed 135 0% Salina Cruz ...... Oaxaca Urban Managed 126 0% Saltillo Derramadero ...... Coahuila Urban Managed 126 0% San Luis Potosí Glorieta Juárez ...... San Luis Potosí Urban Managed 126 0% Silao ...... Guanajuato Urban Managed 126 0% Toluca Aeropuerto ...... Estado de México Urban Managed 126 0% Vallarta Aeropuerto ...... Jalisco Coastal Managed 126 0% Villahermosa Centro ...... Tabasco Urban Managed 110 0% Villahermosa Tabasco 2000 ...... Tabasco Urban Managed 126 0% Xalapa Las Ánimas ...... Veracruz Urban Managed 126 0%

Gamma Hotel State Urban/Coastal Type Rooms % Owned

Ciudad Obregón ...... Sonora Urban Managed 135 0% El Castellano, Mérida ...... Yucatán Urban Franchised 153 0% León ...... Guanajuato Urban Managed 159 0% Monterrey Ancira ...... Nuevo León Urban Franchised 244 0% Morelia Beló ...... Michoacán Urban Franchised 84 0% Tijuana ...... Baja California Norte Urban Managed 140 0%

Other Hotel State Urban/Coastal Type Rooms % Owned

Laredo Civic Center ...... Texas (United Urban Owned 203 100% States) Mérida ...... Yucatán Urban Managed 213 9%

Because of our market position and strong reputation, during the last few years we have been able to expand our hotel business mainly through increasing our operation of hotels developed with investment capital provided by third parties, thus reducing our need to use financial resources generated by our own cash flow or financing activities. As of March 31, 2015, our development pipeline was comprised of plans to operate 39 new hotels with 6,058 rooms. In connection with such development pipeline, we opened the One Hotel Celaya in May 2015 and the Gamma by Fiesta Inn Plaza Ixtapa in April 2015. These new openings reduced the number of hotels in our development pipeline to 37, but we subsequently added the Fiesta Americana Pabellón Guadalajara to our development pipeline, raising the number of new hotels in the pipeline to 38. As of the date of this offering memorandum, our development pipeline is comprised of plans to operate 38 new hotels with 5,964 rooms, which will represent an increase of approximately 27% in our total number of rooms. Approximately 60% of these hotels are Fiesta Inn and One Hotels, which are our economy and budget-brand tiers and 8% of these hotels are Gamma hotels which are our franchised hotels. We estimate our pipeline hotels to represent a total investment of U.S.$567 million, of which we estimate that we will contribute approximately 15.3% or U.S.$87 million, mainly from our cash flow generation and by contributing in kind certain of our existing owned real estate assets to the development

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of such plan, with the remainder contributed by the owners of the hotels we will manage and franchise. We anticipate opening these hotels within 24 months following the date of this offering memorandum. The following table sets forth, for the indicated periods, certain operating data by brand for the hotels in our portfolio:

Occupancy ADR(1)(2) ADR(1)(2) RevPAR(1)(3) RevPAR(1)(3) Ps. (U.S.$) Ps. (U.S.$) Fiesta Americana and Grand Fiesta Americana(4) Year ended December 31, 2014(6)….... 67% 1,457 99 972 66 Three months ended March 31, 2015(7) 69% 1,742 115 1,199 79 Fiesta Inn and Fiesta Inn Loft Year ended December 31, 2014(6) …… 66% 995 68 654 44 Three months ended March 31, 2015(7) 62% 1,027 68 636 42 Live Aqua Year ended December 31, 2014(6)……. 74% 2,104 143 1,557 106 Three months ended March 31, 2015(7) 78% 2,755 182 2,136 141 One Hotels Year ended December 31, 2014(6)……. 53% 683 46 362 25 Three months ended March 31, 2015(7) 56% 695 46 390 26 Gamma Hotels Year ended December 31, 2014(6)……. 41% 770 52 319 22 Three months ended March 31, 2015(7) 42% 768 51 322 21 Other Brands(5) Year ended December 31, 2014(6)……. 66% 981 67 647 44 Three months ended March 31, 2015(7) 64% 1,013 67 650 43

(1) ADR is determined by dividing total room revenues for the period indicated by total room nights sold during such period.. (2) ADR and RevPAR figures are presented for all of the hotels in our portfolio. Therefore, these figures include information relating to hotels we do not own (i.e., those we manage but that are owned by third parties). (3) RevPAR is calculated as ADR multiplied by the occupancy rate (equivalent to dividing total room revenues by total room nights available for sale). (4) Includes hotels operating under the Fiesta Americana and Fiesta Americana Grand. (5) Hotels operated under the Holiday Inn and Ramada brands. (6) Converted into U.S. dollars, solely for the convenience of the reader, using an exchange rate of Ps.14.7180 per U.S. dollar, the Official Exchange Rate in effect on December 31, 2014. These conversions should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the specified rate or at the dates indicated or at all. See “Exchange Rates.” (7) Converted into U.S. dollars, solely for the convenience of the reader, using an exchange rate of Ps.15.1542 per U.S. dollar, the Official Exchange Rate in effect on March 31, 2015. These conversions should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the specified rate or at the dates indicated or at all. See “Exchange Rates.”

Vacation Club Business—Fiesta Americana Vacation Club We also operate a vacation club business through which we market and sell memberships that grant a right to use the vacation club resorts we own and operate in upscale destinations in Mexico including Los Cabos, Cancún, Acapulco, Puerto Vallarta, Cozumel and Kohunlich, as well as other affiliated properties around the world. Our vacation club business operates under the brand name Fiesta Americana Vacation Club, or FAVC. The Cancún property has 179 units, the Los Cabos property has 190 units, the Acapulco property has 324 units, the Kohunlich property has 40 units, and operates two hotels, one in Los Cabos with 249 rooms, and one in Cozumel with 224 rooms, which was transferred to the Vacation Club business in 2012. As of March 31, 2015, FAVC had over 30,600 members, primarily residents of Mexico and the United States. Vacation club members buy a “40-year-right-to-use point-based program” evidenced by an annual allocation of vacation club points. FAVC typically charges an initial payment of between 10% and 30%, and offers installment payment plans that accrue interest for the balance of the purchase price. Although historically a substantial portion of our vacation club sales were denominated in U.S. dollars, as of March 31, 2015, approximately 50% of our vacation club receivables portfolio is denominated in pesos, albeit at a higher interest rate, as a result of the requests by certain members who wanted to convert their installment payment obligations from U.S. dollars to pesos. We expect to continue to offer peso-

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denominated payment plans to Mexican residents who wish to manage their exposure to fluctuations in the peso exchange rate. Vacation club points can be redeemed to stay at our FAVC properties, as well as any of our hotels or, through FAVC’s affiliations with Resorts Condominium International, or RCI, and Hilton Hotels Corp., any RCI-affiliated resort or Hilton Grand Vacation Club, or HGVC, resort throughout the world. In connection with FAVC’s agreement with HGVC, HGVC provides certain services related to product development and vacation club design, sales and marketing consultation transaction processing, and member contact and communication. Members can also exchange points for miles on partner airlines. In 2010, we began marketing a new vacation club product called Kivac, which consists of the sale of points that may be redeemed within five years of sale for accommodations in any of our hotels. Kivac was created to generate a new distribution channel for our hotels’ unused inventory and is targeted at a market for which FAVC membership may be too expensive or long. Kivac has proven to be popular in the mid-scale market, particularly in urban locations, and has reached approximately 18,000 members. Since its inception in 1999, FAVC has become a significant source of our revenue. In addition to FAVC and Kivac, since 2013 we operate a luxury vacation club business called The Front Door which provides services similar to FAVC with a particular focus on a more exclusive and luxury market. The Front Door members can redeem their annual allocation of points to stay at our apartments in Marina Vallarta and Cozumel dedicated to this business line, as well as other upscale properties managed by us and other properties affiliated to The Registry Collection throughout the world. Collectively, our vacation club business contributed approximately 34.1% and 37.6% of our revenues for the year ended December 31, 2014 and during the three months ended March 31, 2015, respectively. Other Related Services Businesses We have established a number of related business that attempt to market to third-parties our management skills and technology platform initially developed to support our hotel operating business. Ampersand Our Ampersand business manages various loyalty programs with world-class capabilities in consulting, developing, executing, operating and managing such loyalty programs. Ampersand contributed approximately 3.6% and 5.2% of our revenues in the three months ended March 31, 2014 and during the three months ended March 31, 2015, respectively. Conectum Our Conectum unit offers business process outsourcing services such as accounting, payroll and technology services to a variety of industries. Like Ampersand, the Conectum business has its roots in our efforts to consolidate and integrate the financial operations of the different hotels in our portfolio. Conectum contributed approximately 0.9% and 0.5% of our revenues during the three months ended March 31, 2014 and during the three months ended March 31, 2015, respectively. Konexo Our Konexo business provides call center and customer care services to a variety of customers. The Konexo service center in Morelia, Michoacán, Mexico has grown out of our efforts to create an efficient and less expensive direct and real-time distribution channel for our hotel operations. Konexo contributed approximately 0.8% and 1.5% of our revenues during three months ended March 31, 2014 and March 31, 2015, respectively. Organizational Structure Grupo Posadas, S.A.B. de C.V. is a sociedad anónima bursátil de capital variable (listed corporation with variable capital) under the laws of Mexico and is a holding company, and its corporate purpose is, among other things, to acquire, hold, subscribe, dispose of or, in any other manner, perform commercial transactions related to stock and other equity interests in commercial entities or civil associations, incorporated according to Mexican or foreign law. However, unlike other holding groups, a significant portion of our business and financing operations are conducted directly by Grupo Posadas,

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S.A.B. de C.V. (including our management agreements and our loan agreements and credit facilities). In 2014, we announced our intention to carry out an internal corporate restructuring in order to reorganize the number of our subsidiaries and the functions that some of them perform in our structure and to transform the Company into a stock holding company and therefore transfer, to the extent possible, our hotel management, brand licensing and franchising businesses to one or more of our subsidiaries which will, as a result of such transfer, receive the revenues from such operations. We expect that this corporate restructuring will allow us to reduce the number of our subsidiaries to 37 from 142, consolidate our hotel operations and payroll activities in a single entity, eliminate 70% of our intercompany transactions and close 273 bank accounts. This corporate restructuring is expected to be completed in 2016. As of the date of this offering memorandum, we have completed six mergers. The chart on the following page presents the organizational structure of our main operating subsidiaries and our direct or indirect percentage of equity ownership in such subsidiaries as of the date of this offering memorandum. The shaded boxes indicate subsidiaries that will be guarantors of the Notes. The chart on the following page reflects certain of our subsidiaries that still exist as of the date of this offering memorandum since certain mergers that are being carried out as part of our corporate restructuring have not yet become fully effective.

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______(1) Grupo Posadas, S.A.B. de C.V. is party to all of the hotel management and franchise contracts for our hotels in Mexico, holds all our trademarks in Mexico, the European Union, and some in the United States. (2) Hoteles y Vilas Posadas S.A. de C.V., receives all the cash flows of our wholly owned and lease hotels in Mexico and pays rents for these hotels to Gran Inmobiliaria Posadas, S.A. de C.V. (the beneficial owner of almost all of our owned hotels), Promociones Hoteleras del Caribe, S.A. de C.V. (owner of the Fiesta Americana Condesa Cancún hotel) and third parties, and also acts as the payroll entity for the general employees of those hotels. (3) Operadora del Golfo de México, S.A. de C.V. owns all of our hotels in Mexico, except for the Fiesta Americana Condesa Cancún hotel and the Fiesta Americana Mérida hotel. Inmobiliaria Administradora Minerva S.A. de C.V. owns the land underlying the Fiesta Americana Guadalajara hotel and Yipa S.A. de C.V. owns certain real property lots underlying the Fiesta Inn Aeropuerto hotel. (4) Inversora Inmobiliaria Club, S.A. de C.V. is the subsidiary through which we hold our vacation club resorts: Acapulco, Cancún, Marina Vallarta, and Kohunlich vacation club resorts. Gran Inmobiliaria Posadas S.A. de C.V. and Operadora del Golfo de México S.A. de C.V. own our Cozumel vacation club resort. Those ownership entities lease their resorts to Gran Operadora Posadas S.A. de C.V., which sells time share rights in those properties. Posadas de Latinoamérica S.A. de C.V. owns Los Cabos vacation club resort and sells time share rights in such property. Gran Operadora Posadas S.A. de C.V. and Posadas de Latinoamérica S.A. de C.V. pay royalties to Grupo Posadas, S.A.B. de C.V. and management fees to Hoteles y Villas Posadas S.A. de C.V. for the operation of vacation club units. Posadas de Latinoamérica S.A. de C.V. pays a marketing fee to Gran Operadora Posadas S.A. de C.V. for marketing the Los Cabos vacation club inventory. Gran Operadora Posadas S.A. de C.V. markets our Kivac Vacation Club product, which targets low-end market customers. Fiesta Vacation S.A. de C.V. manages our vacation club exchange program. Kohunlich Adventures, S.A. de C.V. holds our federal ground transportation permits for transportation of our hotel guests (5) Inmobiliaria del Sudeste S.A. de C.V. is the owner of, and receives all of the cash flows of, the Fiesta Americana Mérida hotel. Inmobiliaria Administradora del Bajío S.A. de C.V. is the payroll entity for such hotel. (6) Bia Acquisition Ltd. is the subsidiary through which we own one hotel located in Laredo, Texas. Posadas USA Inc. holds our sales promotion and collection operations in the United States. (7) Administración Digital Conectum S.A. de C.V. holds our Conectum business; Soluciones de Lealtad, S.A. de C.V. holds our Ampersand business; Konexo Centro de Soluciones S.A. de C.V. holds our Konexo’s call center business; and Solosol Tours S.A. de C.V. holds our GloboGo business. Sistema Director de Proyectos, S.A. de C.V. holds our advisory services on hotel construction and business equipment procurement and operation. Promoción y Publicidad Fiesta, S.A. de C.V. holds the marketing fund for all of our hotels. Promotora Inmobiliaria Hotelera S.A. de C.V. acts as the corporate treasurer of Grupo Posadas and all of its subsidiaries. Controladora de Acciones Posadas S.A. de C.V. holds some of our subsidiaries’ shares and all our trademarks in Latin America. (8) Desarrollo Arcano, S.A. de C.V. and Porto Ixtapa, S.A. de C.V. are the developers of two residential ventures in Ixtapa, Mexico. Desarrollo Arcano, S.A. de C.V. holds two plots of land in Ixtapa and Porto Ixtapa, S.A. de C.V. holds an account receivable for the last plot of land sold in Ixtapa. (9) Hotelera Panamericana, S.A. de C.V., Servicios Administrativos Posadas, S.A. de C.V., Servicios Gerenciales Posadas, S.A. de C.V. are our payroll entities for corporate and hotel executive committee employees. (10) Fundación Posadas A.C. holds and administers our public charity programs. (11) AltiusPar Inc., API FA, S.A. de C.V., API LA, S.A. de C.V., API PM, S.A. de C.V., Asesores Administrativos Los Cabos, S.A. de C.V., Axioma Demostrado, S.L, Central de Grupos Posadas, S.A. de C.V., Corporativo Prohoca, S.A. de C.V., Hotelera Los Cabos, S.A. de C.V., Integración de Servicios para Hoteles, S.A. de C.V., Inversiones Las Posadas 4500, C.A., Inversiones Las Posadas 4501, C.A., Posadas América del Sur, C.A., Posadas Venture BV, Promotora del Caribe, S.A., Servicios Administrativos Conectum, S.A. de C.V., Servicios Ejecutivos Posadas, S.A. de C.V. y Servicios Gerenciales Posadas, S.A. de C.V. are entities that we plan on disposing, including through merger into the Company and our other subsidiares or liquidation pursuant to our on-going corporate reorganization. Inversiones Las Posadas 4500, C.A., Inversiones Las Posadas 4501, C.A. and Posadas América del Sur, C.A. are dormant entities which are not shown on the chart.

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Projects Under Development We continually assess opportunities to operate hotels in new locations. Our real-estate and development division is responsible for identifying locations for new projects. We do not apply fixed statistical or numerical parameters when making a decision on whether to expand into a particular area, but our analysis takes into account the population of the city, the area’s level of local economic activity and the willingness of investors to invest capital in the location. Once a location has been identified by our development department, our research department evaluates the feasibility of the proposal by analyzing existing supply and demand for rooms in the area, the level of local competition, ranges of rates to charge, and which of our brands would be appropriate for the project. The following briefly discusses our current hotel projects under development. As of March 31, 2015, our development pipeline was comprised of plans to operate 39 new hotels with 6,058 rooms. In connection with such development pipeline, we opened the One Hotel Celaya in May 2015 and the Gamma by Fiesta Inn Plaza Ixtapa in April 2015. These new openings reduced the number of hotels in our development pipeline to 37, but we subsequently added the Fiesta Americana Pabellón Guadalajara to our development pipeline, raising the number of new hotels in the pipeline to 38. As of the date of this offering memorandum, our development pipeline is comprised of plans to operate 38 new hotels with 5,964 rooms, which will represent an increase of approximately 27% in our total number of rooms. Approximately 60% of these hotels are Fiesta Inn and One Hotels, which are our economy and budget-brand tiers and 8% of these hotels are Gamma hotels which are our franchised hotels. We estimate our pipeline hotels to represent a total investment of U.S.$567 million, of which we estimate that we will contribute approximately 15.3% or U.S.$87 million, mainly from our cash flow generation and by contributing in kind certain of our existing owned real estate assets to the development of such plan, with the remainder contributed by the owners of the hotels we will manage and franchise. We anticipate opening these hotels within 24 months following the date of this offering memorandum.

Openings Mexico Hotels Rooms % of Rooms Fiesta Americana Grand* ...... 4 1,273 21.3 Fiesta Americana ...... 5 893 15.0 Fiesta Inn ...... 10 1,243 20.7 Gamma ...... 3 449 7.5 One ...... 13 1,656 28.0 Live Aqua ...... 3 450 7.5 Total ...... 38 5,964 100

*Includes Fiesta Americana Grand Villas Acapulco Diamante with 490 rooms. Management Divisions We operate our business through five divisions: hotel management, real-estate and development, vacation club, franchises and finance. The heads of each of these five divisions, together with our Chairman of the Board of Directors, constitute our Executive Committee. See “Management–Executive Committee.” The hotel management division is responsible for the day-to-day operations of our hotels and is focused on achieving optimum service and customer satisfaction levels at each of our properties. This division is responsible for the application of guidelines, policies and procedures that seek to ensure brand consistency throughout all of the hotels in our portfolio, other than franchised hotels. In addition, our sales force reports to the management division. The real-estate and development division is responsible for maximizing the value of our hotel properties and increasing the profitability of those assets. The division is also responsible for furnishing the hotels we operate and for planning, managing and overseeing our development pipeline, including identifying locations for new projects and evaluating the feasibility of a proposed location. See “— Projects Under Development.”

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The vacation club division is responsible for the sales, operation and development of the Fiesta Americana Vacation Club, Kivac and The Front Door business. The franchise division is responsible for the development of brands and trademarks, the implementation of standards applicable to the franchised hotels and our distribution channels. This division is also responsible for the development of guidelines, policies and procedures that seek to ensure brand consistency throughout all of the hotels in our portfolio. This division also provides support to our franchisees. The finance division is responsible for overseeing and managing our finances. In particular, this division manages our financial, treasury, tax, insurance, banking relationships, loan administration and derivatives policies. Systems and Technology We believe that investing in new systems and technology is critical to our growth and distinguishes our enterprise from other companies in the Mexican and Latin American hotel and tourism industry. Throughout our history we have developed new systems, technology and platforms that we believe have allowed us to achieve success by optimizing our product distribution, managing our operations more efficiently and cultivating the talents of our employees. One such capability is ICP, our centralized and consolidated room inventory solution for our entire hotel portfolio. ICP updates in real-time as room availability changes and this information is furnished to all distribution channels through which we sell rooms. We believe the ICP platform allows us to optimize our earnings by allowing us to price our actual room inventory rapidly to meet fluctuations in customer demand. We operate our IT platforms under strict international safety standards and certifications. Another such capability is CRM platform, our guest experience system that places our guests at the very core of our operations by recognizing them and personalizing the service they receive before, during and after their stay, systematizing their benefits and exerting rigorous control over their requests and our responses to them over the course of their stay. See “Risk Factors—We are subject to risks related to stoppages or failures in informational systems” and “Risk Factors—A network failure could cause delays or interruptions of service, which could cause us to lose customers and revenues” for risks associated with our systems and technology. Seasonality Of the 22,021 hotel rooms we operate, approximately 82% are in urban or suburban locations and cater primarily to business travelers. These hotel operations have not experienced significant seasonal fluctuations aside from minor reductions in occupancy during the holiday season from mid- December through mid-January. The remaining hotel rooms we operate are in coastal resort locations. Our coastal hotel operations generally experience two peak seasons. Generally, our resort hotel revenues are greater in the first and fourth quarters than in the second and third quarters. This seasonality can be expected to cause quarterly fluctuations in our revenues. See “Risk Factors—The hotel industry is seasonal in nature.” Competition The hotel industry in Mexico is highly competitive. Our hotels generally compete with a variety of Mexican and international hotel operators, some of which, on an international basis, are substantially larger than us and operate under well-known international brand names. In mid-size urban areas and suburbs of large cities, our hotels primarily compete with Mexican and international chains as well as independently owned and managed hotels. Depending upon the class of the hotel, competition is based primarily upon price, quality of facilities and services offered, physical location within a particular market and the ability to earn and redeem customer loyalty program points. Hotel owners must make continuing expenditures for modernization, refurbishment and maintenance to prevent competitive obsolescence. The competitiveness of the Company’s hotels has been enhanced by our frequent guest program (Fiesta Rewards) the Fiesta Americana Vacation Club and Kivac.

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The main competitors of our Fiesta Americana hotels are other high-end international and Mexican chains such as Camino Real, Crowne Plaza, Marriott, Hyatt, Westin, Hilton Sheraton and Intercontinental. The competitors of our Fiesta Inn hotels are both independent local hotel operators and moderately priced international and Mexican chains such as Holiday Inn, Holiday Inn Express, Best Western, Mision, Hampton Inn, NH Hotels and City Express. Our One Hotels compete primarily with other economy class and independent hotel operators. In our efforts to increase the number of hotel properties we manage, we also compete with entities who seek the same opportunities to enter into management contracts with hotel owners. Some of these entities have substantially greater marketing and financial resources than we do, although few are as well situated as we are in the markets that we serve. Our principal competitors for management opportunities include CityExpress, Riu and AMResorts, Starwood and Marriott. We do not allow any competitors to operate hotels under our distinctive brands. The vacation club industry is also highly competitive. FAVC competes primarily with Palace Resorts, Mayan Palace, Club Regina and Royal Holiday Club in Mexico, and generally with other vacation club destinations in the Caribbean and other coastal resort areas. The Front Door competes primarily with Mayan Grand Luxe and premium vacation real estate developments such as Inspirato. Kivac does not have a direct competitor in the market it serves. We are also subject to competition in our services businesses. Ampersand competes with small to medium-sized companies in the loyalty program management business in Mexico, but we do not believe that any of these competitors integrate the range of capabilities that Ampersand offers to its customers. Konexo competes with many large, multinational providers of call center and contact services. Conectum competes with many entities offering similar business process outsourcing services and with accounting professionals who provide some similar service. Environmental Matters We are subject to certain legal requirements and potential liabilities under various federal, state and municipal environmental laws and regulations, including the regulations for environmental impact, hazardous waste and prevention and control for the contamination of water, air and soil, which we refer to as “Environmental Laws.” Governmental authorities may impose certain administrative and criminal penalties or fines for violation of Environmental Laws. Such authorities may also, among other things, close, either indefinitely or temporarily, operations of any businesses located at any real properties found in violation of any Environmental Laws. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The punishment for infringement of the Environmental Laws might consist of remediation of the damaged environment, administrative and criminal penalties and fines. The presence of hazardous or toxic substances may adversely affect the owner’s ability to sell or rent such real property or to borrow using such real property as collateral. Persons who arrange for the disposal or treatment of hazardous or toxic wastes may be liable for the costs of removal or remediation of such wastes at the treatment, storage or disposal facility, regardless of whether such facility is owned or operated by such person. We do not believe that we use substances or generate waste that may be deemed hazardous or toxic under applicable Environmental Laws. We have not been subject to or suffered any civil liabilities or costs related to cleaning up contamination resulting from historic uses of our current or former properties owned, leased or managed by us. In addition to the above, owners and operators of real property may face civil liability for personal injury or property damage because of various environmental conditions such as alleged exposure to hazardous or toxic substances, poor indoor air quality, radon or poor drinking water quality. We are also subject to other laws and regulations relating to operation and closure of storage tanks, and preservation of wetlands, coastal zones or endangered species, which could limit our ability to develop, use, sell or rent our real property or use it as collateral. Future changes in environmental laws or the discovery of currently unknown environmental conditions may have a material adverse effect on our financial condition and results of operations. In addition, Mexican environmental regulations have become increasingly stringent over the last decade. Accordingly, there can be no assurance that more stringent enforcement of existing laws and regulations or the adoption of additional laws and regulations would not have a material effect on our business and financial condition or prospects.

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Intellectual Property We own various trademarks either directly or through our subsidiaries that are registered in Mexico and/or in certain foreign countries in which we operate, including Live Aqua®, Fiesta Americana®, Fiesta Americana Grand®, Fiesta Americana Vacation Club®, Fiesta Rewards®, Fiesta Inn®, The Explorean®, One Hotels®, KIVAC®, The Front Door®, Gamma Hoteles®, Posadas® Ampersand®, Konexo®, Conectum®, GloboGO® and Summas® We also own various unregistered trademarks either directly or through our subsidiaries, including Inventario Central PosadasTM, and ConectumTM. In addition, we hold licenses either directly or through our subsidiaries to certain intellectual property used in connection with the management of our business, including the third-party software we use in our Conectum and ICP. We consider all of foregoing intellectual property and the associated name recognition to be valuable to our business. We know of no material legal challenge or imminent threat of a material challenge to our use of such intellectual property. We are also party to a co-existence agreement with Live Aqua Hotels & Resorts with respect to the “Aqua” name. In 2015, we entered into an exclusive license contract for use of the Live Aqua brand in the United States. Employees As of March 31, 2015, we employed 4,799 employees at our owned hotels and corporate positions. As of March 31, 2015, 8,358 employees were employed by the owner or lessor at the hotels that we operate but with whom we do not have a direct contractual relationship. In Mexico, approximately 40% of our workforce is unionized. Collective bargaining agreements with our unionized employees are entered between the individual hotels at which such unionized employees work and the relevant union. In general, there is a different union representing our unionized employees at each of our hotels. These collective bargaining agreements are generally reviewed and revised annually for salary adjustments and every two years for other contractual terms. Each of the individual hotel unions is affiliated with a national labor organization: either the CTM (Confederación de Trabajadores de México) or the CROC (Confederación Revolucionaria de Obreros y Campesinos). During the past 10 years, we have not had any material disputes with any of the unions that represent our employees. We currently believe that we have good relations with employees at all of our properties, as well as with the unions to which certain of our employees belong. Regulation Our operations are subject to federal, state and municipal regulations in each of the jurisdictions in which we operate. See “Risk Factors—We are subject to governmental regulations.” In Mexico, each of our hotels is granted a business license by both the state and the municipality to operate locally. Licensing requirements may vary significantly from state to state and even within each state. State and municipal laws in Mexico also regulate fire safety, civil protection and similar matters. Additionally, each of our hotels is required to have sanitation licenses and hotel construction projects are required to have a construction license and environmental authorization, and must comply with several zoning and land-use regulations. We believe that we are in material compliance with all applicable sanitation and construction licenses in Mexico, and with the environmental authorizations and zoning and land-use regulations applicable to our operations. Our operations in Mexico are also subject to the Mexican Ley General de Equilibrio Ecológico y de la Protección al Ambiente (General Law of Ecological Stabilization and Environmental Protection), the rules and regulations published thereunder and the state and local environmental equivalents. Under this law, companies are under the regulatory jurisdiction of the Mexican Secretaría del Medio Ambiente y Recursos Naturales (Ministry of the Environment and Natural Resources). Environmental regulations in Mexico became stricter in the past decade in a trend that is likely to continue in the future in view of the environmental agreements entered by Mexico, the United States and Canada in connection with NAFTA. We have an internal environmental and safety compliance program that seeks to ensure that all of our properties and businesses are in compliance with applicable environmental laws and regulations. We

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believe that we are taking appropriate measures to ensure compliance and/or are in compliance with all environmental laws and regulations. We develop and operate vacation club resorts and we market and sell memberships in the vacation club. We generally sell the memberships pursuant to interest-accruing installment payment arrangements that require a 10% down payment. These activities are all subject to regulation, including the standards established by the Official Mexican Standards. For example, Mexican regulations grant the purchaser of a vacation club membership the right to rescind the purchase contract at any time within a minimum statutory rescission period of five business days that begins upon the signing of the contract. These activities are also regulated at the state level; therefore, regulations may vary in each state in which we operate. In addition, the Procuraduría Federal del Consumidor (Mexican Consumer Protection Agency) must authorize our model contract for the sale of vacation club memberships. In addition to the regulations discussed above, each of our hotels is subject to extensive federal, state and local regulations in Mexico and in the United States, as applicable, and, on a periodic basis, must obtain various licenses and permits, including, but not limited to, those relating to the operation of restaurants, swimming pools, fitness club facilities, parking garages, the sale of alcoholic beverages and occupational health and safety. Grupo Posadas, S.A.B. de C.V. is a Mexican public company and as such is subject to the Mexican Securities Market Law and its regulations. Companies listed on the Mexican Stock Exchange are required to meet certain listing requirements, including maintaining at least 100 shareholders. We have fewer than 100 shareholders. As a result, we are not in compliance with the listing requirements and therefore CNBV can request us to adopt corrective measures, or even order the delisting if such corrective measures are not successfully implemented. Although we believe such delisting is unlikely, we cannot assure that we would be able to take successful measures to cure such a default. A delisting of our shares could require us to carry out a mandatory repurchase of our shares. See “Risk Factors–We cannot assure compliance with the requirements to maintain the listing of our shares in the Mexican stock market.” We believe that, other than as disclosed above, we are in material compliance with applicable laws and regulations and have obtained all applicable licenses and permits and that our business is conducted in substantial compliance with applicable laws. Legal Proceedings Tax Proceedings On May 23, 2014, the Servicio de Administración Tributaria (the Mexican Tax Administration Service), or SAT, alleged that we failed to pay certain income taxes in fiscal year 2006 mainly in connection with a trademark repatriation strategy and assessed a tax liability of Ps.767.2 million (U.S.$49.5 million). On July 7, 2014 we initiated and filed an administrative appeal for revocation in order to defend ourselves against the claim presented by SAT. Up to December 31, 2012, we and certain of our subsidiaries were parties to tax proceedings originating from the years 2004 to 2008 in which the Mexican tax authorities alleged non-payment of federal taxes for a total amount of approximately Ps.1,121.0 million. During the first half of 2013,we requested the Mexican tax authorities to apply the forgiveness benefits established in various rules and criteria published in the Federal Income Law, better known as “tax amnesty”. Consequently, there were several rulings in our favor forgiving all of the alleged contested debt in exchange for a single payment of Ps.142.9 million, of which Ps.125.6 million was recognized in the results of 2013, within income tax expense and refers to income tax, and Ps.17.3 million was recognized in the results of 2013, within “other expenses”, and is associated with local and value-added tax. Such actions concluded these lawsuits. In 2015, we reached a partial settlement with the federal tax authorities of Mexico with respect to the audit of our subsidiary Turística Hotelera los Cabos Siglo XXI, S.A. C.V. The Mexican tax authorities determined a potential tax credit of Ps.243.5 million. The adoption of a conclusive agreement was requested before the office of the Attorney General for Taxpayer Protection (Tax Ombudsman) and we reached a preliminary agreement with SAT to pay Ps.41.8 million in order to settle the total claim. As of

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March 31, 2015, we had paid Ps.18.6 million of the settlement amount; the payment of the remaining Ps.23.2 million is still pending approval from SAT. We are currently subject to audit proceedings with respect to 2007, 2008 and 2009 in connection with our trademark repatriation strategy and the deduction of interest, travel and reimbursement expenses. Other Legal Proceedings In November 2000 and June 2004, Invertur Pacífico, S.A. de C.V., Empresas del Angel, S.A. de C.V., filed lawsuits against Turística Hotelera los Cabos Siglo XXI, S.A. C.V., which operated our Fiesta Inn hotel at the Mexico City airport, for wrongful foreclosure on a bank loan secured in part by 80% of the shares of Yipa, S.A. de C.V, which held title to the property. The plaintiffs previously owned the shares and the hotel, which was also mortgaged to secure the loan. The plaintiffs filed a lawsuit in 2000, challenging the validity of the loan, and we subsequently purchased the loan from the bank, and foreclosed on the shares, thereby becoming the owner of the building. Plaintiffs filed the second lawsuit in 2004, alleging wrongful foreclosure on the shares, and both lawsuits were combined by the court. The parties have filed their claims and counterclaims, the proceeding is not yet in the discovery stage, and we expect to receive a lower court ruling by 2016. In the event the lawsuit were to be resolved against us, based on the nature of the claims, we believe that we would be required to pay the cash value of the shares, which is approximately Ps.40 million (U.S.$3.1) million. We are a creditor in the pending bankruptcy proceedings (quiebra) of Compañía Mexicana de Aviación, S. A. de C.V. and its subsidiaries and affiliates, or Mexicana, which were commenced in August 2010. We have filed claims in those proceedings for sums owed to us by the Mexicana group debtors in an aggregate amount of approximately Ps.171.2 million. From such claims Ps.115 million correspond to operating transactions. As of December 31, 2010 we fully reserved against amounts owed to us resulting from the inability to collect these receivables. Accordingly, these proceedings have not had any effects on our consolidated financial information from 2011 and thereafter. We formerly had a 30.41% interest in Mexicana. On August 13, 2010, we sold our participation in Mexicana to third parties for a nominal amount. The sale had no material impact on our consolidated net income. We may be subject to collateral legal proceedings or other proceedings with respect to this matter although as of March 31, 2015, we have not received any notice of any existing or potential claims against us in connection with the Mexicana quiebra proceedings. We and our subsidiaries have also commenced amparo proceedings in Mexico related to the constitutionality of Federal and State laws and other ordinances. The subject of such claims is the constitutionality of amendments to the Federal Income Tax Law (Ley de Impuesto Sobre la Renta) with respect to permitted deductions and the repeal of the tax consolidation rules, the Federal Revenue Law (Ley de Ingresos de la Federación) for the fiscal year 2013 with respect to tax benefits afforded to States and municipalities, the annual amendments to federal tax laws (Miscelánea Fiscal) for the fiscal year 2014 and the Federal Tax Code (Código Fiscal de la Federación) in connection with electronic accounting rules, a decree issued by the State of Coahuila with respect to taxes on payroll and the Federal Law on the Prevention and Identification of Operations Using Illicit Resources (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita). We believe that our claims in such proceedings have a valid basis but cannot assure the outcome of any such proceeding. If any such proceeding were decided adversely to us we may implement certain procedures and controls which may entail changes to our operational structure and costs. In addition to the matters described above, we are from time to time subject to certain claims and party to certain legal proceedings incidental to the normal course of business. In view of the inherent difficulty of predicting the outcome of legal matters, we cannot state with confidence what the eventual outcome of these pending matters will be, what the timing of the ultimate resolution will be or what the eventual loss, fines or penalties related to each pending matter may be.

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MANAGEMENT Board of Directors Pursuant to our estatutos sociales (by-laws), our management is the responsibility of our Board of Directors. Members of our Board of Directors are elected annually at the ordinary general shareholders’ meeting by our shareholders and serve one year terms. Our by-laws provide that our Board of Directors meet at least every three months. Our Board of Directors takes all major decisions concerning the management of Grupo Posadas, S.A.B. de C.V. Our by-laws provide that the Board of Directors must be comprised of at least five but no more than 21 members (plus their respective alternates) and that at least 25% of the members must be independent. The permanent and alternate Secretaries are not part of our Board of Directors. Our by-laws also require that a majority of the members of our Board of Directors be Mexican citizens. Our current Board of Directors, as appointed pursuant to the resolutions adopted in our shareholders’ annual meetings dated April 14, 2015, is comprised of 10 permanent members and two alternates. The business address of the members of our Board of Directors is Prol. Paseo de la Reforma 1015 Torre A, Piso 9, Colonia Santa Fe, Delegación Álvaro Obregón, México, D.F., México 01210. The following table lists the current members of our Board of Directors: Date of Name Age Position Original Designation Pablo Azcárraga Andrade 56 Chairman of the Board of Directors April 29, 1997 José Carlos Azcárraga Andrade 49 Chief Executive Officer of Grupo Posadas April 30, 2008 Enrique Azcárraga Andrade 50 Director May 31, 1991 Fernando Chico Pardo 62 Director July 26, 1995 Juan Servitje Curzio 57 Director April 30, 2012 Luis Alfonso Nicolau Gutiérrez 53 Independent Director April 30, 2012 Jorge Soto y Gálvez 71 Independent Director April 28, 2006 Silvia Sisset Harp Calderoni 43 Director April 5, 2010 Carlos Levy Covarrubias 53 Director April 27, 2006 BenjamÍn Clariond Reyes-Retana 66 Independent Director March 15, 2013

Mr. Pablo Azcárraga Andrade, Mr. Enrique Azcárraga Andrade and Mr. Jose Carlos Azcárraga Andrade are brothers. Mr. Juan Servitje Curzio is married to Cecilia Azcárraga Andrade. The alternate members of the Board of Directors are Alfredo Loera Fernández and Charbel Christian Francisco Harp Calderoni, to represent indistinctly Silvia Sisset Harp Calderoni and Carlos Levy Covarrubias at the board meetings. Set forth below is a brief summary of the business experience of our directors: Pablo Azcárraga Andrade Mr. Azcárraga is currently the Chairman of the Board of Directors. Since Mr. Azcárraga’s arrival at Grupo Posadas, S.A.B. de C.V., in 1986, he has held various positions within Grupo Posadas, such as General Director of Fiesta Americana Condesa Cancún, General Director of the Fiesta Americana Hotel Division, and he has been in charge of numerous hotel openings, development and management projects such as Holiday Inn Crowne Plaza (today Fiesta Americana Reforma) and Fiesta Americana Condesa Cancún, among others. From 1992 through late 2008, Mr. Azcárraga led the supervision, management, development and aggressive expansion of the Posadas’ hotels and brands, including Fiesta Americana, Fiesta Americana Grand, Fiesta Inn in Mexico and Posadas’ prior Caesar Park and Caesar Business hotels in South America.

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Mr. Azcárraga holds an accounting degree from Universidad Anáhuac, Mexico City and a master’s degree in hotel management from Cornell University. He also holds an executive degree in advanced management from Harvard University. Mr. Azcárraga is also involved in the charitable activities of Fundación Posadas, A.C. José Carlos Azcárraga Andrade José Carlos Azcárraga is Chief Executive Officer for Grupo Posadas since November 11, 2011. He holds a degree in Industrial Engineering from Anáhuac University, Mexico City Campus, and an MBA from the J.L. Kellogg Graduate School, Northwestern University, in Evanston, Illinois. Prior to Grupo Posadas, Mr. Azcárraga worked for Booz Allen & Hamilton, and Chase Manhattan Bank in New York City. He started his career at Posadas in 1994, leading various areas as Director of the Real Estate division, CEO of Fiesta Americana Vacation Club and VP of Sales & Marketing for Posadas Hotel Management Division. Mr. Azcárraga is member of our Executive Committee since 2001 and part of our Board of Directors since 2008. Also, Mr. Azcárraga was elected in 2008 for a 2-year term as Chairman of AMDETUR (the Mexican Resort Development Association) and since 2010 he has been a member of the Board of Directors of the American Resort Development Association. Enrique Azcárraga Andrade Mr. Azcárraga is an industrial engineer with MBA studies from Harvard University. He has worked in several prestigious Mexican companies such as Operadora de Bolsa, S.A. de C.V., Grupo Posadas, S.A.B. de C.V., DESC–Sociedad de Fomento Industrial, GBM–Grupo Bursátil Mexicano, S.A.B. de C.V., and is currently the General Director of Exio, S.C., an investment consulting and family office company. Fernando Chico Pardo Mr. Chico holds a college degree in business and a master’s degree in business administration from Northwestern University. Mr. Chico has held several positions in the following companies: Bimbo, S.A. de C.V., Anderson Clayton, Bank of America, Salomon Brothers, Standard Chartered Bank, Mocatta Metals Corporation, Casa de Bolsa Acciones y Asesoría Bursátil, Inversora Bursátil, Grupo Financiero Inbursa and is currently the President of Promecap, S.C. and ASUR, S.A.B. de C.V. Mr. Chico is also an active member of the Board of Directors of: Grupo Financiero Inbursa, Condumex, S.A. de C.V., Grupo Carso, S.A.B. de C.V., Sanborns, S.A. de C.V., Sears Roebuck de Mexico, United Pension Fund, Quantum Group of Funds and Papalote Museo del Niño, among others. Juan Servitje Curzio Mr. Servitje is an industrial engineer who graduated from Universidad Anahuac and holds a master’s degree in business administration with honors from Northwestern University’s J.L. Kellogg School of Management. He is the Chairman of the Board of Directors of Productos Rich, S.A. de C.V., and since 2000, he has been the Chairman of Rich Products Corporation for Latin America. He is also a member of the Board of Grupo FRIALSA, a leading company in Mexico in controlled temperature storage and distribution. He also participates in various nonprofit organizations such as ENACTUS where he is also Chairman of the Board, SIFE (Students in Free Enterprise), among others. Luis Alfonso Nicolau Gutierrez Mr. Nicolau is a lawyer who graduated from the Escuela Libre de Derecho and he holds a Master’s Degree in Law from Columbia University. He is a partner of the Law Firm Ritch, Mueller, Heather y Nicolau, S.C. Mr. Nicolau is a director for Morgan Stanley México and Shakey’s Pizza México, chairman of the Fulbright Trust, a member of the Museo del Niño Trust and a member of the Oversight Committee of the Mexican Stock Exchange. Mr. Nicolau is the author of various legal publications.

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Jorge Soto y Gálvez Mr. Soto holds an accounting degree from Universidad Nacional Autónoma de México. Prior to joining Grupo Posadas, S.A.B. de C.V., Mr. Soto worked at Arthur Andersen and managed some of the elite clients of the firm, until becoming part of the Executive Committee for the Mexico division. Mr. Soto has been a member of the board of directors of several elite clients of Arthur Andersen and currently has his own consulting company. Silvia Sisset Harp Calderoni Ms. Harp holds a bachelor’s degree in accounting from ITAM. She has held different positions at Robert’s and Filantropía, Educación y Cultura A.C. She was the CEO of the Fundación Alfredo Harp Helú, and has been the Chairman of its board of directors since 2006. She is a member of the Board of Directors of Grupo Martí and the Patronato of Fundación Teletón, among others. Carlos Levy Covarrubias Mr. Levy holds a bachelor’s degree in business from Universidad Iberoamericana. In 1987, he joined Casa de Bolsa Accival and held several operative positions until he became Operations Director. From 1991 through 2005, Mr. Levy held several positions in Grupo Financiero Banamex-Accival, such as Director of Assets Management Coordination, Deputy General Director of the Treasury, General Director of Casa de Bolsa Accival, and Corporate Director of Specialized Banking and Asset Management of Grupo Financiero Banamex. After leaving Banamex, Mr. Levy founded his own investment management company. From 2003 through 2005, Mr. Levy was also President of the Asociación Mexicana de Intermediarios Bursátiles (Mexican Association of Financial Intermediaries). Benjamin Clariond Reyes-Retana Mr. Clariond has a degree in business administration from the Instituto Tecnológico y de Estudios Superiores de Monterrey, a certificate in upper level corporate management from the Industrial Studies Center in Geneve, and a certificate in family-owned enterprises management from the Wharton School, of the University of Pennsylvania. He has held various upper executive level positions in Grupo IMSA in Monterrey and was chairman and member of the board of diverse industrial, banking and service institutions. He has been a house representative elected to the LIV legislature for the I Federal Electoral District of Nuevo Leon, a member of the Committees for Human Settlements and Public Works, Industrial Capital and Promotion and Communication and Transportation, and also served on the technical committee of the chamber of representatives. He was the Municipal President of Monterrey and interim Governor of the state of Nuevo Leon appointed by congress in 1996. He is currently a Federal Representative elected by proportional representation for Nuevo Leon to the LXI Legislature. Executive Committee Pursuant to our by-laws, we have an Executive Committee elected by the Board of Directors consisting of at least three, but no more than five, members. The Executive Committee is currently comprised of Pablo Azcárraga Andrade, Enrique Azcárraga Andrade, and Carlos Levy Covarrubias. The main role of the Executive Committee is to analyze the matters referred to it by the Company. Corporate Practices Committee Both the Mexican Securities Market Law and our by-laws require us to have a Corporate Practices Committee that is currently comprised of Messrs. Luis Alfonso Nicolau Gutiérrez, as President, Jorge Soto y Gálvez and Benjamín Clariond Reyes-Retana. The Corporate Practices Committee is responsible for, among other things: • providing its opinion to the Board of Directors with respect to matters that are under its responsibility, pursuant to the Mexican Securities Market Law; • requesting the opinion of independent experts when considered convenient, for the adequate performance of its functions or when requested by the Mexican Securities Market Law; and

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• calling shareholders’ meetings and including relevant items for the agenda of such meetings, as they believe necessary. Audit Committee Both the Mexican Securities Market Law and our by-laws require us to have an Audit Committee. The Audit Committee is responsible for, among other things: • reviewing our financial statements and assuring compliance with the applicable financial reporting standards; • preparing an annual report of activities for submission to the Board of Directors; • reviewing financial proposals before submission to our Board of Directors; • issuing opinions regarding related party transactions prior to submission to the Board of Directors, and seeking the opinion of experts in connection therewith as appropriate; and • periodically meeting with our internal auditor to review audit reports. The current members of our Audit Committee are Jorge Soto y Gálvez, as President, Luis Alfonso Nicolau Gutiérrez and Benjamín Clariond Reyes-Retana, each of whom is an independent member of our Board of Directors.

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Officers Set forth below are the names, ages and current positions of our officers, together with their years of service with us (rounded to the nearest year). These officers are responsible for our day-to-day management and operations and are the heads of our main operational and financial departments:

Years with Name Age Position Posadas

Pablo Azcárraga Andrade 56 Chairman of the Board of Directors 30 José Carlos Azcárraga Andrade 49 Chief Executive Officer of Grupo Posadas 24 Javier Barrera Segura 52 Chief Executive Officer of Franchises 26 Jorge Carvallo Couttolenc 58 Chief Executive Officer of Inmobiliaria Posadas 21 Arturo Martínez del Campo 48 Chief Financial Officer * Saucedo Enrique Calderón Fernández 48 Chief Executive Officer of Hotelera Posadas 8 Gerardo Rioseco Orihuela 51 Chief Executive Officer of Vacation Properties 15 * Joined the Company in February 2015. Set forth below is a brief summary of the business experience of our officers who are not also directors: Javier Barrera Segura Mr. Barrera holds a degree in Economics at the ITAM and a Master’s degree in Business Administration from Tulane University. In 1986, he was granted the National Award in Economics. For more than 26 years, he has held important positions in Grupo Posadas, S.A.B. de C.V., including marketing, branding, distribution human resources and technology. Before becoming CEO of Posadas Franchise, Mr. Barrera was responsible for designing and launching Fiesta Americana Vacation Club. Jorge Carvallo Couttolenc Mr. Carvallo is currently the Executive Vice President and Chief Executive of Inmobiliaria Posadas. Mr. Carvallo has been in Grupo Posadas, S.A.B. de C.V. for more than 22 years. He is responsible for our owned and leased hotels and the development division of Grupo Posadas, S.A.B. de C.V. Mr. Carvallo has participated in several financial, operational and development ventures within Grupo Posadas, S.A.B. de C.V., including the company’s incursion in South America. Mr. Carvallo served as the head of Grupo Posadas, S.A.B. de C.V., in South America for three years and has been dynamically involved in the expansion of the hotel management and operation activities of Grupo Posadas, S.A.B. de C.V. throughout Mexico. Mr. Carvallo holds a degree in chemical engineering from Universidad Iberoamericana, Mexico City, and a master’s degree in business administration from Instituto Tecnológico Autónomo de México, or ITAM, in Mexico City. Gerardo Rioseco Orihuela Mr. Rioseco is an Industrial Engineering graduate from the Universidad Anáhuac del Sur. He joined Grupo Posadas in 1999 after gaining experience in the finance and tourism industries. At Grupo Posadas Mr. Rioseco initially participated in the creation of Fiesta Americana Vacation Club as Project Director in Los Cabos. After 9 years as Commercial Director of Fiesta Americana Vacation Club and then as Commercial Director of Posadas Vacation Properties, he was appointed as the General Director of Posadas Vacation Properties.

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Arturo Martínez del Campo Saucedo Mr. Martínez is an Industrial Engineer graduate from the Universidad Iberoamericana and holds a Master’s degree in Administration from the University of California. He joined Grupo Posadas on February 2, 2015. He has broad experience in finance and management gained at Grupo Financiero Banamex– Citigroup, where he worked for 26 years and held the positions of Mexico Cost Management Head, Financial Planning Corporate Bank and Treasury Corporate Financial Planning and Treasury (Mexico / Latam), Chief Financial and Administrative Officer at Crédito Familiar and Chief Financial Officer at Avantel /and Banamex Citigroup, among others. Enrique Calderón Fernández Mr. Calderón has a degree in Hotel Industry from the Centro de Estudios Superiores de San Angel. He has worked for more than 20 years in the hotel business sales and tourism service areas in Posadas and other companies in the tourism sector, creating marketing, advertising and sales strategies. In 1999, Mr. Calderón joined Grupo Posadas as Sales Director for Fiesta Americana hotels. Since then he has held several positions such as Sales Director South Region, City Hotels Key Accounts Director and Mexico Sales Director. In 2010 Mr. Calderón was appointed Chief Commercial Officer and was responsible for the total revenue generation for our hotel portfolio. In February 2015 Mr. Calderón became Chief Executive Officer of Hotelera Posadas.

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PRINCIPAL SHAREHOLDERS

Our common stock has been listed on the Mexican Stock Exchange since 1992. There are approximately 496 million Series “A” common shares outstanding and fully paid. The Series “A” shares have showed a non-trading status according to the rates of the Mexican Stock Exchange. The listings of the Series “A” shares has never been suspended by any regulatory authority. On November 11, 2011, at a General Extraordinary Shareholders' Meeting, our shareholders voted to amend our by-laws to provide for the exchange of our Series L shares for Series A shares on a one-for-one basis. As of the date of the offering memorandum, the conditions and authorizations necessary to update the registration of its shares in the Registro Nacional de Valores (National Securities Registry) have been fulfilled and the corresponding exchange was made. As of April 6, 2015, to the best of our knowledge, (i) members of the Azcárraga Andrade family own in the aggregate more than 10% of our capital stock, (ii) an investment company managed by Accival own more than 10% of the corporate capital of the Company, and (iii) a trust managed by Banco Nacional de México, S.A., integrante del Grupo Financiero Banamex, División Fiduciaria holds more than 10% of the Company’s corporate capital. Some members of the Azcárraga Andrade family, who are also relevant officers and directors of Grupo Posadas, S.A.B. de C.V. each individually hold more than 1% but less than 10% of our capital stock, and jointly have approximately 12% of our capital stock. To the best of our knowledge, other than Ms. Maria Luisa Andrade de Azcárraga, no person, including any other member of the Azcárraga Andrade family, directly or indirectly, owns more than 5% of our Series “A” shares. On March 7, 2012, our General Extraordinary Shareholders Meeting approved a Ps.900 million private offering of subordinated debentures mandatorily convertible into 183,257,227 Series “A” shares of the Company. The shareholders also approved the issuance of 183,257,000 Series “A” shares to be held in Treasury and to be subscribed upon conversion of the debentures. On January 2, 2013, such debentures were fully liquidated and on March 15, 2013, our Shareholders Meeting resolved that it was impossible to meet the conditions to which the conditional corporate capital increases was subject, thereby cancelling the aforementioned capital increase. Companies listed on the Mexican Stock Exchange are required to meet certain listing requirements, including maintaining at least 100 shareholders. We have fewer than 100 shareholders. As a result, we are not in compliance with the listing requirements and therefore CNBV can request us to adopt corrective measures, or even order the delisting if such corrective measures are not successfully implemented. Although we believe such delisting is unlikely, we cannot assure that we would be able to take successful measures to cure such a default. A delisting of our shares could require us to carry out a mandatory repurchase of our shares. See “Risk Factors–We cannot assure compliance with the requirements to maintain the listing of our shares in the Mexican stock market.”

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RELATED PARTY TRANSACTIONS Our Conectum service business has a five-year agreement to provide certain accounting process outsourcing services to Compañía Mexicana de Restaurantes, S.A.B. de C.V., of which Joaquín Vargas, one of our former independent directors, is a controlling shareholder. This agreement is currently in the process of being terminated. In August 2005, March and May 2008 and September 2012, we entered into certain hotel operation and brand license agreements with companies in which Benjamín Clariond, a member of the Board of Directors, holds an interest. Those agreements were entered into at arms’ length. We have granted loans from time to time to members of our Executive Committee in amounts not exceeding the present value of 75% of the executive’s expected variable annual compensation (bonus) for the next five years combined. These loans bear interest at what we believe to be market rates. The loans have five-year terms and the proceeds can only be applied to the purchase of a primary residence or to cover healthcare or education expenses. Our Board of Directors is responsible for granting these loans, which can be proposed by our Corporate Practices Committee. In addition, we occasionally engage in isolated transactions with related parties involving non- material amounts, such as the payment of fees for legal services provided to us by Ritch, Mueller, Heather y Nicolau, S.C., of which Luis Alfonso Nicolau Gutiérrez, a member of our Board of Directors, Corporate Practice Committee and Audit Committee, is a partner.

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DESCRIPTION OF OTHER INDEBTEDNESS The following description summarizes material terms of certain of our loan agreements and credit facilities, including such agreements and facilities of our subsidiaries. The description is only a summary and is not intended to describe all of the terms of the credit arrangements that may be important. In general, our loan agreements and credit facilities contain restrictions such as limitations on substantial transfers of assets, payments of dividends and debt incurrence. Euro Commercial Paper Program On November 28, 2014, we issued U.S.$47.2 million principal amount of commercial paper under our Euro commercial paper program. The commercial paper accrues interest at a 6% annual rate and matures on November 18, 2015. Interest on the commercial paper is recognized in the net financing result in our consolidated financial statements as it accrues and is payable on the maturity date of the principal amount on November 18, 2015. The proceeds from the issuance of our Euro commercial paper were used to pay the U.S.$51.7 million remaining principal amount outstanding of our 2015 Senior Notes, which matured on January 15, 2015. As provided by applicable law, the issuance of commercial paper was not subject to review or approval by any federal or state securities commission or regulatory entity of any country. Revolving Loan Agreement with Banco Santander, S.A. On September 29, 2014, we entered into a 12-month revolving credit facility with Banco Santander, S.A. for a total amount of Ps.200 million. The credit facility was secured by a mortgage on the Fiesta Inn Aeropuerto hotel, which is owned by our subsidiaries Gran Operadora Posadas, S.A. de C.V., Operadora del Golfo de México, S.A de C.V., and YIPA, S.A. de C.V. This credit facility has certain borrowing limitations and events of default including, among others, non-payment of principal and interest, cross-acceleration, breach of affirmative and negative covenants, bankruptcy, liquidation or insolvency, delivery of inaccurate or false information and change of control. As of the date of this offering memorandum, the outstanding balance was Ps.0. Convertible Debt of Inmobiliaria del Sudeste, S.A. de C.V. On December 10, 2003, our subsidiary Inmobiliaria del Sudeste, S.A. de C.V. (as successor to our subsidiary Hotelera Prestadora de Servicios del Sudeste, S.A. de C.V.) which operates the Fiesta Americana Mérida hotel entered into a loan agreement with Palace Holding, S.A. de C.V. and our subsidiary Promotora Inmobiliaria Hotelera, S.A. de C.V. (as successor to our subsidiary Inmobiliaria Hotelera Posadas, S.A., de C.V.). The loan is convertible into shares of Inmobiliaria del Sudeste, S.A. de C.V. The date for conversion or maturity of the loan is December 9, 2018. As of March 31, 2015, the outstanding amount of the loan was U.S.$2,666,119.45. The loan accrues interest at the one-month Libor rate plus a margin of 300 basis points.

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DESCRIPTION OF THE NOTES

Posadas will issue U.S.$350,000,000 aggregate principal amount of the Notes in connection with this offering (the “Offering”) pursuant to an Indenture to be dated as of June 30, 2015 (the “Indenture”), among Posadas, as Issuer, the Guarantors (as defined below), The Bank of New York Mellon, as trustee (the “Trustee”), Registrar, New York Paying Agent and New York Transfer Agent, and The Bank of New York Mellon (Luxembourg) S.A., as Luxembourg Listing Agent, Luxembourg Paying Agent and Luxembourg Transfer Agent. The following summaries of certain provisions of the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Indenture. A copy of the Indenture is available for inspection at the offices of the Issuer and any Paying Agent during regular business hours. In addition, for so long as any Notes are listed on the Luxembourg Stock Exchange for trading on the Euro MTF Market and the rules of such exchange shall so require, copies of the Indenture may be obtained upon request to the Luxembourg Paying Agent. As used in this “Description of the Notes,” the terms “Posadas” and “Issuer” refer to Grupo Posadas, S.A.B. de C.V., a sociedad anónima bursátil de capital variable organized under the laws of the United Mexican States, or Mexico, but not its subsidiaries. All references to “U.S.$” or “Dollars” are to United States of America Dollars.

General

The Notes and the Guarantees will be senior unsecured obligations of the Issuer and the Guarantors, ranking equal in right of payment with all other senior unsecured obligations of the Issuer and the Guarantors. As of March 31, 2015, after giving pro forma effect to the sale of the Notes offered hereby and the application of the gross proceeds therefrom, all as described under “Use of Proceeds,” the Issuer and the Guarantors would have had no secured debt outstanding.

The Notes and the Guarantees will be effectively subordinated to all existing and future secured debt of the Issuer and the Guarantors to the extent of the assets securing such debt. As of March 31, 2015, after giving pro forma effect to the sale of the Notes offered hereby and the application of the gross proceeds therefrom, all as described under “Use of Proceeds,” the Issuer and the Guarantors would have no secured debt outstanding.

The Notes also will be effectively subordinated to any debt, preferred stock obligations and other liabilities of the Issuer’s Subsidiaries who will not be Guarantors. As of March 31, 2015, the Guarantors represented 79.0% and 83.2% of the Issuer’s consolidated revenues and total assets, respectively, for the three months ended March 31, 2015. In addition, as of March 31, 2015, the Guarantors represented 119.8% of the Issuer’s consolidated EBITDA, since we and certain of our subsidiaries have negative EBITDA.

The claims of the Holders with respect to the Notes are subject to the prior payment of all liabilities (whether or not for borrowed money) and to any preferred stock interest of such Subsidiaries. There can be no assurance that, after providing for all prior claims, there would be sufficient assets available from the Issuer and the Guarantors to satisfy the claims of the Holders of Notes. Additionally, the Issuer is dependent upon the distribution of the earnings of its Subsidiaries, whether in the form of dividends, advances or payments on account of intercompany obligations, to service its debt obligations. See “Risk Factors.”

Additional notes may be issued from time to time (the “Additional Notes”) subject to the limitations set forth under “—Certain Covenants—Limitation on Indebtedness.” Any Additional Notes subsequently issued under the Indenture will be treated as a single class with the Notes issued in the Offering for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase, provided that if any such Additional Notes are not fungible with the Notes for U.S. federal income tax purposes, such Additional Notes will be issued with a CUSIP and ISIN number different from those assigned to the Notes.

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Payment, Transfer and Exchange

The Notes will bear interest at the rate per annum shown on the front cover of this offering memorandum from the Closing Date, or from the most recent Interest Payment Date to which interest has been paid or provided for, payable semi-annually (to Holders of record at the close of business on the June 15 or December 15 (whether or not a Business Day) immediately preceding the Interest Payment Date) on June 30 and December 30 of each year, commencing December 30, 2015. Interest on the Notes will be computed on the basis of a 360-day year consisting of twelve 30-day months.

Principal of, and interest on, the Notes will be payable, and the Notes may be exchanged or transferred, at the office or agency of Posadas (i) in New York, New York (which initially will be the corporate trust office of the New York Paying Agent) and (ii) so long as any Notes are listed on the Luxembourg Stock Exchange for trading on the Euro MTF Market, in Luxembourg (which initially will be the office of The Bank of New York Mellon (Luxembourg), S.A., the “Luxembourg Paying Agent”), or at the option of the holder and subject to any fiscal or other laws or regulations applicable thereto, at any other office or agency maintained by Posadas for such purpose; provided that, at the option of Posadas, payment of interest may be made by check mailed to the address of the holders as such address appears in the register maintained by the Trustee.

If the due date for payment of any amount in respect of principal or interest on any Note is not a Business Day, the holder thereof shall not be entitled to payment of the amount due until the next succeeding Business Day and shall not be entitled to any further interest or other payment in respect of any such delay. As used in the Indenture regarding payment, “Business Day” means a day on which banks in New York, New York, Mexico City, Mexico, and the relevant place of payment are open for business, are not required or permitted to be closed and are carrying out transactions in Dollars.

The Notes will be issued in denominations of U.S.$150,000 principal amount and any integral multiples of U.S.$1,000 in excess thereof. No service charge will be made for any registration of transfer or exchange of Notes, but Posadas may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith.

Guarantees

The Notes will be jointly and severally guaranteed by each Mexican Wholly Owned Restricted Subsidiary of Posadas except for (i) any Receivables Entity, (ii) Service Subsidiaries that do not have in excess of U.S.$500,000 of assets or did not have greater than U.S.$500,000 of net income (on a consolidated basis with its Subsidiaries) in the twelve-month period ended March 31, 2015 or (iii) certain immaterial subsidiaries which cannot provide guarantees for local regulatory reasons. Following the Issue Date, the Notes will be guaranteed by additional Restricted Subsidiaries of the Issuer to the extent required under “—Additional Guarantees.”

The Guarantee of a Guarantor will be released:

(1) in connection with any sale of other disposition of all of the Capital Stock of such Guarantor to a Person other than the Issuer or any Subsidiary of the Issuer, if the sale complies with the provisions set forth under “—Certain Covenants—Asset Sales;” or

(2) if the Issuer designates such Guarantor to be an Unrestricted Subsidiary in accordance with the provisions set forth under “—Certain Covenants—Limitation on Designations of Unrestricted Subsidiaries.”

The amount of each Guarantee will be limited to the extent required under applicable fraudulent conveyance laws to cause such Guarantee to be enforceable.

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Redemption at Maturity

The Notes will mature on June 30, 2022, unless earlier repurchased or redeemed pursuant to the terms thereof and the Indenture. At maturity, the Notes will be repaid at 100% of the principal amount plus accrued and unpaid interest.

Optional Redemption

Optional Redemption With a Make-Whole Premium

Prior to June 30, 2019, the Issuer will have the right, at its option, to redeem any of the Notes, in whole or in part, at any time or from time to time prior to their maturity at a redemption price equal to the greater of (1) 100% of the principal amount of such Notes and (2) the sum of the present value of each remaining scheduled payment of principal and interest thereon (exclusive of interest accrued to the date of redemption) up to and including June 30, 2019, assuming payment of the redemption price for that date as set forth below, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points (the “Make-Whole Amount”), plus in each case any accrued and unpaid interest on the principal amount of the Notes to the date of redemption.

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of maturity of June 30, 2019.

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Issuer.

“Comparable Treasury Price” means, with respect to any redemption date (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotation or (2) if fewer than four such Reference Treasury Dealer Quotations are obtained, the average of all such quotations.

“Reference Treasury Dealer” means Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated or any of their affiliates which are primary United States government securities dealers and not less than two other leading primary United States government securities dealers in New York City reasonably designated by the Issuer; provided that if any of the foregoing cease to be a primary United States government securities dealer in New York City (a “Primary Treasury Dealer”), the Issuer will substitute therefor another Primary Treasury Dealer.

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by an Independent Investment Banker, of the bid and asked price for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m. New York time on the third Business Day preceding such redemption date.

Optional Redemption Without a Make-Whole Premium

On and after June 30, 2019, the Issuer may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if any, to but excluding the applicable redemption date, subject to the right of Holders of Notes of record on the relevant record date to receive interest due on the relevant

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interest payment date, if redeemed during the twelve-month period beginning on of each of the years indicated below:

Year Percentage

2019 103.938%

2020 101.969%

2021 and thereafter 100.000%

Optional Redemption With Proceeds of Equity Offerings

In addition, at any time, or from time to time, on or prior to June 30, 2018, the Issuer may, at its option, use all or any portion of the net cash proceeds of one or more Equity Offerings to redeem up to 35% of the aggregate principal amount of the Notes issued at a redemption price equal to 107.875% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of redemption; provided that at least 65% of the aggregate principal amount of Notes originally issued remains outstanding immediately after any such redemption. In order to effect the foregoing redemption with the proceeds of any Equity Offering, the Issuer shall consummate such redemption not more than 90 days after the consummation of that Equity Offering.

Selection and Notice of Redemption

In the event that less than all of the Notes are to be redeemed at any time, selection of the Notes for redemption will be made in accordance with applicable DTC procedures and in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed; provided that no Notes of a principal amount of U.S.$1,000 or less shall be redeemed in part.

Notice of an optional redemption will be mailed or transmitted electronically at least 10 but not more than 60 days before the redemption date to each Holder of a Note to be redeemed at its registered address. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note will state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Issuer has deposited with the paying agent funds in satisfaction of the applicable redemption price plus accrued and unpaid interest, if any, to the date of redemption pursuant to the Indenture.

Any redemption and any notice of redemption thereof may, at the Issuer’s discretion, be subject to one or more conditions precedent, including but not limited to, completion of an Equity Offering or Change of Control, issuance of Indebtedness or another corporate transaction. For the avoidance of doubt, in no event shall a condition precedent to any redemption permit the redemption date to be more than 60 days after the date of redemption notice.

Redemption for Tax Reasons

The Notes may be redeemed, at the option of Posadas, in whole but not in part, at any time, upon giving not less than 30 or more than 60 days’ notice to Holders, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest to the date fixed for redemption, if Posadas, or any Guarantor has become or would become obligated to pay any Additional Amounts (as defined below) on the next date on which any payment is due under the Notes or the Guarantees but only if such Additional Amount is attributable to any tax, duty, levy, impost, assessment or other governmental charge imposed or levied by any Relevant Jurisdiction (as defined below) or of any subdivision thereof or by any authority or agency therein or thereof having power to tax at a rate greater than 4.9%, as a result of any change in, or amendment to (1) the laws, treaties, rules or regulations of any Relevant Jurisdiction or of any political subdivision thereof or by any authority or agency of or in a Relevant Jurisdiction having

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power to tax; or (2) the interpretations relating to those laws, treaties, rules or regulations, that have general application, made by any legislative body, governmental or regulatory agency or authority of a Relevant Jurisdiction or of any political subdivision or by any authority or agency of or in a Relevant Jurisdiction having power to tax, including the publication of any regulatory determination occurring after the date hereof, or if later, the date a jurisdiction became a Relevant Jurisdiction, and which obligation cannot be avoided by the use of reasonable measures available to Posadas or any Guarantor, as applicable (for the avoidance of doubt, in the case of any Guarantor, reasonable measures shall include causing payment to be made by another Guarantor).

A notice of redemption may not be issued earlier than 90 days prior to the earliest date on which the Issuer or any Guarantor would be obligated to pay such Additional Amounts were a payment on the Notes or the Guarantees then due.

Prior to the publication or delivery to holders of any notice of redemption pursuant to this provision, the Issuer will deliver to the Trustee:

• a certificate signed by one of the Issuer’s duly authorized representatives stating that the Issuer is entitled to effect the redemption and setting forth a statement of facts showing that the conditions precedent to the Issuer’s right to redeem have occurred; and

• an opinion of legal counsel (which may be the Issuer’s counsel) of recognized standing to the effect that the Issuer has or will become obligated to pay such Additional Amounts as a result of such change or amendment.

This notice, once delivered to the Trustee, will be irrevocable. The Issuer will give notice to Holders of the Notes pursuant to the provisions described under “—Notices” of any redemption it proposes to make at least 30 days (but not more than 60 days) before the redemption date.

The term “Relevant Jurisdiction” as used herein means (1) Mexico, (2) any jurisdiction in which the Issuer or any Guarantor (including any successor entity) is then incorporated, engaged in business or resident for tax purposes or (3) any jurisdiction by or through which payment is made.

Additional Amounts

Posadas is required by Mexican law to deduct Mexican withholding taxes at a rate of 4.9% (subject to certain exceptions) from payments of interest to investors who are not residents of Mexico for tax purposes, and Posadas will pay additional amounts on those payments (and certain other payments) to the extent described below (“Additional Amounts”).

The Issuer and the Guarantors will pay to Holders of the Notes such Additional Amounts as may be necessary so that every net payment of interest (including any premium paid upon redemption of the Notes and any discount deemed interest under the law of any Relevant Jurisdiction) or principal to the Holders will not be less than the amount provided for in the Notes to be then due and payable under the Notes. By net payment, we mean the amount that we or our paying agent pay any Holder after deducting or withholding an amount for or on account of any present or future taxes, duties, assessments or other governmental charges imposed with respect to that payment by any Relevant Jurisdiction or any political subdivision or taxing authority thereof or therein.

The Issuer’s and the Guarantors’ obligation to pay Additional Amounts is subject to several important exceptions. The Issuer and the Guarantors will not be required to pay Additional Amounts to any Holder for or on account of any of the following:

• any taxes, duties, assessments or other governmental charges imposed solely because at any time there is or was a connection between the Holder and a Relevant Jurisdiction (other than the mere receipt of a payment or the ownership or holding of a Note);

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• any tax that is an estate, inheritance, gift, sales, personal property or similar tax, assessment or other governmental charge imposed with respect to the Notes;

• any taxes, duties or other similar governmental charges imposed (or imposed at a higher rate) solely because the Holder or any other Person fails to comply with any certification, identification or other reporting requirement concerning the nationality, residence, identity or connection with the Relevant Jurisdiction, for tax purposes, of the Holder or any beneficial owner of the Note if compliance is required by law, regulation thereunder or by an applicable income tax treaty to which the Relevant Jurisdiction is a party, as a precondition to exemption from, or reduction in the rate of, the tax or other similar governmental charge and we have given the Holders at least 30 days’ notice that Holders will be required to provide such information and identification;

• any tax, duty, assessment or other governmental charge payable otherwise than by deduction or withholding from payments on the Notes (but excluding stamp or similar taxes);

• any payment on the Note to a Holder that is a fiduciary or partnership or a person other than the sole beneficial owner of any such payment, to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such a partnership or the beneficial owner of the payment would not have been entitled to the Additional Amounts had the beneficiary, settlor, member or beneficial owner been the Holder of the Note; and

• any combination of the above.

The exceptions to the obligations to pay Additional Amounts stated in the third bullet point above will not apply if the provision of information, documentation or other evidence described in the applicable bullet point would be materially more onerous, in form, in procedure or in the substance of information disclosed, to a Holder or beneficial owner of a Note (taking into account any relevant differences between U.S. and the Relevant Jurisdiction’s law, regulations or administrative practice) than comparable information or other reporting requirements imposed under U.S. tax law, regulations and administrative practice (such as IRS Forms W-8BEN, W-8BEN-E, and W-9).

The exceptions to the obligations to pay Additional Amounts stated in the third bullet point above will not apply if, with respect to taxes imposed by Mexico or any political subdivision or taxing authority thereof, Article 166, Section II, of the Mexican income tax law (or a substantially similar successor of such Article, whether included in any law or regulation) is in effect, unless (a) the provision of the information, documentation or other evidence described in the applicable bullet point is expressly required by statute, regulation, or published administrative practice of general applicability in order to apply Article 166, Section II, of the Mexican income tax law (or a substantially similar successor of such Article, whether included in any law or regulation), (b) the Issuer or a Guarantor, as applicable, cannot obtain the information, documentation or other evidence necessary to comply with the applicable laws and regulations on our own through reasonable diligence and without requiring it from Holders, and (c) the Issuer or a Guarantor, as applicable, otherwise would meet the requirements for application of Article 166, Section II, of the Mexican income tax law (or a substantially similar successor of such Article, whether included in any law or regulation). Additionally, the third bullet point above shall not be construed to require that any Holder register with the Mexican Ministry of Finance and Public Credit to obtain eligibility for an exemption or a reduction of Mexican withholding tax.

The Issuer and the Guarantors will provide the Trustee with documentation satisfactory to the Trustee evidencing the payment of taxes in respect of which any Additional Amount have been paid. The issuer or a Guarantor, as applicable, will make copies of such documentation available to the Holders of the Notes or the relevant paying agent upon request.

Any reference in this offering memorandum, the Indenture or the Notes to principal, premium, interest or any other amount payable in respect of the Notes by us will be deemed also to refer to any Additional Amount that may be payable with respect to that amount under the obligations referred to in this section.

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In the event of any merger or other transaction described and permitted under “—Limitation on Merger, Consolidation and Sale of Assets,” in which the surviving entity is a corporation organized and validly existing under the laws of a country other than Mexico, all references to a Relevant Jurisdiction, under this “Additional Amounts” section and under “Redemption for Tax Reasons” will be deemed, for the avoidance of doubt, to include such country and any political subdivision therein or thereof, law or regulations of such country, and any taxing authority of such country or any political subdivision therein or thereof, respectively.

Repurchase at the Option of Holders

Change of Control

The Indenture will provide that, upon the occurrence of a Change of Control, each Holder will have the right to require that the Issuer purchase all or a portion of such Holder’s Notes pursuant to the offer described below (the “Change of Control Offer”), at a purchase price equal to 101% of the principal amount thereof plus accrued interest, if any, thereon to the date of purchase (the “Change of Control Payment”).

Within 30 days following the date upon which the Change of Control occurs, the Issuer must send, by first class mail, a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. Such notice will state, among other things, the purchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”). Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, to the paying agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Change of Control Payment Date.

On the Change of Control Payment Date, the Issuer will, to the extent lawful:

(1) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

(2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

(3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an officers’ certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer.

The paying agent will promptly mail to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail to each Holder a new Note in a principal amount equal to any unpurchased portion of the Notes surrendered, if any; provided, however, that each new Note will be in a principal amount of U.S.$150,000 or integral multiples of U.S.$1,000 thereafter.

If a Change of Control Offer is required to be made, there can be no assurance that the Issuer will have available funds sufficient to pay the Change of Control purchase price for all the Notes that might be delivered by Holders seeking to accept the Change of Control Offer. In the event the Issuer is required to purchase outstanding Notes pursuant to a Change of Control Offer, the Issuer expects that it would seek third party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that the Issuer would be able to obtain such financing.

Neither the Board of Directors of the Issuer nor the Trustee may waive the covenant relating to a Holder’s right to require the purchase of Notes upon a Change of Control. Restrictions in the Indenture described herein on the ability of the Issuer and the Restricted Subsidiaries to incur additional Indebtedness, to grant Liens on their property, to make Restricted Payments and to make Asset Sales may also make more difficult or discourage a takeover of the Issuer, whether favored or opposed by the

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management of the Issuer. Consummation of any such transaction in certain circumstances may require the purchase of the Notes, and there can be no assurance that the Issuer or the acquiring party will have sufficient financial resources to effect such purchase. Such restrictions and the restrictions on transactions with Affiliates may, in certain circumstances, make more difficult or discourage any leveraged buyout of the Issuer or any of its Subsidiaries by the management of the Issuer. While such restrictions cover a wide variety of arrangements which have traditionally been used to effect highly leveraged transactions, the Indenture may not afford the Holders protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction.

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent such laws and regulations are applicable in connection with a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the “Change of Control” provisions of the Indenture, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the “Change of Control” provisions of the Indenture by virtue thereof.

Certain Covenants

Limitation on Indebtedness

(a) Under the terms of the Indenture, Posadas will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness; provided, however, that Posadas may Incur Indebtedness and any Restricted Subsidiary may Incur Indebtedness if on the date of the Incurrence of such Indebtedness, the Consolidated Interest Coverage Ratio would be greater than 2.5 to 1.0.

The foregoing restrictions will not apply to any of the following Incurrence of Indebtedness (collectively, “Permitted Indebtedness”):

(i) Indebtedness under the Notes issued in this Offering in an aggregate principal amount not to exceed U.S.$350 million;

(ii) Indebtedness under Credit Facilities at any time outstanding in an amount not to exceed the greater of (x) U.S.$75.0 million and (y) 10% of Consolidated Net Tangible Assets (reduced by the amount of any prepayment thereof with the Net Cash Proceeds of any Asset Sale pursuant to clause (iii)(a) of the first paragraph of “—Asset Sales”);

(iii) Indebtedness of Posadas and the Restricted Subsidiaries (not otherwise described in clauses (i) and (ii) above and subject to the provisions of clause (d) below) outstanding on the Closing Date;

(iv) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that (x) any Indebtedness owed by the Issuer or a Restricted Subsidiary to a Restricted Subsidiary that is not a Guarantor shall be subordinated to prior payment in full of the Notes and (y) upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have Incurred Indebtedness not permitted by this clause (iv) and provided further, that the Issuer, its parent companies and any Restricted Subsidiary shall agree to vote such intercompany Indebtedness, or provide such consents in connection with such intercompany Indebtedness, in any restructuring pursuant to any Mexican Restructuring, in a manner that is consistent with the vote of, or the consents provided by, the holders of the Notes and other unaffiliated creditors of the same class as the Notes;

(v) Indebtedness of the Issuer or any Restricted Subsidiary issued in exchange for, or the net proceeds of which are used to refinance or refund, Indebtedness permitted by the Indenture (other than Indebtedness outstanding under subclauses (a)(ii), (a)(iv), (a)(vi), (a)(vii), (a)(viii), (a)(ix), (a)(x), (a)(xi), (a)(xii), (a)(xiii), (a)(xiv) and (a)(xv)) and any refinancing or refunding thereof in an

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amount not to exceed the amount so refinanced or refunded (plus premiums, accrued interest, fees and expenses); provided that (A) Indebtedness the proceeds of which are used to refinance or refund the Notes or Indebtedness that is pari passu with, or subordinate in right of payment to, the Notes shall only be permitted under this subclause (a)(v) if (x) in case the Notes are refinanced in part or the Indebtedness to be refinanced is pari passu with the Notes, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is outstanding, is expressly made pari passu with, or subordinate in right of payment to, the remaining Notes, or (y) in case the Indebtedness to be refinanced is subordinated in right of payment to the Notes, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is issued or remains outstanding, is expressly made subordinate in right of payment to the Notes at least to the extent that the Indebtedness to be refinanced is subordinated to the Notes; (B) such new Indebtedness, determined as of the date of Incurrence of such new Indebtedness, does not have a Stated Maturity earlier than the Stated Maturity of the Indebtedness to be refinanced or refunded, and the Average Life of such new Indebtedness is at least equal to the remaining Average Life of the Indebtedness to be refinanced or refunded; and (C) the obligors with respect to such new Indebtedness are the obligors on the Indebtedness to be refinanced or refunded (such new Indebtedness under this subclause (a)(v), “Refinancing Indebtedness”);

(vi) Indebtedness (A) in respect of workers’ compensation claims, self-insurance obligations, bid, reimbursement, performance, surety or appeal bonds or obligations provided in the ordinary course of business, including guarantees and letters of credit functioning or supporting these bonds or obligations (in each case other than for an obligation for money borrowed); (B) under Hedging Obligations; provided that such agreements (x) are designed solely to protect Posadas or its Restricted Subsidiaries against fluctuations in foreign currency exchange rates, commodity prices or interest rates and (y) do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in foreign currency exchange rates, interest rates or commodity prices or by reason of fees, indemnities and compensation payable thereunder; and (C) arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any obligations of Posadas or any of its Restricted Subsidiaries pursuant to such agreements, in any case incurred in connection with the disposition of any business, assets or Subsidiary of Posadas (other than guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Subsidiary of Posadas for the purpose of financing such acquisition), in a principal amount not to exceed the gross proceeds actually received by Posadas or any Restricted Subsidiary in connection with such disposition;

(vii) Indebtedness of Posadas and its Restricted Subsidiaries, to the extent the net proceeds thereof are promptly deposited to defease the Notes as described under “—Defeasance”;

(viii) guarantees of the Notes and guarantees of Indebtedness of Posadas or any Restricted Subsidiary by any Guarantor;

(ix) guarantees by Posadas of Indebtedness of any Restricted Subsidiary permitted hereunder;

(x) additional Indebtedness of Posadas and the Restricted Subsidiaries in an aggregate principal amount not to exceed U.S.$50.0 million at any one time outstanding;

(xi) Indebtedness of Posadas and the Restricted Subsidiaries having a maturity no later than one year after the incurrence thereof in an amount incurred for working capital purposes; provided that such Indebtedness, together with all other Indebtedness outstanding under this clause (xi) at the time of incurrence, does not to exceed 15% of Consolidated Net Tangible Assets of Posadas;

(xii) Indebtedness of a Restricted Subsidiary Incurred and outstanding on the date on which such Restricted Subsidiary was acquired by Posadas (other than Indebtedness Incurred (a) to provide all or any portion of the funds utilized to consummate the transaction or series of related

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transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by Posadas or (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that at the time such Restricted Subsidiary is acquired by Posadas, Posadas would have been able to Incur U.S.$1.00 of additional Indebtedness pursuant to the first paragraph of this covenant;

(xiii) Indebtedness under Permitted Vacation Club Financing Facilities in an amount not to exceed the greater of (x) U.S.$100.0 million at any one time outstanding (reduced by the amount of any prepayment thereof with the Net Cash Proceeds of any Asset Sale pursuant to clause (iii)(a) of the first paragraph of “—Asset Sales”) and (y) 80% of the amount of the accounts receivable of the Vacation Club Business (excluding accounts receivables sold, conveyed or transferred to a Receivables Entity in connection with a Receivables Transaction) at the time such Indebtedness is Incurred;

(xiv) Indebtedness of the Issuer or any of its Restricted Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (including daylight overdrafts paid in full by the close of business on the day such overdraft was Incurred) drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within five Business Days of Incurrence; and

(xv) Indebtedness of the Issuer or any Restricted Subsidiary represented by Capitalized Lease Obligations or Purchase Money Indebtedness, in each case Incurred for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in the business of the Issuer or such Restricted Subsidiary in an aggregate amount at any time not to exceed the greater of (x) U.S.$25.0 million and (y) 2.5% of Consolidated Net Tangible Assets.

(b) For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a non-U.S. currency will be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred or, in the case of revolving credit Indebtedness, first committed; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a non-U.S. currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction will be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, will be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

(c) For purposes of determining any particular amount of Indebtedness: (i) guarantees, Liens or obligations with respect to letters of credit supporting Indebtedness otherwise included in the determination of such particular amount shall not be included and (ii) any Liens granted pursuant to the equal and ratable provisions of the Indenture shall not be treated as Indebtedness.

(d) For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described herein, Posadas, in its sole discretion, shall classify, and from time to time may reclassify, such item of Indebtedness; provided that all Indebtedness of Posadas and its Restricted Subsidiaries outstanding on the Closing Date (x) under Credit Agreements (after giving effect to the use of proceeds contemplated by this offering memorandum) shall be deemed to have been incurred under clause (a)(ii) above and (y) described in clause (a)(xiii) shall be deemed to have been incurred under clause (a)(xiii).

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Limitation on Restricted Payments

Posadas will not, and will not cause or permit any of the Restricted Subsidiaries to, directly or indirectly:

(a) declare or pay any dividend or make any distribution (other than (i) dividends or distributions payable in Qualified Capital Stock of Posadas and (ii) in the case of Restricted Subsidiaries, dividends or distributions to Posadas or any other Restricted Subsidiary and pro rata dividends or distributions payable to the other holders of the same class of Capital Stock of such Restricted Subsidiary) on or in respect of shares of its Capital Stock to holders of such Capital Stock;

(b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of Posadas or acquire shares of any class of such Capital Stock other than Capital Stock owned by Posadas or any Wholly Owned Restricted Subsidiary (other than in exchange for its Capital Stock) which is not Disqualified Stock;

(c) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment (other than the purchase, redemption, prepayment or other acquisition of any such subordinated Indebtedness in anticipation of any such sinking fund obligation, principal installment or final maturity, in each case, due within one year of such purchase, redemption, prepayment or other acquisition), any Indebtedness that is subordinate or junior in right of payment to the Notes or the Guarantees; or

(d) make any Investment (other than Permitted Investments)

(each of the foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to as a “Restricted Payment”), if at the time of such Restricted Payment or immediately after giving effect thereto:

(1) a Default or an Event of Default shall have occurred and be continuing;

(2) Posadas is not able to incur at least U.S.$1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described under “—Limitation on Indebtedness”; or

(3) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made after the Closing Date (the amount expended for such purpose, if other than in cash, being the Fair Market Value of such property as determined reasonably and in good faith by the Board of Directors of Posadas) shall exceed the sum of:

(v) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of Posadas earned during the period beginning on April 1, 2015 and ending on the last date of the most recent fiscal quarter for which financial statements are available prior to the date of such Restricted Payment (the “Reference Date”) (treating such period as a single accounting period); plus

(w) 100% of the Net Cash Proceeds received by Posadas from any Person (other than a Subsidiary of Posadas) subsequent to the Closing Date and on or prior to the Reference Date (a) as a contribution to the common equity capital of Posadas by any holder of Posadas’ Capital Stock or (b) from the issuance and sale of Qualified Capital Stock of Posadas; plus

(x) without duplication of any amounts included in clause (3)(w) above, 100% of the Net Cash Proceeds received by Posadas from any Person (other than a Subsidiary of Posadas) subsequent to the Closing Date and on or prior to the Reference Date from the issuance and sale of debt securities or Disqualified Stock of Posadas that has been converted into Qualified Capital Stock of Posadas; plus

(y) without duplication, the sum of:

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(1) the aggregate amount returned in cash on or with respect to Investments (other than Permitted Investments) made subsequent to the Closing Date whether through interest payments, principal payments, dividends or other distributions or payments;

(2) the net cash proceeds received by Posadas or any of the Restricted Subsidiaries from the disposition of all or any portion of any Investment (other than a Permitted Investment) made after the Closing Date (other than to a Subsidiary of Posadas); and

(3) upon Revocation of the status of an Unrestricted Subsidiary as an Unrestricted Subsidiary, the Fair Market Value of Posadas’ and the Restricted Subsidiaries’ Investment in such Subsidiary; provided, however, no amount will be included under this clause (y) to the extent it is included in Consolidated Net Income; plus

(z) U.S.$20.0 million.

Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph will not prohibit:

(1) the payment of any dividend within 60 days after the date of declaration of such dividend if the dividend would have been permitted on the date of declaration;

(2) if no Default shall have occurred and be continuing, the acquisition of any shares of Capital Stock of Posadas, either (i) solely in exchange for shares of Qualified Capital Stock of Posadas or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of Posadas) of shares of Qualified Capital Stock of Posadas;

(3) if no Default shall have occurred and be continuing, the acquisition of any Indebtedness of Posadas that is subordinate or junior in right of payment to the Notes either (i) solely in exchange for shares of Qualified Capital Stock of Posadas or (ii) through the application of the net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of Posadas) of shares of Qualified Capital Stock of Posadas or (iii) Refinancing Indebtedness;

(4) additional Restricted Payments pursuant to this clause (4) not to exceed U.S.$10.0 million (or the equivalent in other currencies) in the aggregate;

(5) payments to holders of Disqualified Stock of Posadas issued in accordance with the terms of the Indenture to the extent such payments are included in the calculation of Consolidated Interest Expense; and

(6) any principal payment on, purchase, defeasance, redemption, prepayment, decrease or other acquisition or retirement for value of, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, of the Convertible Debentures.

In determining the aggregate amount of Restricted Payments made subsequent to the Closing Date in accordance with clause (3) of the first paragraph of this covenant, amounts expended pursuant to clauses (1), (2)(ii), (3)(ii), (4) and (5) shall be included in such calculation.

Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

Under the terms of the Indenture, Posadas will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any such Restricted Subsidiary to (i) pay dividends or make any other distributions permitted by applicable law on any Capital Stock of such Restricted Subsidiary, (ii) pay any Indebtedness owed to Posadas or any other Restricted Subsidiary, (iii) make loans or advances to Posadas, or (iv) transfer any of its property or assets to Posadas or any other Restricted Subsidiary.

The foregoing provisions will not restrict any encumbrances or restrictions:

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(a) existing on the Closing Date in the Indenture, or any other agreements in effect on the Closing Date, and any extensions, refinancings, renewals or replacements of such agreements; provided that the encumbrances and restrictions in any such extensions, refinancings, renewals or replacements are not materially more restrictive than those encumbrances or restrictions in effect on the Closing Date;

(b) existing under or by reason of applicable law or regulation;

(c) existing with respect to any Person or the property or assets of such Person acquired by Posadas or any Restricted Subsidiary, existing at the time of such acquisition and not incurred in contemplation thereof, which encumbrances or restrictions are not applicable to any Person or the property or assets of any Person other than such Person or the property or assets of such Person so acquired;

(d) in the case of clause (iv) above in the case of a transfer of any of the property or assets of a Restricted Subsidiary to Posadas or any other Restricted Subsidiary (i) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset, (ii) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of Posadas or any Restricted Subsidiary not otherwise prohibited by the Indenture, or (iii) arising or agreed to in the ordinary course of business, not relating to any Indebtedness;

(e) with respect to a Restricted Subsidiary (or any of its property or assets) and imposed pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock of, or property and assets of, such Restricted Subsidiary;

(f) contained in the terms of (i) any Indebtedness incurred by any Restricted Subsidiary for the purpose of an Asset Acquisition if the Incurrence of such Indebtedness otherwise complies with clause (a) of the “—Limitation on Indebtedness” covenant and any extensions, refinancings, renewals or replacements of such Indebtedness; provided that the encumbrances and restrictions in any such extensions, refinancings, renewals or replacements taken as a whole are no less favorable in any material respect to the Holders than those encumbrances or restrictions that are then in effect and that are being extended, refinanced, renewed or replaced;

(g) contained in the terms of any Indebtedness or any agreement pursuant to which such Indebtedness was issued if (i) the encumbrance or restriction applies only in the event of a payment default or a default with respect to a financial covenant contained in such Indebtedness or agreement, (ii) the encumbrance or restriction is not materially more disadvantageous to the Holders of the Notes than is customary in comparable financings (as determined by Posadas in good faith), and (iii) Posadas delivers an Opinion of Mexican Counsel to the Trustee to the effect that any such encumbrance or restriction will not materially affect Posadas’ ability to make principal or interest payments on the Notes; or

(h) any encumbrance or restriction with respect to a Receivables Entity in connection with Receivables Transaction; provided that such encumbrances and restrictions are customarily required by the institutional sponsor or arranger of such Receivables Transaction in similar types of documents relating to the purchase of similar receivables, other rights to payment or inventory in connection with the financing thereof.

Nothing contained in this covenant will prevent Posadas or any Restricted Subsidiary from (a) creating, incurring, assuming or suffering to exist any Liens otherwise permitted under the “—Limitation on Liens” covenant or (b) restricting the sale or other disposition of property or assets of Posadas or any of its Restricted Subsidiaries that secure Indebtedness of Posadas or any of its Restricted Subsidiaries.

Limitation on Liens

Under the terms of the Indenture, Posadas will not, and will not permit any Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien on any of its assets or properties securing any Indebtedness, without making effective provision for all of the Notes and all other amounts due under the

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Indenture to be directly secured equally and ratably with (or, if the Indebtedness to be secured by such Lien is subordinated in right of payment to the Notes, prior to) the Indebtedness secured by such Lien until such time as such Indebtedness is no longer secured by a Lien, other than Permitted Liens.

Limitation on Asset Sales

Under the terms of the Indenture, Posadas will not, and will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless:

(i) the consideration received by Posadas or such Restricted Subsidiary is at least equal to the Fair Market Value of the assets sold or disposed of as determined in good faith by Posadas’ Board of Directors (including as to the value of all non-cash consideration);

(ii) at least 75% of the consideration received by Posadas or such Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Temporary Cash Investments and is received at the time of such disposition; provided that the amount of:

(a) any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most recent balance sheet), of the Issuer or any of its Restricted Subsidiaries (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets shall be deemed to be cash for purposes of this clause (ii); and

(b) any securities, notes or other obligations received by the Issuer or any such Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into cash (to the extent of the cash received) within 30 days following the closing of such Asset Sale shall be deemed to be cash for purposes of this clause (ii); and

(iii) an amount equal to 100% of the Net Cash Proceeds from such Asset Sale is either applied to (a) the repayment of Indebtedness of the Issuer or any Restricted Subsidiary which is secured by a Permitted Lien (with a corresponding reduction in the commitment with respect thereto) or the repayment of Senior Indebtedness that matures prior to the Notes; or (b) the investment in or acquisition of assets related to a Permitted Business, in each case, within 365 days from the later of the date of such Asset Sale or the receipt of the Net Cash Proceeds. Any Net Cash Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will be deemed to constitute “Excess Proceeds.”

On the 365th day after an Asset Sale, if the aggregate amount of Excess Proceeds from such Asset Sale exceeds U.S.$25.0 million, Posadas will be required to make an offer (“Asset Sale Offer”) to all holders of Notes and, to the extent required by the terms thereof, to all holders of other Senior Indebtedness outstanding with similar provisions requiring Posadas to make an offer to purchase such Senior Indebtedness with the proceeds from any Asset Sale (“Pari Passu Notes”) to purchase the maximum principal amount of Notes and any Pari Passu Notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest to the date of purchase, in accordance with the procedures set forth in the Indenture; provided, however, that if at any time any non-cash consideration received by Posadas or any Restricted Subsidiary, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration) or Temporary Cash Investments, then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant. To the extent that the aggregate amount of Notes and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to an Asset Sale Offer is less than the Excess Proceeds, Posadas may use any remaining Excess Proceeds for any purpose not otherwise prohibited by the Indenture. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. Posadas may satisfy its obligations under this covenant with respect to the Net Cash Proceeds of an Asset Sale by making an Asset Sale Offer prior to the expiration of the relevant 365-day period.

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The Asset Sale Offer will remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the “Asset Sale Offer Period”). No later than five Business Days after the termination of the Asset Sale Offer Period (the “Asset Sale Purchase Date”), Posadas will purchase the principal amount of Notes required to be purchased pursuant to this covenant (the “Asset Sale Offer Amount”) or, if less than the Asset Sale Offer Amount has been so validly tendered, all Notes validly tendered in response to the Asset Sale Offer. If the aggregate principal amount of Notes surrendered by Holders thereof and other Pari Passu Notes surrendered by holders or lenders thereof, collectively, exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and Pari Passu Notes to be purchased on a pro rata basis on the basis of the aggregate principal amount of tendered Notes and Pari Passu Notes.

If the Asset Sale Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer.

On or before the Asset Sale Purchase Date, Posadas will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Sale Offer Amount of Notes and Pari Passu Notes or portions thereof so validly tendered and not properly withdrawn pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer Amount has been validly tendered and not properly withdrawn, all Notes and Pari Passu Notes so validly tendered and not properly withdrawn. Posadas will deliver to the Trustee an Officers’ Certificate stating that such Notes and Pari Passu Notes or portions thereof were accepted for payment by Posadas in accordance with the terms of this covenant. Posadas or the Paying Agent, as the case may be, will promptly (but in any case not later than five Business Days after the Asset Sale Purchase Date) mail or deliver to each tendering Holder of Notes an amount equal to the purchase price of the Notes so validly tendered and not properly withdrawn by such Holder and accepted by Posadas for purchase, and Posadas will promptly issue a new Note, and the Trustee, upon delivery of an Officers’ Certificate from Posadas will authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted will be promptly mailed or delivered by Posadas to the Holder thereof. Posadas will publicly announce the results of the Asset Sale Offer on the Asset Sale Purchase Date.

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the “Limitation on Asset Sales” provisions of the Indenture, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the “Limitation on Asset Sales” provisions of the Indenture by virtue thereof.

Limitation on Sale and Leaseback Transactions

Posadas will not, and will not permit any of the Restricted Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that Posadas or any Restricted Subsidiary may enter into a Sale and Leaseback Transaction if:

(1) Posadas or that Restricted Subsidiary, as applicable, could have

(a) incurred Indebtedness in an amount equal to the Attributable Indebtedness relating to such Sale and Leaseback Transaction pursuant to the first paragraph of the covenant described under “—Limitation on Indebtedness”; and

(b) to the extent such lease is a Capitalized Lease, incurred a Lien to secure such Indebtedness pursuant to “—Limitation on Liens” above;

(2) the proceeds of that Sale and Leaseback Transaction are at least equal to the Fair Market Value of the property sold; and

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(3) the transfer of assets in that Sale and Leaseback Transaction is permitted by, and the proceeds of such transaction are applied in compliance with the covenant described under “—Asset Sales.”

Limitation on Transactions with Affiliates.

(a) Posadas will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any Affiliate of Posadas (each, an “Affiliate Transaction”), other than:

(i) Affiliate Transactions permitted under paragraph (b) below; and

(ii) certain Affiliate Transactions meeting the following requirements:

(a) the terms of such Affiliate Transaction are no less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arm’s- length basis from a Person that is not an Affiliate of Posadas;

(b) in the event that such Affiliate Transaction involves aggregate payments, or transfers of property or services with a Fair Market Value, in excess of U.S.$5.0 million (or the equivalent in other currencies), the terms of such Affiliate Transaction shall be approved by a majority of the members of the Board of Directors of Posadas or such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such members of the Board of Directors have determined that such transaction complies with clause (a) immediately above;

(c) in the event that such Affiliate Transaction involves aggregate payments, or transfers of property or services with a Fair Market Value, in excess of U.S.$15.0 million (or the equivalent in other currencies), the terms of such Affiliate Transaction will be set forth in an Officers’ Certificate delivered to the Trustee stating that such transaction complies with clauses (a) and (b) immediately above; and

(d) in the event that such Affiliate Transaction involves aggregate payments, or transfers of property or services with a Fair Market Value, in excess of U.S.$20.0 million (or the equivalent in other currencies), the Issuer will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such Affiliate Transaction to the Issuer and any such Restricted Subsidiary, if any, from a financial point of view from an independent financial advisor and file the same with Trustee.

(b) The restrictions set forth in clause (a) shall not apply to:

(i) reasonable fees and compensation paid to, and indemnity provided on behalf of, officers, directors or employees of Posadas or any Restricted Subsidiary as determined in good faith by the Board of Directors of Posadas or senior management;

(ii) transactions exclusively between or among Posadas and any of the Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries;

(iii) any agreement as in effect as of the Closing Date the material terms of which are described in this offering memorandum or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto in effect on the date hereof) or in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Closing Date;

(iv) Restricted Payments permitted by the Indenture;

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(v) the sale, conveyance or other transfer of accounts receivable in connection with a Receivables Transaction; and

(vi) loans and advances to executive committee members, employees and officers of Posadas and the Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of an aggregate of U.S.$3.0 million at any time outstanding.

Additional Guarantees

If, after the Closing Date, (a) any Person becomes a Mexican Wholly Owned Restricted Subsidiary of Posadas other than (i) a Receivables Entity, (ii) Service Subsidiaries that do not have in excess of U.S.$500,000 of assets and do not have greater than U.S.$500,000 of net income (on a consolidated basis with its Subsidiaries) in any twelve-month period following the Closing Date or (iii) certain immaterial subsidiaries which cannot provide guarantees due to local regulatory reasons, as determined in good faith by the Board of Directors or (b) Posadas otherwise elects to have any Restricted Subsidiary become a Subsequent Guarantor, then, in each such case, Posadas shall cause such Restricted Subsidiary to:

(i) execute and deliver to the Trustee a supplemental indenture in form and substance satisfactory to the Trustee pursuant to which such Wholly Owned Restricted Subsidiary shall unconditionally guarantee all of the Issuer’s obligations under the Notes and the Indenture as a Subsequent Guarantor; and

(ii) deliver to the Trustee one or more Opinions of Counsel that such supplemental indenture (a) has been duly authorized, executed and delivered by such Restricted Subsidiary and (b) constitutes a valid and legally binding obligation of such Restricted Subsidiary in accordance with its terms.

Limitation on Business Activities

The Issuer will not, and will not permit any Restricted Subsidiary to, enter into any line of business other than a Permitted Business.

Limitation on Designations of Unrestricted Subsidiaries

After the Closing Date, Posadas may designate any Restricted Subsidiary of Posadas as an “Unrestricted Subsidiary” under the Indenture (a “Designation”) only if:

(1) no Default shall have occurred and be continuing at the time of or after giving effect to such Designation;

(2) Posadas would be permitted under the Indenture to make a Restricted Payment pursuant to the first paragraph of the covenant described under “—Limitation on Restricted Payments” at the time of Designation (assuming the effectiveness of such Designation) in an amount equal to the Fair Market Value of such Subsidiary on such date; and

(3) Posadas would be permitted to incur U.S.$1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described under “—Limitation on Indebtedness” at the time of Designation (assuming the effectiveness of such Designation).

Notwithstanding anything contained herein, Posadas may designate any Restricted Subsidiary as an “Unrestricted Subsidiary” under the Indenture in connection with the payment of any dividend or distribution payable solely in the Qualified Capital Stock of such Restricted Subsidiary as permitted by clauses (7) or (8) of the second paragraph of the covenant described under “—Limitation on Restricted Payments” if such dividend or distribution constitutes in excess of 50% of the Capital Stock of such Restricted Subsidiary.

The Indenture will further provide that Posadas shall not, and shall not cause or permit any Restricted Subsidiary to, at any time:

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(x) provide direct or indirect credit support for, be directly or indirectly liable for or guarantee any Indebtedness of any Unrestricted Subsidiary (including any undertaking agreement or instrument evidencing such Indebtedness) (except that Posadas and the Guarantors may guarantee or otherwise provide credit support for up to U.S.$5.0 million of obligations of an Unrestricted Subsidiary for a period not to exceed 270 days); or

(y) be directly or indirectly liable for any Indebtedness which provides that the holder thereof may (upon notice, lapse of time or both) declare a default thereon or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity upon the occurrence of a default with respect to any Indebtedness of any Unrestricted Subsidiary (including any right to take enforcement action against such Unrestricted Subsidiary), except, in the case of clause (x), to the extent permitted under the covenant described under “—Limitation on Restricted Payments.”

The Indenture will further provide that Posadas may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (“Revocation”), whereupon such Subsidiary shall then constitute a Restricted Subsidiary, if

(1) no Default shall have occurred and be continuing at the time and after giving effect to such Revocation;

(2) immediately after giving effect to such Revocation, Posadas would be permitted to incur U.S.$1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described under “— Limitation on Indebtedness”; and

(3) all Liens and Indebtedness of such Unrestricted Subsidiaries outstanding immediately following such Revocation would, if incurred at such time, have been permitted to be incurred for all purposes of the Indenture.

All Designations and Revocations must be evidenced by an officers’ certificate of Posadas delivered to the Trustee certifying compliance with the foregoing provisions.

Reporting

Under the terms of the Indenture, Posadas will furnish or cause to be furnished to the Trustee, holders of Notes and the Luxembourg Stock Exchange, (i) as soon as available but in any event not later than 120 days after the close of each of its fiscal years, a consolidated balance sheet, consolidated statement of income, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows for such fiscal year of Posadas, (ii) as soon as available but in any event not later than 60 days after the end of each of the first three quarters of each of its fiscal years a consolidated balance sheet, consolidated statement of income and consolidated statement of changes in shareholders’ equity for such fiscal quarter of Posadas, and which, in the case of the annual financial statements, will be audited by and accompanied by a report thereon of an independent public accountant selected by Posadas. Each such report shall include a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that describes the financial condition and results of operations of Posadas and its consolidated Subsidiaries (and each report with respect to any fiscal year (but not with respect to fiscal quarters) shall show in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Issuer and the Guarantors separate from the financial condition and results of operations of the non-Guarantor Subsidiaries of the Issuer, if any).

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer's Certificates).

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Use of Proceeds

Posadas agrees to use the proceeds from the sale of the Notes as set forth under “Use of Proceeds” in this offering memorandum.

Covenant Suspension

If on any date following the Issue Date (i) the Notes have Investment Grade Ratings from at least two Rating Agencies, and (ii) no Default has occurred and is continuing under the Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), the Issuer and its Restricted Subsidiaries will not be subject to the following covenants (collectively, the “Suspended Covenants”):

(1) “—Certain Covenants—Limitation on Indebtedness;”

(2) “—Certain Covenants—Limitation on Restricted Payments;”

(3) “—Certain Covenants—Limitation on Asset Sales;”

(4) “—Certain Covenants—Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries;”

(5) “—Certain Covenants—Limitation on Transactions with Affiliates;”

(6) “—Certain Covenants—Limitation on Designations of Unrestricted Subsidiaries;” and

(7) clause (ii) of the first paragraph of “—Merger, Consolidation and Sale of Assets.”

In the event that the Issuer and its Restricted Subsidiaries are not subject to the Suspended Covenants under the Indenture for any period of time as a result of the foregoing, and on any subsequent date (the “Reversion Date”) at least two Rating Agencies no longer rate the Notes Investment Grade, then the Issuer and its Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants under the Indenture.

The period of time between the occurrence of a Covenant Suspension Event and the Reversion Date is referred to in this description as the “Suspension Period.” In the event of any such reinstatement, no action taken or omitted to be taken by the Issuer or any of its Restricted Subsidiaries prior to such reinstatement will give rise to a Default or Event of Default under the Indenture with respect to Notes; provided that (1) with respect to Restricted Payments made after any such reinstatement, the amount of Restricted Payments made will be calculated as though the covenant described under “—Certain Covenants—Limitation on Restricted Payments” had been in effect prior to, but not during, the Suspension Period, provided that any Subsidiaries designated as Unrestricted Subsidiaries during the Suspension Period shall automatically become Restricted Subsidiaries on the Reversion Date (subject to the Issuer’s right to subsequently designate them as Unrestricted Subsidiaries pursuant to “—Certain Covenants—Limitation on Designations of Unrestricted Subsidiaries”), and (2) all Indebtedness Incurred, or Disqualified Capital Stock or Preferred Stock issued, during the Suspension Period will be classified to have been Incurred or issued pursuant to clause (iii) of the second paragraph of “—Certain Covenants— Limitation on Indebtedness.”

The Issuer will promptly provide the Trustee with written notice of any Covenant Suspension Event or of any Reversion Date. In the absence of such notice, the Trustee shall be entitled to assume that no Covenant Suspension Date or Reversion Date (as applicable) has occurred.

The Notes may never achieve or maintain Investment Grade Ratings.

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Merger, Consolidation and Sale of Assets

Posadas will not (a) in one or more related transactions, consolidate with or merge into or reorganize with or into, or directly or indirectly, transfer, convey, sell, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any other Person or (b) permit any Guarantor to, in one or more related transactions, consolidate with or merge into or reorganize with or into, or directly or indirectly, transfer, convey, sell, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any other Person in each case unless: (i) the Person formed by the consolidation, merger or reorganization, if it is not Posadas or the Guarantor, or that acquired by transfer, conveyance, sale, lease or other disposition Posadas or such Guarantor’s assets and property (any such Person, a “Successor”), (x) is engaged in a Permitted Business and (y) shall expressly assume, by executing a supplemental indenture, all the obligations of Posadas under the Notes and the Indenture or of such Guarantor under the Guarantees or shall concurrently execute a supplemental indenture as a Subsequent Guarantor, guaranteeing, on a joint and several basis with each of the other Guarantors, all obligations of Posadas under the Notes and the Indenture; (ii) in the case of clause (a), immediately after giving effect to such transaction in accordance with the Indenture (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), Posadas or such Successor, as the case may be, either (A)would be permitted to incur at least U.S.$1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described under “—Limitation on Indebtedness” or (B) (1) Posadas’ or such Successor’s Consolidated Interest Coverage Ratio would be equal to or greater than Posadas’ Consolidated Interest Coverage Ratio immediately prior to the transaction and (2) the ratings on the Notes by at least two Rating Agencies then rating the Notes would be equal to or higher than such ratings immediately prior to the transaction (it being understood that in the event that less than two Rating Agencies are providing a rating for the Notes, then this prong (2) cannot be satisfied and therefore this entire clause (B) is not available to be relied upon by Posadas); (iii) immediately after giving effect to such transaction in accordance with the Indenture (including the substitution thereunder of any Successor for a Guarantor or a subsidiary, as the case may be) and treating any Indebtedness incurred by Posadas or any Successor or any Subsidiary of either of them as a result of such transaction as having been incurred at the time of such transaction, no Default with respect to the Notes shall have occurred and be continuing; (iv) the Issuer or any Successor will have delivered to the Trustee an Opinion of Mexican Counsel to the effect that (a) the Holders of the Notes will not recognize income, gain or loss for Mexican income tax purposes as a result of the transaction and will be subject to Mexican income tax in the same manner and on the same amounts (assuming solely for this purpose that no Additional Amounts are required to be paid on the Notes) and at the same times as would have been the case if the transaction had not occurred and (b) no other taxes on income, including capital gains, will be payable by the Holders of the Notes under the laws of Mexico relating to the acquisition, ownership or disposition of the Notes, including the receipt of interest or principal thereon, as a result of the transaction; (v) the Issuer or any Successor will have delivered to the Trustee an Opinion of U.S. Counsel to the effect that (a) the beneficial owners of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the transaction and will be subject to U.S. federal income tax in the same manner and on the same amounts (assuming solely for this purpose that no Additional Amounts are required to be paid on the Notes) and at the same times as would have been the case if the transaction had not occurred and (b) no other taxes on income, including capital gains, will be payable by the beneficial owners of the Notes under the laws of the United States relating to the acquisition, ownership or disposition of the Notes, including the receipt of interest or principal thereon, as a result of the transaction; and (vi) Posadas has delivered to the Trustee an Officers’ Certificate setting forth in reasonable detail information demonstrating compliance with the foregoing requirements and an Opinion of Mexican Counsel and an Opinion of U.S. Counsel, each stating that such consolidation, merger or reorganization and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the provisions of the Indenture and that the conditions precedent in the Indenture relating to such transaction have been complied with.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties and assets of one or more Restricted Subsidiaries, the Capital Stock of which constitutes all or substantially all of the properties and

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assets of Posadas, shall be deemed to be the transfer of all or substantially all of the properties and assets of Posadas.

The Indenture will provide that upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of Posadas in accordance with the foregoing in which Posadas is not the continuing corporation, the successor Person formed by such consolidation or into which Posadas is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, Posadas under the Indenture and the Notes with the same effect as if such surviving entity had been named as such.

Notwithstanding the above, (x) any Guarantor may consolidate with, merge into or transfer all or part of its properties and assets to Posadas or to another Guarantor and (y) Posadas may merge with an Affiliate incorporated solely for the purpose of reincorporating Posadas in another jurisdiction to realize tax or other benefits; provided that if such consolidation or merger constitutes a Change of Control, then the provisions set forth under “—Repurchase at the Option of Holders—Change of Control” will apply.

Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the property or assets of a Person.

Events of Default

The following events will be defined as “Events of Default” in the Indenture:

(a) failure to pay principal of any Note when the same becomes due and payable at maturity, upon acceleration, redemption or otherwise;

(b) failure to pay interest on any Note when the same becomes due and payable, continued for a period of 30 days;

(c) the default in the performance of or breach of any other covenant or agreement in the Indenture and such default or breach continues for a period of 30 consecutive days after written notice by the Trustee or the Holders of 25% or more in aggregate principal amount of the Notes;

(d) a default or defaults under the terms of any instruments evidencing or securing, or of any agreements pursuant to which there may be issued, Indebtedness of Posadas or any Restricted Subsidiary having an outstanding principal amount in excess of U.S.$20.0 million (or the equivalent thereof in other currencies or currency units) individually or in the aggregate, which Indebtedness now exists or is hereafter incurred, which default or defaults (i) result in the acceleration of the payment of such Indebtedness and such Indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within 10 days of such acceleration, or (ii) constitute the failure to pay all or any part of such Indebtedness at the final Stated Maturity thereof (after the expiration of any applicable grace period) and which shall not have been cured or waived;

(e) the rendering of a final judgment or judgments (not subject to appeal) or an order or orders against Posadas or any Restricted Subsidiary in an aggregate amount in excess of U.S.$25.0 million (or the equivalent thereof in other currencies or currency units), individually or in the aggregate, which is neither discharged nor bonded in full within 60 days thereafter (or which, if bonded, thereafter becomes unbonded);

(f) certain events of bankruptcy affecting the Issuer, any Guarantor or any Principal Subsidiary; or

(g) any of the Guarantees shall cease to be in full force and effect (except as contemplated by its terms or the terms of the Indenture).

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If an Event of Default (other than an Event of Default specified in clause (f) above with respect to the Issuer) occurs and is continuing under the Indenture, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding, by written notice to Posadas (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare the principal of, and accrued interest (together with any Additional Amounts) on, the Notes to be immediately due and payable. Upon such a declaration of acceleration, such principal and accrued interest shall be immediately due and payable. If an Event of Default specified in clause (f) above occurs with respect to the Issuer, the principal of, and accrued interest (together with any Additional Amounts) on, the Notes then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of at least a majority in principal amount of the outstanding Notes, by written notice to the Trustee, may waive all past defaults and rescind and annul a declaration of acceleration and its consequences, if (i) all existing Events of Default, other than the nonpayment of the principal of, and interest on, the Notes that have become due solely by such declaration of acceleration, have been cured or waived, (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (iii) and any unpaid fees, expenses or other amounts owed to the Trustee have been paid in full. For information as to the waiver of defaults, see “—Modification and Waiver.”

No Holder of any Note will have any right to institute any proceeding with respect to the Indenture or the Notes unless: (i) the Holder gives the Trustee written notice of a continuing Event of Default; (ii) the Holders of at least 25% in aggregate principal amount of outstanding Notes make a written request to the Trustee to institute such proceeding; (iii) such Holder or Holders offer the Trustee reasonable indemnity to institute such proceeding as Trustee; (iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (v) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request. However, such limitations do not apply to the right of any Holder of a Note to receive payment of the principal of, or interest (together with Additional Amounts) on, such Note or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes, which right shall not be impaired or affected without the consent of the Holder. The Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Notes (other than a payment default of principal, premium or interest) unless a written notice of such Default or Event of Default shall have been given to an officer of the Trustee with direct responsibility for the administration of the Indenture and the Notes, by Posadas or any Holder of Notes.

The Indenture provides that if a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the uncured Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of, premium, interest or Additional Amounts on any Note, the Trustee may withhold notice if and so long as a committee of trust officers of the Trustee in good faith determines that withholding the notice is in the interest of the Holders. In addition, Posadas is required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. Posadas is also required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any events which would constitute certain Defaults, their status and what action Posadas is taking or proposes to take in respect thereof.

Satisfaction and Discharge

The Indenture provides that it will be discharged and shall cease to be of further effect (except as to rights of registration of transfer or exchange of Notes which shall survive until all Notes have been canceled and certain other limited provisions including, but not limited to, certain rights of the Trustee) as to all outstanding Notes and the Trustee, on written demand of and at the expense of Posadas, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when either:

(a) all Notes theretofore authenticated and delivered (other than (i) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in the Indenture and (ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by

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Posadas and thereafter repaid to Posadas or discharged from such trust) have been delivered to the Trustee for cancellation; or

(b) (i) either (A) Posadas shall have given notice to the Trustee and mailed a notice of redemption to each Holder of the redemption of all of the Notes under arrangements satisfactory to the Trustee for the giving of such notice or (B) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable; (ii) Posadas has irrevocably deposited or caused to be deposited with the Trustee in trust an amount of U.S. legal tender or U.S. government obligations sufficient to pay and discharge the entire Indebtedness on such Notes not theretofore delivered to the Trustee for cancellation, for the principal of, premium, if any, and interest on the Notes to the date of such deposit; (iii) no Default with respect to the Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which Posadas is a party or by which it is bound; (iv) Posadas has paid or caused to be paid all other sums payable under the Indenture by Posadas; and (v) Posadas has delivered to the Trustee (A) irrevocable instructions to apply the deposited money toward payment of the Notes at the maturity or redemption thereof, and (B) an officers’ certificate and an Opinion of U.S. Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of the Indenture have been complied with and that such satisfaction and discharge does not result in a default under any agreement or instrument then known to such counsel which binds or affects Posadas.

Defeasance

The Indenture will provide that, at the option of Posadas, (a) Posadas will be discharged from any and all obligations in respect of the outstanding Notes (except for, among other matters, certain obligations of Posadas to register the transfer or exchange of the Notes, and to replace lost, stolen or mutilated Notes and certain obligations of Posadas with respect to the rights of the Trustee) (“Legal Defeasance”) or (b) Posadas may omit to comply with “—Repurchase at the Option of Holders—Change of Control,” clause (b)(i) of “—Merger, Consolidation and Sale of Assets” and the covenants set forth above under “—Certain Covenants,” excluding the covenant set forth under “—Certain Covenants— Reporting” (collectively, the “Defeased Covenants”), and such omission will not be deemed to be an Event of Default under clause (c) or clause (d) (but only with respect to clause (b)(ii) under “—Merger, Consolidation and Sale of Assets”) under “—Events of Default” (the “Defeased Events of Default”) under the Indenture and the Notes (“Covenant Defeasance”), in either case (a) or (b) on the 271st day after irrevocable deposit with the Trustee, in trust, of U.S. dollars and/or U.S. government obligations which will provide money in an amount sufficient in the opinion of an independent accounting firm nationally recognized in the United States to pay the principal of, and each installment of interest on, the outstanding Notes and Additional Amounts then known. With respect to clause (b), the obligations under the Indenture other than the Defeased Covenants and the Events of Default other than the Defeased Events of Default shall remain in full force and effect. Such trust may be established only if, among other things, (i) Posadas has delivered to the Trustee an Opinion of Mexican Counsel to the effect that the Holders of the Notes will not recognize gain or loss for Mexican income tax purposes as a result of such deposit and defeasance and will be subject to Mexican income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; (ii) Posadas has delivered to the Trustee an Opinion of U.S. Counsel to the effect that the beneficial owners of the Notes will not recognize gain or loss for United States federal income tax purposes as a result of such deposit and defeasance and will be subject to United States federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (which United States federal income tax opinion in the case of Legal Defeasance, must be based on a change in law occurring after the date hereof or a ruling received by Posadas from the United States Internal Revenue Service); (iii) no Event of Default or event that with the passing of time or the giving of notice, or both, would constitute an Event of Default shall have occurred or be continuing during the 271st day period referred to above; (iv) Posadas has delivered to the Trustee an Opinion of U.S. Counsel to the effect that such deposit shall not cause the Trustee or the trust so created to be subject to the Investment Company Act of 1940; (v) with respect to an election by Posadas under clause (a) Posadas has delivered to the Trustee an Opinion of Mexican Counsel to the

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effect that Posadas has paid all Additional Amounts due in respect of the Notes; (vi) with respect to an election by Posadas under clause (a) Posadas has delivered to the Trustee an officers’ certificate to the effect that as a result of such deposit and defeasance the Notes will no longer be considered a liability of Posadas under IFRS; and (vii) certain other customary conditions precedent set forth in the Indenture are satisfied.

In the event Posadas exercises its option to omit compliance with certain covenants and provisions of the Indenture as described in the immediately preceding paragraph and the Notes are declared due and payable because of the occurrence of an Event of Default that remains applicable, the amount of money and/or U.S. government obligations on deposit with the Trustee will be sufficient to pay amounts due on the Notes at the time of their Stated Maturity but may not be sufficient to pay amounts due on the Notes at the time of the acceleration resulting from such Event of Default. However, Posadas will remain liable for such payments.

Modification and Waiver

Modifications of the Indenture, except as noted below, may be made by Posadas and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the outstanding Notes; provided, however, that no such modification may, without the consent of the Holder of each outstanding Note affected thereby, (i) change the Stated Maturity of the principal of, or any installment of interest on any Note, (ii) reduce the principal amount of, or interest (including Additional Amounts) on, any Note, (iii) change the place or currency of payment of principal of, or interest (including Additional Amounts) on, any Note, (iv) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity (or, in the case of a redemption, on or after the redemption date) of any Note, (v) reduce the above-stated percentage of outstanding Notes the consent of whose Holders is necessary to modify the Indenture, (vi) change Posadas’ obligations under “—Reporting” in a manner materially adverse to Holders, (vii) waive a default in the payment of principal of, or interest (including Additional Amounts) on, the Notes, (viii) release any of the Guarantors from the Guarantees, (ix) reduce the percentage of aggregate principal amount of outstanding Notes the consent of whose Holders is necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults or (x) amend “Change of Control” provisions or “Asset Sale Offer” provisions at any time when the Issuer is obligated to make a Change of Control Offer or an Asset Sale Offer.

Notwithstanding the foregoing, from time to time, the Issuer and the Trustee, without the consent of the holders of Notes, may amend the Indenture for certain specified purposes, including curing ambiguities, defects or inconsistencies, so long as such change does not adversely affect the rights of any of the holders of Notes in any material respect (which shall be evidenced by an opinion of counsel delivered to the Trustee, upon which the Trustee may conclusively rely).

The Holders of a majority in aggregate principal amount of the outstanding Notes, on behalf of all Holders of Notes, may waive compliance by Posadas with certain restrictive provisions of the Indenture. The Holders of a majority in aggregate principal amount of the outstanding Notes, on behalf of all Holders of Notes, may waive any past default under the Indenture, except a default in the payment of principal or interest or in any covenant or provision that cannot be modified without the consent of the Holder of each outstanding Note affected thereby.

Payments for Consent

Posadas will not, and will not cause or permit any Subsidiary to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture, the Notes or the Guarantees unless such consideration is offered to be paid to all Holders who so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or amendment. Notwithstanding the foregoing, Posadas may, and may permit its Subsidiaries, to make any payment of consideration for, or as an inducement to, any consent, waiver or amendment of any of the terms or provisions of the Indenture, the Notes or the Guarantees in connection with an exchange offer that excludes (i) holders or beneficial owners of the Notes that are not “qualified

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institutional buyers” as defined in Rule 144A under the Securities Act, “non-U.S. Persons” as defined in Regulation S under the Securities Act, or institutional “accredited investors” as defined in subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act, and (ii) holders or beneficial owners of the Notes in any jurisdiction (other than the United States) where the inclusion of such holders or beneficial owners would require Posadas or any such Subsidiary to comply with the registration requirements or other similar requirements under any securities laws of such jurisdiction, or the solicitation of such consent, waiver or amendment from, or the granting of such consent or waiver, or the approval of such amendment by, holders or beneficial owners in such jurisdiction would be unlawful, in each case as determined by Posadas in its sole discretion.

Concerning the Trustee

The Indenture provides that, except during the continuance of a Default, the Trustee will not be liable except for the performance of such duties as are specifically set forth in such Indenture. If an Event of Default has occurred and is continuing, the Trustee will use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person’s own affairs. Subject to the provisions set forth in the Indenture, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of the Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Notices

All notices to Holders of the Notes shall be deemed to have been duly given (i) upon the mailing of such notices to Holders of the Notes at their registered addresses as recorded in the Issuer’s register and (ii) for as long as the Notes are listed on the Luxembourg Stock Exchange for trading on the Euro MTF Market, upon publication in a leading daily newspaper of general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or on the website of the Luxembourg Stock Exchange at www.bourse.lu, in each case not later than the latest date, and not earlier than the earliest date, prescribed in the Indenture for the giving of such notice.

Governing Law and Submission to Jurisdiction

The Notes, the Guarantees and the Indenture will be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. Posadas and the Guarantors will submit to the jurisdiction of the US. Federal and New York state courts located in the Borough of Manhattan, The City of New York, and each such party will submit to the jurisdiction of the courts of its own corporate domicile (domicilio social) in respect of actions brought against it as a defendant, for purposes of all legal actions and proceedings instituted in connection with the Notes, the Guarantees and the Indenture. Posadas and each Guarantor has appointed, and Posadas has agreed to cause any Subsequent Guarantor to appoint National Corporate Research, Ltd., 10 East 40th. Street, 10th floor, New York, NY 10016 as its authorized agent upon which process may be served in any such action in Federal or state court in the Borough of Manhattan, The City of New York.

Prescription

Under the laws of the State of New York, claims for payment of interest, premium (if any) and repayment of principal on the Notes generally will be barred if an action is not commenced within six years after payment is due or within the period otherwise provided for under New York law.

Certain Definitions

Set forth below is a summary of certain of the defined terms used in the covenants and other provisions of the Indenture. Reference is made to the Indenture for the full definition of all terms as well as any other capitalized term used herein for which no definition is provided.

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“Acquired Indebtedness” means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or at the time it merges or consolidates with the Issuer or any of its Restricted Subsidiaries or is assumed in connection with the acquisition of assets from such Person. Acquired Indebtedness will be deemed to have been Incurred at the time such Person becomes a Restricted Subsidiary or at the time it merges or consolidates with the Issuer or a Restricted Subsidiary or at the time such Indebtedness is assumed in connection with the acquisition of assets from such Person.

“Additional Notes” has the meaning set forth under the section entitled “General.”

“Affiliate” means, with respect to any specified Person, any other Person which directly or indirectly through one or more Persons controls, or is controlled by, or is under common control with, such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person directly or indirectly, whether through the ownership of Voting Stock, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Affiliate Transaction” has the meaning set forth under “—Certain Covenants—Limitation on Transactions with Affiliates.”

“Asset Acquisition” means:

(i) an investment by Posadas or any of its Subsidiaries in any other Person under which that Person shall become a Restricted Subsidiary or shall be merged into or consolidated with Posadas or any of its Restricted Subsidiaries; provided that such Person’s primary business is related, ancillary or complementary to a Permitted Business, or

(ii) an acquisition by Posadas or any of its Restricted Subsidiaries of the property and assets of any Person other than Posadas or any of its Restricted Subsidiaries that constitute substantially all of a division or line of business of such Person; provided that the property and assets acquired are related, ancillary or complementary to a Permitted Business.

“Asset Sale” means any direct or indirect sale, issuance, conveyance, lease (other than operating leases entered into in the ordinary course of business), assignment, transfer or other disposition (other than the granting of a Permitted Lien), including by way of merger, consolidation or Sale and Leaseback Transaction, in one transaction or a series of related transactions by Posadas or any of its Restricted Subsidiaries of:

(a) all or any of the Capital Stock of any Restricted Subsidiary, other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than Posadas or a Restricted Subsidiary in order to maintain the corporate status of such Subsidiary,

(b) all or substantially all of the property and assets of an operating unit or business of Posadas or any of its Restricted Subsidiaries, or

(c) any other property and assets of Posadas or any of its Restricted Subsidiaries outside the ordinary course of business of Posadas or such Restricted Subsidiary, in each case, that is not governed by the provisions of the Indenture applicable to mergers, consolidations, sales and leases of Posadas. However, “Asset Sale” shall not include:

(i) sales or other dispositions of inventory, receivables and other current assets, in the ordinary course of business, including any sale of time share, full or fractional ownership or membership interests in the ordinary course of the Vacation Club Business,

(ii) any Restricted Payment made under the “—Limitation on Restricted Payments” covenant or a Permitted Investment,

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(iii) sales, transfers or other dispositions of assets with a Fair Market Value not in excess of U.S.$5.0 million in any transaction or series of related transactions,

(iv) the sale or other disposition of Temporary Cash Investments,

(v) any sale, transfer, assignment or other disposition of any property or equipment that has become damaged, worn out, obsolete or otherwise unsuitable for use in connection with the business of Posadas or its Subsidiaries,

(vi) the sale, conveyance or other transfer of accounts receivable in connection with a Receivables Transaction,

(vii) the issuance of Capital Stock by a Restricted Subsidiary of Posadas to Posadas or a Wholly Owned Restricted Subsidiary, or

(viii) any sale or disposition by Posadas or any Restricted Subsidiary to Posadas or any Restricted Subsidiary.

“Attributable Indebtedness” in respect of a Sale and Leaseback Transaction means, as at the time of determination, the greater of:

(i) the fair value of the property subject to such arrangement; and

(ii) the present value (discounted at the rate of interest implicit in such transaction, determined in accordance with IFRS) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended).

“Average Life” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the original aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each scheduled installment, sinking fund, serial maturity or other required payment of principal including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.

“Board of Directors” means, with respect to any Person, the board of directors of such Person (or other similar governing body) or any duly authorized committee thereof.

“Board Resolution” means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary (or equivalent officer) of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Business Day” has the meaning set forth under “—General.”

“Capital Stock” means, (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) in the equity of such Person, whether now outstanding or issued after the date of the Indenture, including, without limitation, all common stock and preferred stock and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person.

“Capitalized Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) which, in conformity with IFRS, is required to be accounted for as a capital lease.

“Capitalized Lease Obligations” means, as at any date of determination, the capitalized amount shown as a liability in respect of all Capitalized Leases on the balance sheet of such Person prepared in conformity with IFRS.

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“Change of Control” means the occurrence of one or more of the following events:

(1) the Permitted Holders shall cease to (a) be the “beneficial owners” (as such term is used in Rule 13d-3 promulgated under the Exchange Act) of at least 35% of the outstanding Voting Stock of Posadas or (b) have the power to elect a majority of the Board of Directors of Posadas; or

(2) there is consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Posadas to any Person or Group, together with any Affiliates thereof (whether or not otherwise in compliance with the provisions of the Indenture) unless such sale, lease, exchange or other transfer is to one acquiror and the Permitted Holders (a) are the beneficial owners (as defined above) of at least 35% of the outstanding Voting Stock of the acquiror and (b) have the power to elect a majority of the Board of Directors of the acquiror; provided, however, that a “Change of Control” shall not be deemed to have occurred if at least two of the Rating Agencies then rating the Notes shall have publicly announced prior to the consummation of the Change of Control that no downgrade shall occur as a result of such events (it being understood that if less than two Rating Agencies are then providing a rating for the Notes, then this proviso shall not apply and a “Change of Control” shall be deemed to have occurred solely if clause (1) or clause (2) above is satisfied).

“Change of Control Offer” has the meaning set forth under “—Repurchase at the Option of Holders— Change of Control.”

“Change of Control Payment” has the meaning set forth under “—Repurchase at the Option of Holders—Change of Control.”

“Change of Control Payment Date” has the meaning set forth under “—Repurchase at the Option of Holders—Change of Control.”

“Closing Date” means the first date on which the Notes are originally issued under the Indenture, which will be June 30, 2015.

“Commission” means the Securities and Exchange Commission, as from time to time constituted, or if at any time after the execution of the Indenture such Commission is not existing and performing the applicable duties now assigned to it, then the body or bodies performing such duties at such time.

“Commodity Agreements” means any forward commodity contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement entered into by Posadas or any of its Subsidiaries.

“Common Stock” of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common stock, whether outstanding on the Closing Date or issued after the Closing Date, and includes, without limitation, all series and classes of such common stock.

“Consolidated Assets” means, as at any date of determination, the aggregate of all of the assets of Posadas and its Subsidiaries, determined on a consolidated basis in accordance with IFRS.

“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period plus, to the extent such amount was deducted in calculating such Consolidated Net Income:

(a) Consolidated Interest Expense,

(b) Consolidated Income Tax Expense,

(d) amortization expense, and

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(e) expense attributable to impairment of assets, including goodwill.

“Consolidated Income Tax Expense” means, with respect to any Person for any period, the provision for or payment of federal, state, local and any other income taxes in any other jurisdiction where such Person and its Subsidiaries may operate or be subjected to, and any statutorily mandated employee profit sharing payable by such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) for such period as determined on a consolidated basis in accordance with IFRS.

“Consolidated Interest Coverage Ratio” means, as at any date of determination, the ratio of (i) Consolidated EBITDA of a Person for the period of the most recently completed four consecutive fiscal quarters for which financial statements are in existence (a “Test Period”) to (ii) Consolidated Interest Expense of such Person for such Test Period; provided that, for purposes of this definition, Consolidated EBITDA and Consolidated Interest Expense shall be calculated after giving effect on a pro forma basis for such Test Period to:

(i) the incurrence of any Indebtedness by such Person or any of its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) or the issuance of any Preferred Stock by any such Subsidiary (Restricted Subsidiary in the case of the Issuer) (and the application of the proceeds thereof) and any repayment of other Indebtedness by such Person or any of its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) or redemption of other Preferred Stock by any such Subsidiary (Restricted Subsidiary in the case of the Issuer) (and the application of the proceeds therefrom) (other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to any revolving credit arrangement) occurring during the applicable Test Period for which Consolidated EBITDA or Consolidated Interest Expense is being calculated or at any time subsequent to the last day of such Test Period and on or prior to the date of determination, as if such incurrence, issuance, repayment, or redemption, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Test Period (except that, in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be computed based on (i) the average daily balance of such Indebtedness during such quarter or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of such quarter, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of calculation);

(ii) any Asset Sale or acquisition, including, without limitation, any acquisition giving rise to the need to make such calculation as a result of such Person or any of its Subsidiaries (including any Person who becomes a Subsidiary as a result of such Asset Acquisition) (Restricted Subsidiaries in the case of the Issuer) incurring Indebtedness and also including any Consolidated EBITDA (including any pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Exchange Act) associated with any such Asset Sale or acquisition) occurring during the Test Period or at any time subsequent to the last day of the Test Period and on or prior to the date of determination, as if such Asset Sale or acquisition (including the incurrence of, or assumption or liability for, any such Indebtedness) occurred on the first day of the Test Period;

(iii) the Investment in any Subsidiary (Restricted Subsidiary in the case of the Issuer) (or any Person who becomes a Subsidiary (Restricted Subsidiary in the case of the Issuer) or is merged with or into such Person) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, since the beginning of any Test Period, by such Person, or any Subsidiary (Restricted Subsidiary in the case of the Issuer) (by merger or otherwise), as if such Investment or acquisition of assets occurred on the first day of the Test Period;

(iv) any Asset Sale or any Investment or any acquisition of assets that would have required any adjustment pursuant to clauses (ii) or (iii) above if made by such Person or any of its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) during such Test Period, by any Person that subsequently became a Subsidiary (Restricted Subsidiary in the case of the Issuer) or was merged with or into such Person or any of its Subsidiaries since the beginning of such Test Period) since the

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beginning of such Test Period, as if such Investment or acquisition of assets occurred on the first day of the Test Period; and

(v) the payment of any dividend or distribution permitted by clauses (7) or (8) of the second paragraph of the covenant described under “—Limitation on Restricted Payments” occurring during the applicable Test Period for which Consolidated EBITDA or Consolidated Interest Expense is being calculated or at any time subsequent to the last day of such Test Period and on or prior to the date of determination, as if such payment occurred on the first day of the Test Period.

In calculating Consolidated Interest Expense for purposes of determining the denominator (but not the numerator) of this Consolidated Interest Coverage Ratio:

(i) interest on outstanding Indebtedness determined on a fluctuating basis as of the date of determination and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the date of determination;

(ii) if interest on any Indebtedness actually incurred on the date of determination may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the date of determination will be deemed to have been in effect during the Test Period; and

(iii) notwithstanding clause (i) or (ii) of this paragraph, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by Hedging Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of these agreements.

“Consolidated Interest Expense” for any period means the sum, without duplication, of the total interest expense of a Person and its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) for such period, determined on a consolidated basis in accordance with IFRS and including, to the extent not included in such interest expense, without duplication:

(a) imputed interest on Capitalized Lease Obligations and Attributable Indebtedness,

(b) commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations and bankers’ acceptance financings,

(d) amortization of debt issuance costs, debt discount or premium and other financing fees and expenses except, in the case of the Issuer or any of its Restricted Subsidiaries, any such costs, discount or premium and fees and expenses resulting from the issuance of the Notes hereunder or the application of the proceeds thereof to prepay Indebtedness,

(e) the interest portion of any deferred payment obligations,

(f) all other non-cash interest expense,

(g) capitalized interest,

(h) any premiums, fees, discounts, expenses and losses on the sale of accounts receivable (and any amortization thereof) payable by such Person or its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) in connection with a Receivables Transaction,

(i) the product of (a) all dividend payments on any series of Disqualified Stock of such Person or any Preferred Stock of any Subsidiary (Restricted Subsidiaries in the case of the Issuer) (other than any such Disqualified Stock or any Preferred Stock held by such Person or a Wholly Owned Restricted Subsidiary or to the extent paid in Qualified Capital Stock), multiplied by (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and

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local statutory tax rate of such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Issuer), expressed as a decimal, and

(j) all interest payable with respect to discontinued operations.

Total interest expense will be determined after giving effect to any net payment made or received by such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) with respect to Interest Rate Agreements.

“Consolidated Net Income” means, for any period, net income of a Person and its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) on a consolidated basis, determined in accordance with IFRS; provided that there shall be excluded from such Consolidated Net Income:

(i) any net income of any Subsidiary (Restricted Subsidiary in the case of the Issuer) for any period to the extent (i) such Subsidiary (Restricted Subsidiary in the case of the Issuer) is subject to restrictions, directly or indirectly, on the making of distributions or dividends and (ii) at the time of determination of Consolidated Net Income, (x) the net income of such Subsidiary (Restricted Subsidiary in the case of the Issuer) for such period has not been paid as dividends or distributions by such Subsidiary (Restricted Subsidiary in the case of the Issuer), directly or indirectly, to such Person and (y) such restrictions prohibit the net income of such Subsidiary (Restricted Subsidiary in the case of the Issuer) for such period from being paid as a dividend or distribution by such Subsidiary (Restricted Subsidiary in the case of the Issuer), directly or indirectly, to such Person (for the avoidance of doubt, if for any period of determination, such Subsidiary (Restricted Subsidiary in the case of the Issuer) is able to make a distribution or dividend to such Person of any amount of its net income, such amount shall be included in determining such Person’s Consolidated Net Income for such period); provided that, notwithstanding the foregoing, such Person’s equity in a net loss of any such Subsidiary (Restricted Subsidiary in the case of the Issuer) for such period shall be included in determining such Consolidated Net Income;

(ii) any gain or loss realized upon the sale or other disposition of any assets of such Person, its consolidated Subsidiaries (Restricted Subsidiaries in the case of the Issuer) or any other Person (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of such Person and any gain or loss realized upon the sale or other disposition of any Capital Stock of any Person which is not sold or otherwise disposed of in the ordinary course of business;

(iii) extraordinary gains or losses;

(iv) any gain (or loss) from foreign exchange translation or change in net monetary position;

(v) all other non-cash charges of such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period);

(vi) the cumulative effect of a change in accounting principles; and

(vii) deferred income taxes.

Notwithstanding the foregoing, for the purposes of the covenant described under “—Certain Covenants—Limitation on Restricted Payments” only, there shall be excluded from Consolidated Net Income any repurchases, repayments or redemptions of Investments, proceeds realized on the sale of Investments or return of capital to the Issuer or a Restricted Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or returns increase the amount of Restricted Payments permitted under such covenant pursuant to clause (3)(z) of the first paragraph of such covenant.

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“Consolidated Net Tangible Assets” of any Person means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (a) all current liabilities and (b) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense (to the extent included in said aggregate amount of assets) and other like intangibles, as shown on the balance sheet of such Person for the most recently ended fiscal quarter for which financial statements are available, determined on a consolidated basis in accordance with IFRS. Consolidated Net Tangible Assets shall be determined as of the time of the occurrence of the event(s) giving rise to the requirement to determine Consolidated Net Tangible Assets and after giving effect to such event(s).

“Consolidated Revenues” means, for any period, revenues of a Person and its Subsidiaries (Restricted Subsidiaries in the case of the Issuer), determined on a consolidated basis in accordance with IFRS.

“Consolidated Total Indebtedness” means, with respect to a Person as of any date of determination, an amount equal to the aggregate amount (without duplication) of all Indebtedness of such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) outstanding at such time.

“Covenant Defeasance” has the meaning set forth under “—Defeasance.”

“Credit Agreements” means, collectively (i) the Ps.200.0 million revolving credit agreement between Banco Santander, S.A. and Posadas and (ii) the loan agreement among Inmobiliaria del Sudeste, S.A. de C.V., Palace Holding, S.A. de C.V. and Promotora Inmobiliaria Hotelera, S.A. de C.V. (as successor to Inmobiliaria Hotelera Posadas, S.A. de C.V.) dated as of December 10, 2003.

“Credit Facilities” means one or more debt facilities (which may be outstanding at the same time and including, without limitation, the Credit Agreements) providing for revolving credit loans, term loans or letters of credit and, in each case, as such agreements may be amended, refinanced or otherwise restructured, in whole or in part from time to time with respect to all or any portion of the Indebtedness under such agreement or agreements or any successor or replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.

“Currency Agreements” mean any spot or forward foreign exchange agreements and currency swap, currency option or other similar financial agreements or arrangements entered into by Posadas or any of its Subsidiaries.

“Debt to EBITDA Ratio” means, with respect to any Person as of any date of determination, the ratio of the aggregate amount of Consolidated Total Indebtedness for such Person as of such date to Consolidated EBITDA for such Person for the Test Period; provided that, for purposes of this definition, Consolidated Total Indebtedness and Consolidated EBITDA shall be calculated after giving effect on a pro forma basis for such Test Period to:

(i) the incurrence of any Indebtedness by such Person or any of its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) or the issuance of any Preferred Stock by any such Subsidiary (Restricted Subsidiary in the case of the Issuer) (and the application of the proceeds thereof) and any repayment of other Indebtedness by such Person or any of its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) or redemption of other Preferred Stock by any such Subsidiary (Restricted Subsidiary in the case of the Issuer) (and the application of the proceeds therefrom) (other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to any revolving credit arrangement) occurring during the applicable Test Period for which Consolidated EBITDA or Consolidated Total Indebtedness is being calculated or at any time subsequent to the last day of such Test Period and on or prior to the date of determination, as if such incurrence, issuance, repayment, or redemption, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Test Period (except that, in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be computed based on (i) the average daily balance of such Indebtedness during such quarter or such shorter period for which such facility was outstanding or (ii) if such facility

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was created after the end of such quarter, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of calculation);

(v) the payment of any dividend or distribution permitted by clauses (7) or (8) of the second paragraph of the covenant described under “—Limitation on Restricted Payments” occurring during the applicable Test Period for which Consolidated EBITDA or Consolidated Total Indebtedness is being calculated or at any time subsequent to the last day of such Test Period and on or prior to the date of determination, as if such payment occurred on the first day of the Test Period.

“Default” means any event that is, or after the giving of notice or passage of time or both would be, an Event of Default.

“Defeased Covenants” has the meaning set forth under “—Defeasance.”

“Defeased Events of Default” has the meaning set forth under “—Defeasance.”

“Designation” has the meaning set forth under “—Certain Covenants—Limitation on Designations of Unrestricted Subsidiaries.”

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the final Maturity of the Notes; provided, however, that only the amount of such Capital Stock that matures or is redeemable prior to the maturity of the Notes shall be deemed to be Disqualified Stock.

“Equity Offering” means a public or private offer and sale of Capital Stock of the Issuer other than to a Subsidiary.

“Event of Default” means the occurrence of any of the events set forth under “Events of Default.”

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“Exchange Act” means the United States Securities Exchange Act of 1934 (or any successor statute), as amended and the rules and regulations of the Commission promulgated thereunder.

“Fair Market Value” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors (whose determination shall be conclusive) and evidenced by a resolution of the Board of Directors.

“Fitch” means Fitch Ratings Ltd. and its successors.

“guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term “guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “guarantee” used as a verb has a corresponding meaning.

“Guarantees” mean the joint and several guarantees by the Guarantors and the Subsequent Guarantors of Posadas’ obligations under the Notes and the Indenture for the benefit of the Holders and the Trustee.

“Guarantor” means each Person that has executed a Guarantee of the Notes on the Closing Date and any Subsequent Guarantor.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Commodity Agreement or Currency Agreement.

“Holder” means any registered holder, from time to time, of any Note.

“IFRS” means International Financial Reporting Standards, as issued by the International Accounting Standards Board, that are in effect as of the Issue Date (i.e., without giving effect to any amendment, modification or change to such International Financial Reporting Standards after the Issue Date).

“Incur” means, with respect to any Indebtedness, to incur, create, issue, assume, guarantee, acquire or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness or other obligations or the recording, as required pursuant to IFRS or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person (and “Incurrence,” “Incurred” and “Incurring” shall have meanings correlative to the foregoing); provided, however, Indebtedness or Capital Stock of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition of assets or otherwise) will be deemed to be incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary whether or not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary; provided, further, however, that a change in IFRS that results in an obligation of such Person that exists at such time becoming Indebtedness will not be deemed an Incurrence of such Indebtedness.

“Indebtedness” means, with respect to any Person at any date of determination (without duplication), (i) all obligations of such Person, in respect of (a) borrowed money; (b) the outstanding principal amount of any bonds, notes, loan stock, commercial paper, acceptance credits, debentures, and bills or promissory notes drawn, accepted, endorsed, or issued by such Person (including, in the case of Posadas and the Guarantors, the Notes and the Guarantees, respectively); (c) any credit to such Person from, or other obligation of such Person to, a supplier of goods or services under any installment

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purchase or similar arrangement in respect of goods or services (except trade accounts payable within 180 days that were Incurred in the ordinary course of business); (d) non-contingent obligations of such Person to reimburse any other Person in respect of amounts paid under a letter of credit or similar instrument (excluding any such letter of credit or similar instrument issued for the benefit of such Person in respect of trade accounts in the ordinary course of business); (e) Capitalized Lease Obligations and (f) any fixed or minimum premium payable on a redemption or replacement of any of the foregoing obligations; (ii) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness shall be the lesser of (A) the Fair Market Value of such asset at such date of determination and (B) the amount of such Indebtedness; (iii) all Indebtedness of other Persons guaranteed by such Person to the extent such indebtedness is guaranteed by such Person; (iv) to the extent not otherwise included in this definition, the net payment obligations of such Person and its Subsidiaries under Currency Agreements, Commodity Agreements and Interest Rate Agreements; (v) all liabilities of such Person (actual or contingent) under any conditional sale or transfer with recourse or obligation to repurchase, including, without limitation, by way of discount or factoring of book debts or receivables; (vi) to the extent not otherwise included in this definition, the Receivables Transaction Amount outstanding relating to any Receivables Transaction; and (vii) all Disqualified Capital Stock of such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued and unpaid dividends, if any. The amount of Indebtedness of any Person at any date shall be (without duplication) the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation (unless the underlying contingency has not occurred and the occurrence of the underlying contingency is entirely within the control of Posadas or its Subsidiaries); provided that the amount outstanding at any time of any Indebtedness issued with original issue discount is the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time as determined in accordance with IFRS.

“Indenture” has the meaning set forth in the first paragraph under “Description of the Notes.”

“Independent Financial Advisor” means an investment banking firm, accounting firm or appraisal firm of national standing; provided that such firm is not an Affiliate of the Issuer.

“Interest Rate Agreements” mean any interest rate protection agreements and other types of interest rate hedging agreements (including, without limitation, interest rate swaps, caps, floors, collars and similar arrangements) entered into by Posadas or any of its Subsidiaries.

“Investment” means any direct or indirect advance (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of any Person or its Subsidiaries), loan, or other extension of credit or equity capital contribution to (by means of my transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, bonds, notes, debentures or other similar instruments issued by, any other Person. “Investment” shall exclude (i) extensions of trade credit by the Issuer and the Restricted Subsidiaries on commercials reasonable terms in accordance with normal trade practices of the Issuer or such Restricted Subsidiaries, as the case may be, (ii) Hedging Obligations entered into in the ordinary course of business and in compliance with the Indenture, (iii) endorsements of negotiable instruments and documents in the ordinary course of business and (iv) an acquisition of assets, Capital Stock or other securities by Posadas for consideration exclusively consisting of Capital Stock of Posadas. If the Issuer or any Restricted Subsidiary sells or otherwise disposes of any Capital Stock of any Restricted Subsidiary (the “Referent Subsidiary”) such that, after giving effect to any such sale or disposition, the Referent Subsidiary shall cease to be a Restricted Subsidiary, the Issuer shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Capital Stock of the Referent Subsidiary not sold or disposed of. Any Designation of a Restricted Subsidiary as an Unrestricted Subsidiary shall be deemed to be an Investment by the Issuer in an amount equal to the Fair Market Value of such Subsidiary on the date of such Designation, provided that the Designation of a Restricted Subsidiary as an Unrestricted Subsidiary as permitted by the second

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paragraph of the covenant described under “—Limitation on Designations of Unrestricted Subsidiaries” shall not be deemed to be an Investment by the Issuer.

“Investment Grade Ratings” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating category of Moody’s); a rating of BBB- or better by S&P (or its equivalent under any successor rating category of S&P); a rating of BBB- or better by Fitch (or its equivalent under any successor rating category of Fitch); and a rating equal to or higher than the equivalent investment grade credit rating from any replacement Rating Agency selected by the Issuer.

“Issue Date” means the first date of issuance of Notes under the Indenture, which will be June 30, 2015.

“Legal Defeasance” has the meaning set forth under “—Defeasance.”

“Lien” means, with respect to any assets or property of any kind, any mortgage or deed of trust, pledge, security interest, hypothecation, collateral, assignment, encumbrance, lien (statutory or otherwise) or charge of any kind or nature whatsoever on or with respect to such property or assets (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof, any sale with recourse against the seller or any Affiliate of the seller, or any agreement to give any security interest).

“Mexican Restructuring” means any case or other proceeding against the Issuer or any Subsidiary with respect to it or its debts under any bankruptcy, concurso mercantil, quiebra, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, conciliador, liquidator, custodian or other similar official of it or any substantial part of its property.

“Mexican Wholly Owned Restricted Subsidiary” means a Wholly Owned Restricted Subsidiary organized, incorporated or formed under the laws of Mexico.

“Moody’s” means Moody’s Investors Service, Inc.

“Net Cash Proceeds” means (a) with respect to any Asset Sale, the cash or readily marketable cash equivalents received (including by way of sale or discounting of a note, installment receivable or other receivable, but excluding any other consideration received in the form of assumption by the acquiror of Indebtedness or other obligations relating to such properties or assets or received in any other noncash form) therefrom by such Person, net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses Incurred and all federal, state, provincial, foreign and local taxes required to be accrued as a liability under IFRS as a consequence of such asset disposition, (ii) all payments made by such Person or its Subsidiaries on any Indebtedness that is secured by such assets in accordance with the terms of any Lien upon or with respect to such assets or that must, by the terms of such Lien, or in order to obtain a necessary consent to such asset disposition, or by applicable law, be repaid out of the proceeds from such asset disposition, and (iii) appropriate amounts to be determined by Posadas or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with IFRS, against any liabilities associated with such Asset Sale and retained by Posadas or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, and (b) with respect to any issuance and sale of Capital Stock by a Person, the proceeds to such Person of such issuance and sale in the form of cash or readily marketable cash equivalents, net, in each case, of any attorney’s fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions, and brokerage and other fees incurred in connection with such issuance and sale and net of taxes paid or payable by such Person as a result thereof.

“Notes” means the 7.875% Senior Notes due 2022 to be issued by the Issuer.

“Offering” means the offering of U.S.$350 million aggregate principal amount of Notes on the Closing Date.

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“Opinion of Mexican Counsel” means a written opinion of counsel admitted to practice in Mexico and of recognized standing in Mexico who may be counsel to Posadas and who shall be acceptable to the Trustee; provided that such counsel may rely, as to any matters of U.S. law, on an Opinion of U.S. Counsel.

“Opinion of U.S. Counsel” means a written opinion of counsel admitted to practice in the State of New York and of recognized standing in the United States who may be counsel to Posadas and who shall be acceptable to the Trustee; provided that such counsel may rely, as to any matters of Mexican law, on an Opinion of Mexican Counsel.

“Pari Passu Notes” has the meaning set forth under “—Certain Covenants—Limitation on Asset Sales.”

“Permitted Business” means the business or businesses conducted by the Issuer and its Subsidiaries as of the Issue Date and any business ancillary or complementary thereto.

“Permitted Holders” means (i) any member of Posadas’ Board of Directors on the Closing Date, their respective spouses, ancestors, siblings, descendants (including children or grandchildren by adoption) and the descendants of any of his siblings; (ii) in the event of the incompetence or death of any of the Persons described in clause (i), such Person’s estate, executor, administrator, committee or other personal representative, in each case who at any particular date shall beneficially own or have the right to acquire, directly or indirectly, Equity Interests of Posadas; (iii) any trust created for the benefit of the Persons described in clause (i) or (ii) or any trust for the benefit of any such trust; or (iv) any investment entity a majority of the voting Equity Interests of which are owned by any of the Persons described in clause (i), (ii) or (iii).

“Permitted Indebtedness” has the meaning set forth under “—Certain Covenants—Limitation on Indebtedness.”

“Permitted Investments” means:

(a) Investments by Posadas or any Restricted Subsidiary in any Person that is or will become immediately after such Investment a Wholly Owned Restricted Subsidiary or that will merge or consolidate into Posadas or a Wholly Owned Restricted Subsidiary;

(b) Investments in a Person engaged in a Permitted Business not to exceed the greater of (x) U.S.$50.0 million and (y) 2.5% of Consolidated Net Tangible Assets of the Issuer at any time outstanding;

(d) loans and advances to executive committee members, employees and officers of Posadas and the Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of an aggregate of U.S.$2.0 million at any one time outstanding;

(e) Investments in Currency Agreements, Commodity Agreements and Interest Rate Agreements entered into in the ordinary course of Posadas’ or a Restricted Subsidiary’s businesses to protect Posadas or its Subsidiaries from fluctuations in interest rates, exchange rates and commodity prices and not for speculative purposes;

(f) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;

(g) Investments made by Posadas or a Restricted Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with the covenant described under “— Certain Covenants—Asset Sales”;

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(h) Investments by Posadas and its Restricted Subsidiaries in Unrestricted Subsidiaries in an aggregate principal amount, measured based on the amount invested by Posadas and its Restricted Subsidiaries, not to exceed the greater of (x) U.S.$75.0 million and (y) 7.5% of Consolidated Net Tangible Assets of Posadas;

(i) Investments in a Receivables Entity in connection with a Receivables Transaction; provided that such Investment in any such Person is in the form of any equity interest or interests in receivables and related assets generated by the Issuer or any Restricted Subsidiary and transferred to such Person in connection with a Receivables Transaction; and

(j) Investments by the Issuer or its Restricted Subsidiaries in connection with the sale of vacation club memberships, full or fractional ownership or full ownership of vacation homes, land, amenities and other improvements in the ordinary course of the Vacation Club Business.

“Permitted Liens” means:

(a) Liens existing on the Closing Date and any extension, replacement or renewal thereof;

(b) Liens securing Indebtedness incurred under clauses (a)(ii) and (a)(xi) of the covenant described under “—Certain Covenants—Limitation on Indebtedness”;

(c) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to Posadas or a Wholly Owned Subsidiary;

(d) Liens granted after the Closing Date on any assets or Capital Stock of Posadas or its Subsidiaries created in favor of the Holders;

(e) Liens securing Refinancing Indebtedness which is Incurred to refinance secured Indebtedness which is permitted to be Incurred or to exist under the Indenture; provided that such Liens do not extend to or cover any property or assets of Posadas or any Subsidiary other than the property or assets securing the Indebtedness being Refinanced;

(f) purchase money Liens securing Purchase Money Indebtedness or Capitalized Lease Obligations Incurred to finance the acquisition or leasing of property of the Issuer or a Restricted Subsidiary used in a Permitted Business; provided that: (i) the related Purchase Money Indebtedness does not exceed the cost of such property together with the related costs of construction or improvement of such property and shall not be secured by any property of the Issuer or any Restricted Subsidiary other than the property so acquired, and (ii) the Lien securing such Indebtedness will be created within 365 days of such acquisition;

(g) in addition to Liens securing Indebtedness pursuant to paragraphs (a) through (f) above, Liens securing Indebtedness in an amount not to exceed 5% of Consolidated Net Tangible Assets of Posadas;

(h) Liens for taxes, assessments, governmental charges or claims that are being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with IFRS shall have been made;

(i) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with IFRS shall have been made;

(j) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security;

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(k) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligations, bankers’ acceptances, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of a similar nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money);

(l) easements, rights-of-way, municipal and zoning ordinances and similar charges, encumbrances, title defects or other irregularities that do not materially interfere with the ordinary course of business of Posadas and the Subsidiaries taken as a whole;

(m) leases or subleases granted to others that do not materially interfere with the ordinary course of business of Posadas and the Subsidiaries, taken as a whole;

(n) Liens encumbering property or assets under construction arising from progress or partial payments by a customer of Posadas or the Subsidiaries relating to such property or assets;

(o) Liens on property of, or on shares of Capital Stock or Indebtedness of any Person existing at the time such Person becomes, or becomes a part of, any Restricted Subsidiary; provided that such Liens do not extend to or cover any property or assets of Posadas or any Restricted Subsidiary other than the property or assets acquired;

(p) Liens in favor of Posadas or any Guarantor;

(q) Liens arising from the rendering of a final judgment or order against Posadas or any Subsidiary that does not give rise to an Event of Default;

(r) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof;

(s) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(t) Liens on any assets acquired by Posadas or any Restricted Subsidiary after the Closing Date, which Liens were in existence prior to the acquisition of such assets (to the extent that such Liens were not created in contemplation of or in connection with such acquisition); provided that such Liens are limited to the assets so acquired and the proceeds thereof;

(u) Liens arising by virtue of any statutory, regulatory, contractual or warranty requirements of Posadas or any Restricted Subsidiary, including, without limitation, provisions relating to rights of offset and set-off, bankers’ liens or similar rights and remedies;

(v) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of banker’s acceptance issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(w) Liens arising under any Permitted Vacation Club Financing Facilities and Liens in effect on the Closing Date securing Indebtedness permitted under clause (xiii) of the second paragraph of the covenant described under “—Certain Covenants—Limitation on Indebtedness.”

(x) Liens securing any Hedging Obligations so long as the Lien is incurred in the ordinary course of business, and not for speculative purposes and pursuant to customary collateral provisions for Hedging Obligations of such type; and

(y) Liens on accounts receivable or assets related to such accounts receivable incurred in connection with a Receivables Transaction.

“Permitted Vacation Club Financing Facilities” means one or more debt facilities the proceeds of which are used in the Vacation Club Business; provided that such Indebtedness is not:

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(a) an obligation of, or otherwise recourse, directly or indirectly, to the Issuer or any of its Restricted Subsidiaries other than a Vacation Club Business Subsidiary or any Receivables Entity; or

(b) secured by any Lien on any asset of the Issuer or any of its Restricted Subsidiaries, other than by a Lien on (i) properties and assets of the Vacation Club Business, (ii) property and assets to be developed into a Vacation Club Business, and (iii) Receivables Entities and the Capital Stock of a Receivables Entity.

“Person” means any individual, corporation, partnership, limited liability company, trust or other organization or any government or any agency or political subdivision thereof.

“Principal Subsidiary” means, at any date of determination, (a) any Subsidiary of Posadas, that, together with its Subsidiaries, on a consolidated basis, (i) had total assets (exclusive of assets owed to such Subsidiary by Posadas or other Subsidiaries of Posadas) in excess of 5% of Consolidated Assets or (ii) accounted for more than 5% of Consolidated Revenues, in each case determined by reference to the consolidated financial statements of Posadas and its Subsidiaries for the most recently completed fiscal quarter prior to the date of determination and (b) each Guarantor.

“Purchase Money Indebtedness” means Indebtedness Incurred for the purpose of financing all or any part of the purchase price, or other cost of construction or improvement of any property; provided that the aggregate principal amount of such Indebtedness does not exceed the lesser of the Fair Market Value of such property or such purchase price or cost, including any Refinancing Indebtedness that does not increase the aggregate principal amount (or accreted amount, if less) thereof as of the date of the Refinancing.

“Qualified Capital Stock” means any Capital Stock that is not Disqualified Stock.

“Rating Agency” means (1) each of Fitch, Moody’s and S&P; and (2) if any of Fitch, Moody’s or S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Issuer’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act, selected by the Issuer as a replacement agency for Fitch, Moody’s or S&P, as the case may be.

“Receivables Entity” means a Person in which the Issuer or any Restricted Subsidiary makes an Investment and:

(1) to which the Issuer or any Restricted Subsidiary transfers receivables and related assets in connection with a Receivables Transaction;

(2) which engages in no activities other than in connection with the Receivables Transaction;

(3) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which:

(a) is guaranteed by the Issuer or any Restricted Subsidiary (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings);

(b) is recourse to or obligates the Issuer or any Restricted Subsidiary in any way other than pursuant to Standard Securitization Undertakings; or

(c) subjects any property or asset of the Issuer or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;

(4) with which neither the Issuer nor any Restricted Subsidiary has any material contract, agreement, arrangement or understanding (except in connection with a Receivables Transaction) other than on terms no less favorable to the Issuer or such Restricted Subsidiary than those that might be

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obtained at the time from Persons that are not Affiliates of the Issuer, other than fees payable in the ordinary course of business in connection with servicing receivables; and

(5) to which neither the Issuer nor any Restricted Subsidiary has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

“Receivables Transaction” means any securitization, factoring, discounting or similar financing transaction or series of transactions that may be entered into by the Issuer or any of its Restricted Subsidiaries pursuant to which the Issuer or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to any Person (including a Receivables Entity), or may grant a security interest in, any receivables (whether now existing or arising in the future) of the Issuer or any of its Restricted Subsidiaries, and any assets related thereto, including all collateral, securing such receivables, all contracts and all guarantees or other obligations in respect of such receivables, the proceeds of such receivables and other assets which are customarily transferred, or in respect of which security interests are customarily granted, in connection with securitization, factoring or discounting involving receivables.

“Receivables Transaction Amount” means the amount of obligations outstanding under the legal documents entered into as part of a Receivables Transaction on any date of determination that would be characterized as principal if such Receivables Transaction were structured as a secured lending transaction rather than a purchase.

“Reference Date” has the meaning set forth under “—Certain Covenants—Limitation on Restricted Payments.”

“Referent Subsidiary” has the meaning set forth in the definition of Investment.

“Refinance” means in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” has the meaning set forth in the covenant described under “—Certain Covenants—Limitation on Indebtedness.”

“Restricted Payment” has the meaning set forth under “—Certain Covenants—Limitation on Restricted Payments.”

“Restricted Subsidiary” means any Subsidiary of Posadas that has not been designated by the Board of Directors of Posadas, by a Board Resolution delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in compliance with the covenant described under “—Certain Covenants—Limitation on Designations of Unrestricted Subsidiaries.”

“Revocation” as the meaning set forth under “—Certain Covenants—Limitation on Designations of Unrestricted Subsidiaries.”

“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc.

“Sale and Leaseback Transaction” means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to Posadas or a Restricted Subsidiary of any property, whether owned by Posadas or any Restricted Subsidiary on the Closing Date or later acquired, which has been or is to be sold or transferred by Posadas or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced on the security of such property.

“Senior Indebtedness” means all indebtedness of Posadas and the Guarantors ranking senior to, or pari passu with, the Notes.

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“Service Subsidiaries” means Subsidiaries of Posadas which do not own, lease as lessee or manage hotels and which are operated principally for the purpose of providing payroll, procurement, advertising or other similar support services for Posadas and its Subsidiaries.

“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Issuer or any Restricted Subsidiary which are reasonably customary in securitization of receivables transactions.

“Stated Maturity” means, (i) with respect to any debt security, the date specified in such debt security as the fixed date on which the final installment of principal of such debt security is due and payable and (ii) with respect to any scheduled installment of principal of, or interest on, any debt security, the date specified in such debt security as the fixed date on which such installment is due and payable.

“Subsequent Guarantor” means any Restricted Subsidiary that after the Closing Date has pursuant to a supplemental indenture executed a direct, unconditional and irrevocable guarantee of Posadas’ obligations under the Notes and the Indenture on the terms set forth in the Indenture.

“Subsidiary” means, with respect to any Person, any corporation, association or other business entity (i) of which Voting Stock representing more than 50% of the total voting power of the outstanding Voting Stock is owned, directly or indirectly, by such Person or (ii) for which such Person may nominate or appoint more than 50% of the members of the board of directors or persons performing similar functions for such entity.

“Successor” has the meaning set forth under “—Merger, Consolidation and Sale of Assets.”

“Temporary Cash Investments” means any of the following:

(1) direct obligations of the United States of America or any agency thereof or obligations fully and unconditionally guaranteed by the United States of America or any agency thereof, in each case, maturing within 365 days of the date of acquisition;

(2) time deposit accounts, bank promissory notes, certificates of deposit and money market deposits maturing within 365 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of U.S.$200.0 million, or the foreign currency equivalent thereof, and has outstanding debt which is rated “A,” or such similar equivalent rating, or higher by S&P or Moody’s or any money market fund sponsored by a registered broker dealer or mutual fund distributor;

(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above or clause (6) below entered into with a bank or trust company meeting the qualifications described in clause (2) above or clause (9) below;

(4) commercial paper maturing not more than 90 days after the date of acquisition, issued by a corporation, other than an Affiliate of Posadas, organized and in existence under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of “P-1” or higher according to Moody’s or “A-1” or higher according to S&P;

(5) securities with maturities of six months or less from the date of acquisition issued or fully and unconditionally guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A” by S&P or Moody’s;

(6) Certificados de la Tesorería de la Federación (Cetes) or Bonos de Desarrollo del Gobierno Federal (Bondes) issued by the Mexican government and maturing not more than 365 days after the acquisition thereof;

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(7) Investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (1) through (6) above and (9) below;

(8) demand deposit accounts with U.S. banks or Mexican banks specified in clause (9) of this definition maintained in the ordinary course of business; and

(9) certificates of deposit, bank promissory notes and bankers’ acceptances denominated in pesos, maturing not more than 365 days after the acquisition thereof and issued or guaranteed by any one of the four largest banks, based on assets as of the immediately preceding December 31, organized under the laws of Mexico and which are not under intervention or controlled by the Instituto para la Protección al Ahorro Bancario or any successor thereto or any banking subsidiary of a foreign bank which has capital, surplus and undivided profits aggregating in excess of U.S.$200.0 million, or the foreign currency equivalent thereof, and has outstanding debt which is rated “A,” or such similar equivalent rating, or higher by S&P or Moody’s.

“Test Period” has the meaning set forth in the definition of Consolidated Interest Coverage Ratio.

“Trustee” has the meaning set forth in the first paragraph under “Description of the Notes.”

“Unrestricted Subsidiary” of Posadas, means, initially Fundación Posadas, A.C., its successors and Subsidiaries, and

(1) any Subsidiary of Posadas that at the time of determination shall be or continue to be designated as such pursuant to and in compliance with the covenant described under “—Certain Covenants—Limitation on Designations of Unrestricted Subsidiaries”; and

(2) any Subsidiary of an Unrestricted Subsidiary.

“Vacation Club Business” means the vacation ownership business of Posadas and its Subsidiaries described in this offering memorandum, and any related business involving the sale and operation of membership interests, time share right of use, or full or fractional ownership interests.

“Voting Stock” means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.

“Wholly Owned” means, with respect to any Subsidiary of any Person, such Subsidiary if all of the outstanding Capital Stock in such Subsidiary (other than any shares required that the relevant company has two shareholders at all times as mandated by applicable law) is owned directly or indirectly by such Person or one or more Wholly Owned Subsidiaries of such Person.

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BOOK-ENTRY; DELIVERY AND FORM The Notes are being offered and sold in connection with the initial offering thereof solely to “qualified institutional buyers,” as defined in Rule 144A under the Securities Act (“QIBs”), pursuant to Rule 144A and in offshore transactions to persons other than “U.S. persons,” as defined in Regulation S under the Securities Act (“Non-U.S. Persons”), in reliance on Regulation S. Following the initial offering of the Notes, the Notes may be sold to QIBs pursuant to Rule 144A, Non-U.S. Persons in reliance on Regulation S and pursuant to other exemptions from, or in transactions not subject to, the registration requirements of the Securities Act, as described under “Transfer Restrictions.” The Global Notes Rule 144A Global Notes. Notes offered and sold to QIBs pursuant to Rule 144A will be issued in the form of one or more registered notes in global form, without interest coupons (collectively, the “Rule 144A Global Note”). The Rule 144A Global Note will be deposited on the issue date with, or on behalf of, The Depository Trust Company (“DTC”) and registered in the name of a nominee of DTC, or will remain in the custody of the trustee pursuant to the FAST Balance Certificate Agreement between DTC and the trustee. Interests in the Rule 144A Global Note will be available for purchase only by QIBs. Regulation S Global Notes. Notes offered and sold in offshore transactions to Non-U.S. Persons in reliance on Regulation S will initially be issued in the form of one or more registered notes in global form, without interest coupons (collectively, the “Regulation S Global Note”). Each Regulation S Global Note will be deposited upon issuance with, or on behalf of, a custodian for DTC in the manner described in the preceding paragraph. Except as set forth below, the Rule 144A Global Note and the Regulation S Global Note (collectively, the “Global Notes”) may be transferred, in whole and not in part, solely to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for notes in physical, certificated form (“Certificated Notes”) except in the limited circumstances described below. The Notes will be subject to certain restrictions on transfer and will bear a restrictive legend as set forth under “Transfer Restrictions.” All interests in the Global Notes may be subject to the procedures and requirements of DTC. Any interests held through the Euroclear System (“Euroclear”) or Clearstream Banking S.A. of Luxembourg (“Clearstream, Luxembourg”) may also be subject to the procedures and requirements of such systems. Exchanges Among the Global Notes Prior to the expiration of the later of the 40th day after the later of the commencement of the offering of the Notes and the issue date (such period through and including such 40th day, the “Distribution Compliance Period”), transfers by an owner of a beneficial interest in the Regulation S Global Note to a transferee who takes delivery of such interest through the Rule 144A Global Note may be made only in accordance with applicable procedures and upon receipt by the trustee of a written certification from the transferor of the beneficial interest in the form provided in the indenture to the effect that such transfer is being made to a person whom the transferor reasonably believes is (i) a QIB within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or (ii) pursuant to another exemption from the registration requirements under the Securities Act and, in either case, in accordance with all applicable securities laws of the United States or any other jurisdiction. Such written certification will no longer be required after the expiration of the Distribution Compliance Record. Transfers by an owner of a beneficial interest in the Rule 144A Global Note to a transferee who takes delivery of such interest through the Regulation S Global Note, whether before or after the expiration of the Distribution Compliance Period, will be made only upon receipt by the trustee of a certification from the transferor to the effect that such transfer is being made in accordance with Regulation S under the Securities Act. Any beneficial interest in one of the Global Notes that is transferred to a person who takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be

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subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. Certain Book-Entry Procedures for the Global Notes The descriptions of the operations and procedures of DTC, Euroclear and Clearstream, Luxembourg set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to change by them from time to time. Neither we nor the initial purchasers take any responsibility for these operations or procedures, and investors are urged to contact the relevant system or its participants directly to discuss these matters. DTC has advised us that it is: • a limited purpose trust company organized under the laws of the State of New York; • a “banking organization” within the meaning of the New York Banking Law; • a member of the Federal Reserve System; • a “clearing corporation” within the meaning of the Uniform Commercial Code, as amended; and • a “clearing agency” registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participants (collectively, the “Participants”) and facilitates the clearance and settlement of securities transactions between Participants through electronic book-entry changes to the accounts of its Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC’s Participants include securities brokers and dealers (including the initial purchasers), banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the “Indirect Participants”) that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Investors who are not Participants may beneficially own securities held by or on behalf of DTC only through Participants or Indirect Participants. We expect that pursuant to procedures established by DTC (1) upon deposit of each Global Note, DTC will credit the accounts of Participants designated by the initial purchasers with an interest in the Global Note and (2) ownership of the Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of Participants) and the records of Participants and the Indirect Participants (with respect to the interests of persons other than Participants). The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the Notes represented by a Global Note to such persons may be limited. In addition, because DTC can act only on behalf of its Participants, who in turn act on behalf of persons who hold interests through Participants, the ability of a person having an interest in notes represented by a Global Note to pledge or transfer such interest to persons or entities that do not participate in DTC’s system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest. So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the notes represented by the Global Note for all purposes under the indenture. Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of certificated notes, and will not be considered the owners or holders thereof under the indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee thereunder. Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if such holder is not a Participant or an Indirect Participant, on the procedures of the Participant through which such holder owns its interest, to exercise any rights of a holder of notes under the indenture or such Global Note. We

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understand that under existing industry practice, in the event that we request any action of holders of Notes, or a holder that is an owner of a beneficial interest in a Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take such action and the Participants would authorize holders owning through such Participants to take such action or would otherwise act upon the instruction of such holders. Neither we nor the trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such Notes. Payments with respect to the principal of, and premium, if any, and interest on (including additional interest, if any), any notes represented by a Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the Global Note representing such notes under the indenture. Under the terms of the indenture, we and the trustee may treat the persons in whose names the notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither we nor the trustee has or will have any responsibility or liability for the payment of such amounts to owners of beneficial interests in a Global Note (including principal, premium, if any, and interest, including additional interest, if any). Payments by the Participants and the Indirect Participants to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice and will be the responsibility of the Participants or the Indirect Participants and DTC. Transfers between Participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds. Transfers between participants in Euroclear or Clearstream, Luxembourg will be effected in the ordinary way in accordance with their respective rules and operating procedures. Subject to compliance with the transfer restrictions applicable to the Notes, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream, Luxembourg participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, Luxembourg, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, Luxembourg, as the case may be, by the counterparts in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, Luxembourg, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Notes in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream, Luxembourg participants may not deliver instructions directly to the depositories for Euroclear or Clearstream, Luxembourg. Because of time zone differences, the securities account of a Euroclear or Clearstream, Luxembourg participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream, Luxembourg participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream, Luxembourg) immediately following the settlement date of DTC. Cash received in Euroclear or Clearstream, Luxembourg as a result of sales of interests in the Global Notes by or through a Euroclear or Clearstream, Luxembourg participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream, Luxembourg cash account only as of the business day for Euroclear or Clearstream, Luxembourg following DTC’s settlement date. Although DTC, Euroclear and Clearstream, Luxembourg have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, Luxembourg, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither we nor the trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream, Luxembourg or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

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Certificated Notes If: • we notify the trustee in writing that DTC is no longer willing or able to act as a depositary or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of such notice or cessation; or • an event of default has occurred and is continuing and the registrar has received a request from DTC to issue certificated notes, then, upon surrender by DTC of the Global Notes, certificated notes will be issued to each person that DTC identifies as the beneficial owner of the notes represented by the Global Notes. Upon any such issuance, the trustee is required to register such certificated notes in the name of such person or persons (or the nominee of any thereof) and cause the same to be delivered thereto. Neither we nor the trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related Notes and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the Notes to be issued). In the event that certificated notes are issued, so long as the Notes are listed on the Luxembourg Stock Exchange, the Issuer will notify the Luxembourg Stock Exchange and the holders of the Notes via a notice to be published in the Luxemburger Wort which shall contain material information in regards to, but not limited to, the time and means of transfer or exchange of the Notes for certificated notes.

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TAXATION

The following summary is based on the federal tax laws of Mexico and the United States as in effect on the date of this offering memorandum, and is subject to changes in Mexican or U.S. law, including changes that could have retroactive effect. The following summary does not take into account or discuss the tax laws of any country other than the federal laws of Mexico or the United States and does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase the Notes. Prospective purchasers in all jurisdictions are advised to consult their own tax advisors as to Mexican, U.S. or other tax consequences of the purchase, ownership and holding, and disposition of the Notes. Holders that are not U.S. Holders (as defined below) should consult their tax advisors with respect to whether they reside in a country that has entered into a tax treaty with Mexico which is effective, and, if so, the conditions and requirements for obtaining benefits under any such tax treaty, if any such benefits shall arise. General Mexican Tax Considerations The following is a summary of the main Mexican federal income tax consequences for non- Mexican tax residents in connection with the purchase, ownership and holding or disposition of Notes, and is based upon the federal tax laws and regulations of Mexico as in effect on the date of this offering memorandum, all of which are subject to change. This summary does not purport to be a comprehensive description of all Mexican tax considerations that may be relevant to a decision to purchase, hold or dispose of the Notes. This summary deals only with Mexican federal tax laws as applicable to non-Mexican tax resident Holders of Notes that do not have a permanent establishment in Mexico. This summary does not address any tax consequences under the laws of any state or municipality of Mexico or under treaties to avoid double taxation entered into by Mexico with other countries; or any tax consequences under the laws of the United States, Luxembourg or any other taxing jurisdiction. This summary has not been reviewed or approved by, and no ruling in respect of the accuracy of this summary has been, or will be sought or has been issued by the Ministry of Finance and Public Credit or the Servicio de Administración Tributaria (Mexican Tax Administration Service), or SAT, or any other Mexican taxing authority. Consequently, no assurance can be given that any such authority will not assert, or that a court will not sustain, a position contrary to that summarized below. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE MEXICAN AND NON-MEXICAN CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND HOLDING, AND DISPOSITION OF NOTES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY FOREIGN (NON-MEXICAN), STATE, OR MUNICIPAL TAX OR THE EFFECT OF ANY TAX TREATIES EXECUTED BY MEXICO. Mexican Federal Tax Considerations An individual is a resident of Mexico for tax purposes, and hence the content of this summary will not be applicable to such person, if such person has established his or her home in Mexico. When such person has a home in another country, the individual will be considered a resident of Mexico for tax purposes if his/her center of vital interests is located in Mexico. Under Mexican law, an individual’s center of vital interests is located in Mexico if, among other things, (i) more than 50% of such individual’s total income, in any calendar year, derives from Mexican sources, or (ii) such individual’s principal center of professional activities is located in Mexico. Mexican nationals who filed a change of tax residence to a country or jurisdiction that does not have a comprehensive exchange of information agreement with Mexico and where his/her income is subject to a preferential tax regime as defined by the Mexican law, will be considered Mexican residents for tax purposes during the year of the filing of the notice of such residence change and during the following three years. Mexican nationals that are employed by the Mexican government are deemed residents of Mexico, even if his/her center of vital interests is located outside of Mexico. Unless otherwise proven, Mexican nationals are deemed residents of Mexico for tax purposes. A legal entity is a resident of Mexico for tax purposes, and hence the content of this summary will not be applicable to such entity, if it maintains the principal administration of its business or the effective

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location of its management in Mexico. Under applicable regulations, the principal administration of a business or the effective location of management is deemed to exist in Mexico if the individual or individuals having the authority to decide or execute the decisions of control, management, operation or administration are in Mexico. Furthermore, a permanent establishment in Mexico, for tax purposes, of a foreign person will be required to pay taxes in Mexico in accordance with applicable tax laws on all income attributable to such permanent establishment. Mexican tax residents, both individuals and legal entities, are taxed on a worldwide income basis, regardless of the location of its source. The following is a general summary of the principal Mexican federal income tax consequences of the purchase, ownership and holding, and disposition of the Notes by holders that are not residents of Mexico for tax purposes and that do not hold the Notes through a permanent establishment for tax purposes in Mexico to which the holding of the Notes is attributable. Taxation of Interest Payment of Interest. Pursuant to the Mexican Income Tax Law, payments of interest (including original issue discount and premiums, which are deemed interest under the Mexican income tax law) on the Notes made by us or the guarantors, to a non-resident of Mexico holding the Notes will generally be subject to Mexican withholding taxes at a rate of 4.9%, if, as expected, the following requirements are satisfied: • a notice has been filed with the CNBV describing the main characteristics of the Notes offering, including that the Notes were the subject of an offering outside Mexico, as specified in the second paragraph of article 7 of the Mexican Securities Market Law; • the Notes, as expected, are placed in an offering outside of Mexico, through banks or brokerage houses, in a country with which Mexico has in force a treaty for the avoidance of double taxation (which currently includes the United States of America and Luxembourg); and • the information requirements specified from time to time by SAT under general rules, including, after completion of the offering of the Notes, the filing of certain information related to the Notes offering and this offering memorandum, are duly satisfied. If any of the above-mentioned requirements is not met, the Mexican withholding tax applicable to interest payments under the Notes made to non-residents of Mexico, will be imposed at a rate of 10% or higher. In addition, if the effective beneficiaries, whether acting directly or indirectly, severally or jointly, with related parties, receiving more than 5% of the aggregate amount of each interest payment under the Notes are (i) shareholders holding 10% or more of our voting stock, directly or indirectly, or (ii) corporations or other entities having more that 20% of their stock owned directly or indirectly, jointly or severally, by persons related to us, the Mexican withholding tax will be applied at a rate of 35%. As of the date of this offering memorandum, neither the U.S.-Mexico Tax Treaty nor the Luxembourg-Mexico Tax Treaty is expected to have any effect on the Mexican tax consequences described in this summary, because, as described above, under the Mexican income tax law, we expect to be entitled to withhold taxes in connection with interest payments under the Notes at a 4.9% rate. Payments of interest on the Notes made by us to non-Mexican pension and retirement funds will be exempt from Mexican withholding tax provided that: • such fund is duly incorporated pursuant to the laws of its country of residence and is the beneficial owner of the interest payment; • such income is exempt from taxes in its country of residence; and • such fund provides information to the Mexican Tax Administration Service from time to time in accordance with the general rules issued thereby. Holders or beneficial owners of the Notes may be requested to, subject to specified exceptions and limitations, provide certain information or documentation necessary to enable us to apply the

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appropriate Mexican withholding tax rate on interest payments under the Notes made by us, to such holders or beneficial owners. In the event that the specified information or documentation concerning the holder or beneficial owner, if requested and required, is not timely provided completely or at all, we may withhold Mexican tax from interest payments on the Notes to that non-Mexican holder or beneficial owner at the maximum applicable rate, but our obligation to pay Additional Amounts relating to those withholding taxes will be limited as described under “Description of the Notes—Additional Amounts.” We have agreed, subject to certain limitations and exceptions, to pay additional amounts in respect of the above-mentioned Mexican withholding taxes in connection with interest payments on the Notes. See “Description of the Notes—Additional Amounts.” Payments of Principal. Under existing Mexican law and regulations, payments of principal made by us or any Mexican guarantor in respect of the Notes to a non-resident of Mexico holding the Notes, will not be subject to Mexican withholding or similar taxes. Gains obtained from the Disposition of the Notes. Pursuant to the Mexican Income Tax Law, in certain cases gains realized by a non-Mexican resident from the disposition of Notes may be subject to income tax in Mexico. In this regard, if Notes are transferred by a non-Mexican resident investor to a Mexican resident or to a permanent establishment in Mexico for tax purposes of a non-Mexican resident, gains, if any, would be subject to Mexican withholding tax pursuant to the rules described above in respect of interest payments. The amount of deemed interest income will be determined according to the rules established in the Mexican income tax law. Gains realized by a non-Mexican resident investor from the sale or other disposition of Notes transferred to another non-Mexican resident, would not be subject to Mexican withholding tax, provided that neither transferor nor transferee have a permanent establishment in Mexico for tax purposes. Imputed Interest on the Acquisition of Notes. Under the Mexican Income Tax Law, any discount received by a non-Mexican resident upon purchase of the Notes, if acquired from a Mexican resident or a non-Mexican resident with a permanent establishment in Mexico, is treated as deemed interest income, and therefore, subject to taxes in Mexico. Such interest income is calculated as the difference between the face value (plus accrued interest not yet subject to withholding) and the purchase price of such Notes. The Mexican seller must determine, pay and collect the tax on behalf of the non-resident purchaser within 15 days after the sale. In such case, the applicable income tax rate would be 10%. Notes acquired at a discount by a non-Mexican resident with no permanent establishment in Mexico from another non-Mexican resident with no permanent establishment in Mexico would not be subject to income tax on imputed interest on the acquisition of the Notes. Other Mexican Taxes. Under current Mexican tax laws and regulations, non-Mexican holders of the Notes are not subject to estate, gift, inheritance or similar taxes in connection with the holding or disposition of the Notes, nor will they be liable for Mexican stamp, registration or similar taxes with respect to purchase or holding of the Notes. THE ABOVE SUMMARY IS INTENDED TO OUTLINE CERTAIN MEXICAN FEDERAL TAX LAWS AND REGULATIONS AND IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP OR DISPOSITION OF THE NOTES. PURSUANT TO ARTICLE 89 OF THE MEXICAN TAX CODE, RECIPIENTS OF THIS OFFERING MEMORANDUM ARE HEREBY ADVISED THAT THE INFORMATION CONTAINED HEREIN MAY BE CONTRARY TO THE INTERPRETATION OF THE MEXICAN FISCAL AUTHORITIES. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS. United States Federal Income Taxation General The following is a general summary of certain material U.S. federal income tax consequences of the acquisition, ownership and disposition of Notes to U.S. Holders (as defined below) who hold the Notes as capital assets (within the meaning of the U.S. Internal Revenue Code of 1986, as amended (the “Code”)). It does not purport to be a comprehensive description of all the tax considerations that may be

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relevant to the acquisition, ownership or disposition of the Notes. In particular, it does not discuss special tax considerations that may apply to certain types of taxpayers, including, without limitation, the following: (i) financial institutions; (ii) insurance companies; (iii) dealers or traders in stocks, securities, notional principal contracts or currencies; (iv) tax-exempt entities; (v) real estate investment trusts; (vi) regulated investment companies; (vii) persons that hold the Notes as part of a “hedging” or “conversion” transaction or as a position in a “straddle” or as part of a “synthetic security” or other integrated transaction for U.S. federal income tax purposes; (viii) partnerships, pass-through entities, or persons that hold Notes through partnerships or pass-through entities; (ix) “U.S. Holders” (as defined below) that have a “functional currency” other than the U.S. dollar; and (x) certain U.S. expatriates and former long-term residents of the United States. In addition, this summary does not address the application of the “Medicare contribution tax” nor does it address federal estate and gift tax or alternative minimum tax consequences or the indirect effects on the holders of interests in a holder of Notes. This summary also does not describe any tax consequences arising under the laws of any taxing jurisdiction other than the U.S. federal government. No ruling has been or will be sought from the Internal Revenue Service (the “IRS”) regarding any tax consequences relating to matters discussed herein. Consequently, no assurance can be given that the IRS will not assert, or that a court will not sustain, a position contrary to any of those summarized below. Each investor should consult its own tax advisor with respect to the U.S. federal, state, local and non-U.S. tax consequences of acquiring, holding and disposing of Notes. This summary is based on the Code, U.S. Treasury regulations and judicial and administrative interpretations thereof, in each case as in effect or available on the date hereof. All of the foregoing is subject to change, and any such change may apply retroactively and could affect the tax consequences described below. As used in this section, the term “U.S. Holder” means a beneficial owner of Notes that is for U.S. federal income tax purposes: (i) a citizen or individual resident of the United States; (ii) a corporation created or organized in or under the laws of the United States or any state thereof (including the District of Columbia); (iii) any estate the income of which is subject to U.S. federal income tax regardless of its source; or (iv) any trust if (A) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. If a partnership (or entity treated as such for U.S. federal income tax purposes) holds Notes, the tax treatment of a partner generally will depend upon the status of the partner and upon the activities of the partnership. Partners of partnerships holding Notes should consult their own tax advisors. Interest The Notes are not expected to be, and the remainder of this discussion assumes that they will not be, issued with original issue discount in excess of the statutory de minimis amount. Accordingly, if you are a U.S. Holder, interest paid to you on a Note, including any amounts withheld and any additional amounts, will be includible in your gross income as ordinary interest income in accordance with your method of tax accounting. For U.S. foreign tax credit limitation purposes, interest on the Notes will be treated as foreign source income and such interest generally will constitute passive income. Subject to applicable limitations, you will generally be entitled to a credit against your U.S. federal income tax liability, or alternatively, a deduction in computing your U.S. federal taxable income, for Mexican income taxes withheld. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all income taxes paid or accrued in the taxable year to foreign countries and possessions of the United States. The rules regarding foreign tax credits are complex, and you should consult your own tax advisor concerning the availability and utilization of the foreign tax credit in your particular circumstances.

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Sale, Exchange or Other Taxable Disposition Upon the sale, exchange or other taxable disposition of a Note you will recognize gain or loss equal to the difference, if any, between the amount realized on the sale, exchange or other taxable disposition (other than accrued and unpaid interest, which will be treated as interest as discussed above) and your adjusted tax basis in the Note. Your adjusted tax basis in a Note generally will equal the cost of the Note to you. Any such gain or loss will be capital gain or loss. If your holding period in a Note exceeds one year at the time of the sale, exchange or other taxable disposition, such gain or loss will be long-term capital gain or loss. Long-term capital gains of noncorporate taxpayers are currently subject to reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss realized on the sale, exchange or other taxable disposition of a Note generally will be treated as U.S. source gain or loss. U.S. Backup Withholding and Information Reporting Backup withholding and information reporting requirements apply to certain payments of principal of, and interest on, an obligation and to proceeds of the sale or redemption of an obligation, to certain noncorporate U.S. Holders. Information reporting generally will apply to payments of interest and to proceeds from the sale or redemption of Notes made within the United States to a holder of Notes (other than an exempt recipient, including a corporation, a payee that is not a U.S. person who provides appropriate certification and certain other persons). Backup withholding will be required on payments made within the United States on a Note to a U.S. Holder, other than an exempt recipient, such as a corporation, if the U.S. Holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding requirements. Backup withholding is not an additional tax. Any amounts withheld from a payment to a holder of Notes under the backup withholding rules will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the Internal Revenue Service. The above description is not intended to constitute a complete analysis of all tax consequences relating to the ownership of Notes. Prospective purchasers of Notes should consult their own tax advisors concerning the tax consequences of their particular situations.

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PLAN OF DISTRIBUTION Subject to the terms and conditions in the purchase agreement among us, the guarantors and the initial purchasers, we have agreed to sell to the initial purchasers, and the initial purchasers have agreed to purchase from us, the entire principal amount of the Notes set forth opposite their names below:

Principal Initial Purchaser Amount of Notes

Citigroup Global Markets Inc...... U.S.$116,667,000 J.P. Morgan Securities LLC ...... U.S.$116,667,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated ...... U.S.$116,666,000 Total ...... U.S.$350,000,000

The obligations of the initial purchasers under the purchase agreement, including their agreement to purchase Notes from us, are several and not joint. The purchase agreement provides that the initial purchasers will purchase all the Notes if any of them are purchased. The initial purchasers initially propose to offer the Notes for resale at the issue price that appears on the cover of this offering memorandum. After the initial offering, the initial purchasers may change the offering price and any other selling terms. The initial purchasers may offer and sell Notes through certain of their affiliates. If an initial purchaser defaults, the purchase agreement provides that the purchase commitments of the non-defaulting initial purchasers may be increased or the purchase agreement may be terminated. We will indemnify the initial purchasers and their controlling persons against certain liabilities, including liabilities under the Securities Act, or contribute to payments that the initial purchasers may be required to make in respect of those liabilities. The Notes have not been registered under the Securities Act or the securities laws of any other place. In the purchase agreement, the initial purchaser has agreed that: • The Notes may not be offered or sold within the United States or to U.S. persons except pursuant to an exemption from the registration requirements of the Securities Act or in transactions not subject to those registration requirements. • During the initial distribution of the Notes, it will offer or sell Notes only to qualified institutional buyers in compliance with Rule 144A and outside the United States in compliance with Regulation S. In addition, until 40 days following the commencement of this offering, an offer or sale of Notes within the United States by a dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act unless the dealer makes the offer or sale in compliance with Rule 144A or another exemption from registration under the Securities Act. The Notes are a new issue of securities, and there is currently no established trading market for the Notes. In addition, the Notes are subject to certain restrictions on resale and transfer as described under “Transfer Restrictions”. We have applied to list the Notes on the official list of the Luxembourg Stock Exchange and to trading on the Euro MTF Market. The initial purchasers have advised us that they intend to make a market in the Notes, but they are not obligated to do so. The initial purchasers may discontinue any market making in the Notes at any time in their sole discretion. Accordingly, we cannot assure you that a liquid trading market will develop for the Notes, that you will be able to sell your Notes at a particular time or that the prices that you receive when you sell will be favorable. You should be aware that the laws and practices of certain countries require investors to pay stamp taxes and other charges in connection with purchases of securities. In connection with the offering of the Notes, the initial purchasers may engage in overallotment, stabilizing transactions and syndicate covering transactions. Overallotment involves sales in excess of

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the offering size, which creates a short position for the initial purchasers. Stabilizing transactions involve bids to purchase the Notes in the open market for the purpose of pegging, fixing or maintaining the price of the Notes. Syndicate covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover short positions. Stabilizing transactions and syndicate covering transactions may cause the price of the Notes to be higher than it would otherwise be in the absence of those transactions. If the initial purchasers engage in stabilizing or syndicate covering transactions, they may discontinue them at any time. Certain of the initial purchasers and their affiliates have performed commercial banking, investment banking and advisory services for us and our affiliates from time to time for which they have received compensation (including interest income), customary fees and reimbursement of expenses. The initial purchasers and their affiliates may, from time to time, engage in transactions with and perform services for us and our affiliates in the ordinary course of their business for which they may receive compensation (including interest income), customary fees and reimbursement of expenses and under which they may be entitled to other benefits (including security on our or our affiliates’ assets). A portion of the net proceeds from this offering will be applied to fund the Concurrent Tender Offer, and any initial purchaser or its affiliate holding Existing Notes that chooses to tender will receive proceeds from the offering. Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as dealer managers in connection with the Concurrent Tender Offer. See “Summary—Concurrent Tender Offer” and “Use of Proceeds.” An affiliate of Citigroup Global Markets Inc. administers a trust for a shareholder or group of shareholders that in the aggregate own more than 10% of our capital stock. See “Principal Shareholders.” In addition, in the ordinary course of their business activities, the initial purchasers and their affiliates may hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including banking loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. If any of the initial purchasers or their affiliates has a lending relationship with us, certain of those initial purchasers or their affiliates routinely hedge, and certain other of those initial purchasers or their affiliates may hedge, their credit exposure to us consistent with their customary risk management policies. Typically, these initial purchasers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the Notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the Notes offered hereby. The initial purchasers and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. Sales Outside the United States We are not making an offer to sell, or seeking offers to buy, the Notes in any jurisdiction where the offer and sale is not permitted. You must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell the Notes or possess or distribute this offering memorandum, and you must obtain any consent, approval or permission required for your purchase, offer or sale of the Notes under the laws and regulations in force in any jurisdiction to which you are subject or in which you make such purchases, offers or sales. We will not have any responsibility therefor. Mexico The Notes have not been and will not be registered with the National Securities Registry maintained by the CNBV and may not be offered or sold publicly, or otherwise be the subject of brokerage activities in Mexico, except pursuant to the private placement exemption set forth under article 8 of the Mexican Securities Market Law. European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each initial purchaser has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an

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offer of Notes which are the subject of the offering contemplated by this offering memorandum to the public in that Relevant Member State other than: • to any legal entity which is a qualified investor as defined in the Prospectus Directive; • to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the initial purchasers for any such offer; or • in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Notes shall require the Company or any initial purchaser to publish a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an “offer of Notes to the public” in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU. United Kingdom Each initial purchaser has represented and agreed that in the United Kingdom, this offering memorandum is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act of 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This offering memorandum must not be acted on or relied on in the United Kingdom by persons who are not relevant persons. In the United Kingdom, any investment or investment activity to which this offering memorandum relates is only available to, and will be engaged in with, relevant persons. Hong Kong The Notes may not be offered or sold in Hong Kong by means of any other document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the Notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder. Japan The Notes offered in this offering memorandum have not been registered under the Securities and Exchange Law of Japan, and the Notes have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an exemption from the registration requirements of the Securities and Exchange Law, and (ii) in compliance with any other applicable requirements of Japanese law.

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Singapore This offering memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this offering memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes may not be circulated or distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA. Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: • a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or • a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, • shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the notes pursuant to an offer made under Section 275 of the SFA except: • to an institutional investor (for corporations, under Section 274 of SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than U.S.$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA; • where no consideration is or will be given for the transfer; or • where the transfer is by operation of law. Switzerland This offering memorandum does not constitute an issue prospectus pursuant to Article 652a or Article 1156 of the Swiss Code of Obligations and the Notes will not be listed on the SIX Swiss Exchange. Therefore, this offering memorandum may not comply with the disclosure standards of the listing rules (including any additional listing rules or prospectus schemes) of the SIX Swiss Exchange. Accordingly, the Notes may not be offered to the public in or from Switzerland, but only to a selected and limited circle of investors who do not subscribe to the Notes with a view to distribution. Any such investors will be individually approached by the initial purchasers from time to time. Chile Notice to Prospective Investors in Chile Pursuant to Law No. 18,045 of Chile (the Chilean Securities Market Law) and Rule (Norma de Carácter General) No. 336, dated June 27, 2012, issued by the SVS, the notes may be privately offered in Chile to certain “qualified investors” identified as such by SVS Rule 336 (which in turn are further described in Rule N° 216, dated June 12, 2008, of the SVS). SVS Rule 336 requires the following information to be provided to prospective investors in Chile:

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1. Date of commencement of the offer: June 25, 2015. The offer of the notes is subject to Rule (Norma de Carácter General) No. 336, dated June 27, 2012, issued by the Superintendency of Securities and Insurance of Chile (Superintendencia de Valores y Seguros de Chile or “SVS”). 2. The subject matter of this offer are securities not registered with the Securities Registry (Registro de Valores) of the SVS, nor with the Foreign Securities Registry (Registro de Valores Extranjeros) of the SVS, due to the notes not being subject to the oversight of the SVS. 3. Since the notes are not registered in Chile there is no obligation by the issuer to make publicly available information about the notes in Chile. 4. The notes shall not be subject to public offering in Chile unless registered with the relevant Securities Registry of the SVS. Información a los Inversionistas Chilenos De conformidad con la ley N° 18.045, de mercado de valores y la Norma de Carácter General N° 336 (la “NCG 336”), de 27 de junio de 2012, de la Superintendencia de Valores y Seguros de Chile (la “SVS”), los bonos pueden ser ofrecidos privadamente a ciertos “inversionistas calificados”, a los que se refiere la NCG 336 y que se definen como tales en la Norma de Carácter General N° 216, de 12 de junio de 2008, de la SVS. La siguiente información se proporciona a potenciales inversionistas de conformidad con la NCG 336: 1. La oferta de los bonos comienza el 25 de junio de 2015, y se encuentra acogida a la Norma de Carácter General N° 336, de fecha 27 de junio de 2012, de la SVS. 2. La oferta versa sobre valores no inscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la SVS, por lo que tales valores no están sujetos a la fiscalización de esa Superintendencia. 3. Por tratarse de valores no inscritos en Chile no existe la obligación por parte del emisor de entregar en Chile información pública sobre los mismos. 4. Estos valores no podrán ser objeto de oferta pública en Chile mientras no sean inscritos en el Registro de Valores correspondiente.

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TRANSFER RESTRICTIONS Because the following restrictions will apply with respect to the resale of the Notes, purchasers are advised to consult legal counsel prior to making any offer, resale, pledge or transfer of the Notes. None of the Notes has been registered under the Securities Act or any state securities laws, and they may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Notes are being offered and sold only (A) to “qualified institutional buyers” (as defined in Rule 144A promulgated under the Securities Act, or Rule 144A) (“QIBs”) in compliance with Rule 144A and (B) outside the United States to persons other than U.S. persons (“non-U.S. purchasers,” which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for non-U.S. beneficial owners (other than an estate or trust)) in reliance upon Regulation S under the Securities Act, or Regulation S. As used herein, the terms “United States” and “U.S. person” have the meanings given to them in Regulation S. Each purchaser of Notes will be deemed to have represented and agreed as follows: 1. It is purchasing the Notes for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is either (A) a QIB, and is aware that the sale to it is being made in reliance on Rule 144A or (B) a non-U.S. purchaser that is outside the United States (or a non- U.S. purchaser that is a dealer or other fiduciary as referred to above). 2. It acknowledges that the Notes are being offered in a transaction not involving any public offering in the United States within the meaning of the Securities Act; that the Notes have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as set forth below. 3. It shall not resell or otherwise transfer any of such Notes except (A) to us or any of our subsidiaries, (B) inside the United States to a QIB in a transaction complying with Rule 144A, (C) outside the United States in compliance with Rule 904 under the Securities Act, (D) in accordance with an exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if we so request), or (E) pursuant to an effective registration statement under the Securities Act. 4. It agrees that it will give to each person to whom it transfers the Notes notice of any restrictions on transfer of such Notes. 5. It acknowledges that prior to any proposed transfer of Notes in certificated form or of beneficial interests in a note in global form (a “global note”) (in each case other than pursuant to an effective registration statement) the holder of Notes or the holder of beneficial interests in a global note, as the case may be, may be required to provide certifications and other documentation relating to the manner of such transfer and submit such certifications and other documentation as provided in the indenture. 6. It understands that the Rule 144A notes will bear a legend substantially to the following effect unless otherwise agreed by us: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT EITHER (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO US OR ANY OF OUR SUBSIDIARIES THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (D) IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF WE SO REQUEST), OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION

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STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THIS LEGEND CAN ONLY BE REMOVED AT THE OPTION OF THE ISSUER. 7. It understands that the Regulation S notes will bear a legend substantially to the following effect unless otherwise agreed by us: PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S (“REGULATION S”) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), THIS SECURITY MAY NOT BE REOFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REEGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S) EXCEPT TO A “QUALIFIED INSTITUTIONAL BUYER” IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF THE INDENTURE REFERRED TO HEREIN. 8. It acknowledges that the foregoing restrictions apply to holders of beneficial interests in the Notes, as well as holders of the Notes. 9. It acknowledges that the trustee will not be required to accept for registration of transfer any Notes acquired by it, except upon presentation of evidence satisfactory to us and the trustee that the restrictions set forth herein have been complied with. 10. It acknowledges that we, the initial purchasers and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and agrees that if any of the acknowledgments, representations or agreements deemed to have been made by its purchase of the Notes is no longer accurate, it shall promptly notify us and the initial purchasers. If it is acquiring the Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgments, representations, and agreements on behalf of each account.

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STRATEGIC ADVISORS We have been advised by GBM International, Inc. and Houlihan Lokey Capital, Inc. on certain strategic and liability management matters.

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LEGAL MATTERS Certain legal matters in connection with the offering of the Notes will be passed upon with respect to New York and U.S. law by Curtis, Mallet-Prevost, Colt & Mosle LLP New York, New York, counsel to Posadas, and by Davis Polk & Wardwell LLP, New York, New York, counsel to the initial purchasers, and, with respect to Mexican law, by Curtis-Mallet-Prevost, Colt & Mosle, S.C., Mexico City, Mexico, counsel to Posadas, and by Ritch, Mueller, Heather y Nicolau, S.C., Mexico City, Mexico, counsel to the initial purchasers. Mr. Luis Alfonso Nicolau Gutiérrez, a partner at Ritch, Mueller, Heather y Nicolau, S.C., serves as an independent director of Grupo Posadas, S.A.B. de C.V.

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INDEPENDENT AUDITORS Our consolidated financial statements as of December 31, 2014, 2013 and 2012, and for each of the three years in the period ended December 31, 2014, included herein, were audited by Galaz, Yamazaki, Ruiz Urquiza, S.C., a member firm of Deloitte Touche Tohmatsu Limited, independent auditors, as stated in their report which is included herein.

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GENERAL LISTING INFORMATION 1. The Notes have been accepted for clearance and settlement through DTC, Euroclear and Clearstream. The CUSIP, Common Code and ISIN numbers for the Notes are as follows:

Restricted Global Note Regulation S Global Note CUSIP 400489 AH3 P4983G AQ3 Common Code 125546200 125546641 ISIN US400489AH37 USP4983GAQ30 2. Copies of our audited consolidated annual financial statements at and for the years ended December 31, 2014 and December 31, 2013, our unaudited interim financial statements for the period ended March 31, 2015, our future audited consolidated annual financial statements, and our future unaudited consolidated quarterly financial statements, if any, and the indenture (including forms of notes and guarantees), as well as English-language copies of the articles of association and by-laws (estatutos sociales) of Grupo Posadas, S.A.B. de C.V., will be available free of charge at the offices of the principal paying agent and any other paying agent, including the Luxembourg listing agent. In addition, from and after the date the Notes are admitted to listing with the Official List of the Luxembourg Stock Exchange and so long as it is required by the rules of such exchange, English-language copies of the articles of association and by-laws (estatutos sociales) of the guarantors will be made available, upon request, at the offices of the Luxembourg listing agent. 3. Except as disclosed in this offering memorandum, there has been no material adverse change in our financial position since March 31, 2015, the date of our latest financial statements included in this offering memorandum. 4. Except as disclosed in this offering memorandum, we are not involved in any litigation or arbitration proceedings relating to claims or amounts that are material in the context of this offering, nor so far as we are aware is any such litigation or arbitration threatened. 5. We have applied to list the Notes on the Official List of the Luxembourg Stock Exchange and to trade the Notes on the Euro MTF Market. We will comply with any undertakings assumed or undertaken by us from time to time to the Luxembourg Stock Exchange in connection with the Notes, and we will furnish to them all such information as the rules of the Luxembourg Stock Exchange may require in connection with the listing of the Notes. 6. As required under the Mexican Securities Market Law, we will notify the CNBV of the offering of the Notes outside Mexico. Such notice will be delivered to the CNBV to comply with a legal requirement and for information purposes only, and the delivery to, and the receipt by, the CNBV of such notice, does not imply any certification as to the investment quality of the Notes or our solvency, liquidity or credit quality. The information contained in this offering memorandum is exclusively our responsibility and has not been reviewed or authorized by the CNBV. The acquisition of the Notes by an investor who is a resident of Mexico will be made under its own responsibility. 7. We have obtained all necessary consents, approvals and authorizations, including in respect of the subsidiary guarantors, in connection with the issuance and performance of the Notes pursuant to resolutions adopted by our Board of Directors on May 29, 2015 and by our shareholders at our ordinary shareholders’ meeting held on June 18, 2015. 8. Galaz, Yamazaki, Ruiz Urquiza, S.C., a member firm of Deloitte Touche Tohmatsu Limited, has agreed to the inclusion of its report in this offering memorandum in the form and context in which it is included. 9. The Notes will be fully and unconditionally guaranteed by the Guarantors. The main field of activity of each of the Guarantors is the following: (i) Controladora de Acciones Posadas, S.A. de C.V.; sub-holding; (ii) Fiesta Vacation, S.A. de C.V.; timeshare interchange club; (iii) Gran Inmobiliaria Posadas, S.A. de C.V.; real estate; (iv) Gran Operadora Posadas, S.A. de C.V.; timeshare seller; (v) Hoteles y Villas Posadas, S.A. de C.V.; hotel operator; (vi) Inmobiliaria y Administradora Minerva, S.A. de C.V.; real estate; (vii) Inversora Inmobiliaria Club, S.A. de C.V.; real estate; (viii) Operadora del Golfo

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de Mexico, S.A. de C.V.; real estate; (ix) Posadas de Latinoamerica, S.A. de C.V.; timeshare seller; (x) Promociones Hoteleras del Caribe, S.A. de C.V.; real estate; (xi) Promotora Inmobiliaria Hotelera, S.A. de C.V. corporate treasurer, and (xii) Yipa, S.A. de C.V; real estate. The registered office of the Guarantors is Prol. Paseo de la Reforma 1015 Torre A, Piso 9, Colonia Santa Fe, Delegación Álvaro Obregón, México, D.F., México 01210.

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Grupo Posadas, S. A. B. de C. V. and Subsidiaries Audited Consolidated Financial Statements Page Independent Auditors’ Report ...... F-4 Consolidated statements of financial position as of December 31, 2014, 2013, and 2012 ...... F-6 Consolidated statements of comprehensive income (loss) for the years ended December 31, 2014, 2013, and 2012 ...... F-7 Consolidated statements of changes in stockholders’ equity for the years ended December 31, 2014, 2013, and 2012 ...... F-9 Consolidated statement of cash flows for the years ended December 31, 2014, 2013, and 2012 ...... F-10 Notes to consolidated financial statements ...... F-12

Grupo Posadas, S. A. B. de C. V. and Subsidiaries Unaudited Condensed Consolidated Interim Financial Statements Page Unaudited condensed consolidated interim statement of financial position as of March 31, 2015 ...... F-59 Unaudited condensed consolidated interim statements of comprehensive loss for the three months ended March 31, 2015 and 2014 ...... F-60 Unaudited condensed consolidated interim statements of changes in stockholders’ equity for the three months ended March 31, 2015 and 2014 ...... F-62 Unaudited condensed consolidated interim statements of cash flows for the three months ended March 31, 2015 and 2014 ...... F-63 Notes to unaudited condensed consolidated interim financial statements ...... F-65

F-1 Grupo Posadas, S. A . B. de C. V. and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2014, 2013 and 2012, and Independent Auditors’ Report Dated June 5, 2015

F-2 Grupo Posadas, S. A. B. de C. V. and Subsidiaries

Independent Auditors’ Report and Consolidated Financial Statements for 2014, 2013 and 2012

Table of contents Page

Independent Auditors’ Report )

Consolidated Statements of Financial Position )

Consolidated Statements of Comprehensive Income (Loss) )

Consolidated Statements of Changes in Stockholders’ Equity )

Consolidated Statements of Cash Flows )

Notes to the Consolidated Financial Statements )

F-3 F-4 F-5

Grupo Posadas, S. A. B. de C. V. and Subsidiaries

Consolidated Statements of Financial Position As of December 31, 2014, 2013 and 2012 (In thousands of Mexican pesos)

Assets Notes 2014 2013 2012 Liabilities and stockholders’ Notes 2014 2013 2012 equity

Current assets: Current liabilities: Cash and cash equivalents 6 $ 997,792 $ 706,365 $ 1,431,867 Bank loans and current portion of long-term debt 16 $ 1,449,957 $ 2,498 $ 1,005,842 Investments in securities 7 519,073 525,351 48,110 Trade accounts payable 400,101 348,327 381,355 Other liabilities and accrued expenses 806,166 784,931 954,872 Accounts and notes receivable - Net 8 2,627,080 2,251,204 1,704,108 Income tax payable 17 280,272 597,538 45,203 Vacation Club deferred income 65,344 45,069 29,266 Inventories 34,068 35,803 44,375 Current portion of long-term value added tax 133,539 101,703 111,945 Prepaid expenses 133,311 121,866 77,370 Derivative financial instruments 21 2 - - 19,798 Liabilities directly associated with Vacation Club inventory 9 286,968 105,996 70,395 assets classified as held for sale 10 6,423 - 514,816 Total current liabilities 3,141,802 1,880,066 3,063,097 Other current assets 27,733 35,383 21,268 Long-term liabilities: Debt 16 4,432,316 4,555,080 4,059,456 Assets classified as held for sale 10 50,910 - 1,364,958 Accrued liabilities 18 343,898 276,050 170,011

F-6 Value added tax payable 248,719 165,051 156,796 Total current assets 4,676,935 3,781,968 4,762,451 Vacation Club deferred income 508,858 394,198 256,000 Income tax payable 17 533,148 702,233 99,359 Deferred income tax 17 - 1,158,482 1,220,783 Total long-term liabilities 6,066,939 7,251,094 5,962,405 Total liabilities 9,208,741 9,131,160 9,025,502

Stockholders’ equity: Non-current assets: Contributed capital: Long-term notes receivable - Net 11 1,726,722 1,513,309 1,355,028 Capital stock 22 495,937 495,937 489,427 Contributions for future capital Long-term accounts receivable 12 - 396,679 319,938 increases 12,516 12,516 17,523 Share repurchase reserve 16,800 133,509 133,509 Vacation Club inventory in Shares held in trust - (3,322) (3,322) construction 303,150 239,944 272,600 Additional paid-in capital 157,429 157,429 25,451 682,682 796,069 662,588 Property and equipment - Net 13 6,267,293 6,337,625 7,367,586 Earned capital: Share repurchase reserve 535,556 559,371 559,371 Investment in associates 14 1,879 35,437 40,300 Retained earnings 2,645,031 1,776,394 3,609,315 Accumulated other comprehensive Other assets 15 269,362 214,415 130,496 income 27,244 25,982 15,138 3,207,831 2,361,747 4,183,824 Deferred tax assets 17 72,610 - - Total controlling interest 3,890,513 3,157,816 4,846,412 Non-controlling interest 218,697 230,401 376,485 Total non-current assets 8,641,016 8,737,409 9,485,948 Total stockholders’ equity 4,109,210 3,388,217 5,222,897

Total assets $ 13,317,951 $ 12,519,377 $ 14,248,399 Total liabilities and stockholders’ equity $ 13,317,951 $ 12,519,377 $ 14,248,399

See accompanying notes to consolidated financial statements.

Grupo Posadas, S. A. B. de C. V. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss) For years ended December 31, 2014, 2013 and 2012 (In thousands of Mexican pesos, except earnings (loss) per share and number of shares)

Notes 2014 2013 2012 Revenues: Hotel operation $ 2,691,647 $ 2,673,704 $ 3,026,383 Vacation Club 1,996,686 1,894,629 1,844,757 Hotel management, brand and other 1,107,921 1,200,437 1,268,734 Sales of non- strategic properties 26,197 2,781,588 - Other income 25,827 - - 5,848,278 8,550,358 6,139,874 Operating expenses: Hotel operation cost and expenses 1,004,529 1,007,563 1,069,259 Vacation Club cost and expenses 1,520,736 1,429,250 1,250,621 Hotel management cost and expenses 1,116,372 1,300,426 1,459,605 Cost of sales of non- strategic properties 26,197 2,216,418 - Administrative 177,299 137,977 240,699 Sales, advertising and promotion 105,726 110,563 130,342 Maintenance and energy 288,674 292,641 331,797 Property taxes and insurance 23,130 25,329 29,560 Corporate expenses 256,202 247,157 212,070 Depreciation and amortization 13 409,265 420,057 431,511 Impairment of assets - 894,831 - Real estate leasing 329,761 326,513 331,154 Other expenses, net 45,669 183,213 30,989 5,303,560 8,591,938 5,517,607

Operating income (loss) 544,718 (41,580) 622,267

Interest expense 417,669 393,659 610,174 Interest income (22,509) (110,875) (27,139) Commissions and financial expenses 60,763 57,711 173,847 Exchange loss (gain), net 427,934 29,996 (152,200) Effects of valuation of financial instruments - (2,209) (80,613) 883,857 368,282 524,069

Equity in results of associated entities (12,595) (4,863) (2,119) (Loss) income before income tax (351,734) (414,725) 96,079

Income tax expense (benefit) 17 (1,061,257) 1,161,883 616,559 Consolidated income (loss) from continuing operations 709,523 (1,576,608) (520,480)

Income (loss) from discontinued operations 25 8,718 (181,206) 1,876,044

Consolidated income (loss) for the year 718,241 (1,757,814) 1,355,564

(Continued)

F-7

Notes 2014 2013 2012

Other comprehensive income: Items which may be reclassified to results - Exchange differences on translating foreign operations 10,844 2,049 (155,359) Items which will not be reclassified to results - Remeasurement of defined benefit obligation (9,582) 8,795 - 1,262 10,844 (155,359)

Consolidated comprehensive income (loss) for the year $ 719,503 $ (1,746,970) $ 1,200,205

Consolidated income (loss) for the year attributable to: Controlling interest $ 716,817 $ (1,753,264) $ 1,342,894 Non-controlling interest 1,424 (4,550) 12,670

Consolidated income (loss) for the year $ 718,241 $ (1,757,814) $ 1,355,564

Consolidated comprehensive income (loss) for the year attributable to: Controlling interest $ 718,079 $ (1,742,420) $ 1,187,535 Non-controlling interest 1,424 (4,550) 12,670

Consolidated comprehensive income (loss) for the year $ 719,503 $ (1,746,970) $ 1,200,205

Earnings (loss) per share: From continuing and discontinued operations - Basic and diluted earnings (loss) per common share (in pesos) 1.45 (3.57) 2.77 From continuing operations - Basic and diluted earnings (loss) per common share (in pesos) 1.43 (3.20) (1.06)

Weighted average number of shares 495,937,601 492,496,017 490,030,254

(Concluded)

See accompanying notes to consolidated financial statements.

F-8

Grupo Posadas, S. A. B. de C. V. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity For the years ended December 31, 2014, 2013 and 2012 (In thousands of Mexican pesos)

Contributed capital Earned capital Contributions for Shares repurchase Additional paid-in Shares repurchase Accumulated other Non-controlling Total stockholders’ Capital stock future capital increases reserve Shares held in trust capital reserve Retained earnings comprehensive income interest equity

Balance as of January 1, 2012 $ 489,427 $ 118,814 $ 133,529 $ (3,322) $ 80,734 $ 559,669 $ 2,347,982 $ 170,497 $ 746,887 $ 4,644,217

Repurchase of shares - - (20) - - (298) - - - (318) Contributions for future capital increases - 848,000 ------848,000 Convertible debenture liability - (900,000) ------(900,000) Non-controlling dividends paid ------(23,763) (23,763) Partial payment of convertible debt - (49,291) - - (55,283) - - - (8,137) (112,711) Acquisition of non-controlling interest and stock purchase surplus ------(81,561) - (351,172) (432,733) Consolidated comprehensive income ------1,342,894 (155,359) 12,670 1,200,205

Balance as of December 31, 2012 489,427 17,523 133,509 (3,322) 25,451 559,371 3,609,315 15,138 376,485 5,222,897

Capital increase by issuing shares in trust 6,510 - - - 131,978 - - - - 138,488 F-9 Dividends paid ------(73,520) - - (73,520) Non-controlling dividends paid ------(43,608) (43,608) Partial payment of convertible debt - (5,007) ------(2,170) (7,177) Acquisition of non-controlling interest and stock purchase surplus ------(6,137) - (95,756) (101,893) Consolidated comprehensive loss ------(1,753,264) 10,844 (4,550) (1,746,970)

Balance as of December 31, 2013 495,937 12,516 133,509 (3,322) 157,429 559,371 1,776,394 25,982 230,401 3,388,217

Cancellation of shares in trusts - - - 3,322 - 7,669 - - - 10,991 Decrease shares repurchase reserve - - (116,709) - - (31,484) 148,193 - - - Non-controlling dividends paid ------(8,000) (8,000) Acquisition of non-controlling interest and stock purchase surplus ------3,627 - (5,128) (1,501) Consolidated comprehensive income ------716,817 1,262 1,424 719,503

Balance as of December 31, 2014 $ 495,937 $ 12,516 $ 16,800 $ - $ 157,429 $ 535,556 $ 2,645,031 $ 27,244 $ 218,697 $ 4,109,210

See accompanying notes to consolidated financial statements.

Grupo Posadas, S. A. B. de C. V. and Subsidiaries

Consolidated Statements of Cash Flows For the years ended December 31, 2014, 2013 and 2012 (In thousands of Mexican pesos)

2014 2013 2012

Cash flows from operating activities: Consolidated income (loss) for the year $ 718,241 $ (1,757,814) $ 1,355,564 Adjustments for: Income tax (benefit) expense (1,061,257) 1,161,883 616,559 Asset impairment, depreciation and amortization 409,265 1,314,888 431,511 Equity in results of associated entities 12,595 4,863 2,119 (Income) loss on sale of fixed assets - (565,170) 518 Interest income (22,509) (110,875) (27,139) Unrealized foreign exchange loss (gain) 586,751 23,789 (74,988) Discontinued operations - 181,206 (1,876,044) Effects of valuation of financial instruments - - 184,759 Interest expense 417,669 393,659 610,174 1,060,755 646,429 1,223,033

Movements in working capital: Accounts and notes receivable - Net (192,610) (326,828) (141,720) Inventories 1,735 8,572 9,255 Prepaid expenses (11,445) (44,496) 11,871 Vacation Club inventory (180,972) (35,601) 66,045 Other assets (81,940) (98,034) (21,719) Trade accounts payable 51,774 (33,028) (74,495) Other liabilities and accrued expenses 160,918 (203,615) 188,652 Deferred income of Vacation Club 134,935 154,001 124,031 Income taxes paid (595,188) (268,946) (45,628) Net cash generated by (used in) operating activities 347,962 (201,546) 1,339,325

Cash flows from investing activities: Consideration received from discontinued operations - - 2,834,506 Purchases of property and equipment (437,373) (1,154,237) (157,576) Investments in securities 6,278 (477,241) (9,674) Interest collected 22,509 76,672 14,892 Discontinued operations - - (8,755) Cash flow from sales of non-strategic properties 26,197 2,326,298 - Net cash (used in) generated by investing activities (382,389) 771,492 2,673,393

F-10

2014 2013 2012

Cash flows from financing activities: Proceeds from borrowings 740,159 88,134 1,737,277 Loan payments - - (4,124,511) Interest paid (427,114) (375,654) (625,937) Repayment of convertible debts - (900,000) - Contributions for future capital increases - - 848,000 Partial payment of convertible debt - (7,177) (112,711) Derivative financial instruments - (22,007) (185,414) Repurchase of shares - - (318) Capital increase by issuing shares in trust 10,991 138,488 - Non-controlling interest dividends paid (8,000) (43,608) (23,763) Dividends paid - (73,520) - Cash flow from discontinued operations - - (32,927) Acquisition of non-controlling interest (1,501) (101,893) (432,733) Net cash generated by (used in) financing activities 314,535 (1,297,237) (2,953,037)

Net increase (decrease) in cash and cash equivalents 280,108 (727,291) 1,059,681

Cash and cash equivalents at the beginning of the year 706,365 1,431,867 384,018

Effects of exchange rate changes on the balance of cash held in foreign currencies 11,319 1,789 (11,832)

Cash and cash equivalents at the end of the year $ 997,792 $ 706,365 $ 1,431,867

See accompanying notes to consolidated financial statements.

F-11

Grupo Posadas, S. A. B. de C. V. and Subsidiaries

Notes to the Consolidated Financial Statements For the years ended December 31, 2014, 2013 and 2012 (In thousands of Mexican pesos)

1. Activities

Grupo Posadas, S. A. B. de C. V. (Posadas) and Subsidiaries (the Entity) are primarily engaged in the ownership, operation and management of hotels as well as the purchase and sale of real estate within the tourism industry. As of December 31, 2014, 2013 and 2012, the Entity operated a total of 127 hotels with 21,094 rooms, 110 hotels with 18,795 rooms, and 105 hotels with 17,831 rooms, respectively. The Entity mainly operates hotels under its Fiesta Americana, Fiesta Inn and One Hotels, and from May 2014, Gamma brand names throughout Mexico and until October of 2012, Caesar Park and Caesar Business in Brazil, Argentina and Chile.

The Entity enters into long-term management contracts with all the hotels that it operates. From the total of hotels that the Entity operated at December 31, 2014, 2013 and 2012, 17 in 2014 and 2013 and 29 in 2012 are owned hotels and 14, 15 and 16, respectively, were operated under leasing contracts. The remaining 96, 79 and 60 hotels, respectively, are owned by third parties and operated by the Entity at December 31, 2014, 2013 and 2012. For purposes of these consolidated financial statements, these hotels are referred to as the Entity’s “owned”, “leased” and “managed” hotels, respectively.

Posadas receives fees pursuant to the management long-term contracts it has with all of the hotels it operates. Certain fees, including management, brand use fee, reservation services and technology usage, among others, are based on hotel revenues. Posadas also receives an incentive fee based on the hotels’ operating income.

Additionally, the Entity operates a Vacation Club business called Fiesta Americana Vacation Club (FAVC), as well as its new product "Front Door" focused on the high-income sector, through which members purchase a “40-year-right-to-use” evidenced by an annual allocation of FAVC points. FAVC points can be redeemed to stay at the Entity’s seven FAVC resorts in Los Cabos (villas and resort), Acapulco, Cancun, Cozumel, Chetumal and Puerto Vallarta, as well as any of the hotels in its portfolio. In addition, members of FAVC can also redeem their FAVC points to stay at any Resorts Condominium International (RCI), affiliated resort or Hilton Grand Vacation Club resorts throughout the world. At the same time, the Entity marketing a product called "Kívac" consisting in sales of points, with a maturity of up to 5 years that can be redeemed for stays at any of the hotels in the Entity’s portfolio.

During 2012, the Entity initiated a restructuring of its business with a focus towards ownership of strategic assets and the growth of its hotel management business and FAVC. As part of this strategy, the Entity has sold several hotels and other non-strategic assets (see Note 2d and 2f). As of the date of the consolidated financial statements the Entity has restructured its operations to significantly reduce the number of companies that compose it.

The hotel industry is seasonal and particularly sensitive to macroeconomic and social changes, leading to volatility in revenues, income and the related costs during any given year. The Entity seeks to reduce the impact of seasonality on its results through marketing strategies such as agreements with institutions, competitive prices and intensive promotion. Therefore, the impact of seasonality in the statements of comprehensive income and financial position is not significant.

The corporate offices of the Entity are located in Prolongación Paseo de la Reforma 1015 Piso 9 Torre A, Col. Santa Fe, México, Distrito Federal.

F-12

2. Significant events

a. Issuance of Euro-Commercial paper and payment of 2015 Senior Notes

On November 28, 2014, the Entity obtained US$47.2 million through a program known as “Euro- Commercial Paper”, which accrue interest at a rate of 6% annually and mature on November 18, 2015. Interest is recognized in the consolidated statement of comprehensive income (loss) as accrued, and will be paid at maturity.

The resources obtained of the Euro-Commercial paper were utilized for payment of the “2015 Senior Notes” in the principal amount of US$51.7 million, which matured on January 15, 2015.

b. “Gamma” brand

As of May 2014, the Entity launched its new “Gamma” brand, geared to owners of independent hotels with less than 100 rooms, operating under the franchise model through two options: i) an operating and licensing scheme, in which Posadas absorbs the operation of the hotels, or ii) the pure franchise scheme, in which Posadas offers the know-how of its Fiesta Americana and Fiesta Inn brands.

c. Contingencies for Hurricane Odile

As a result of hurricane “Odile” that passed through the Baja California peninsula during September 2014, the Entity’s hotels suffered significant damage. These hotels have insurance policies which cover damages to real estate and consequential damages. The Entity incurred approximately $85 million in damages during 2014. It has filed claims with the insurance company and has received an advance of $56 million in 2014.

d. Assets available for sale

Holiday Inn Laredo

On December 9, 2014, the Entity signed an agreement with I Ram Moneytree, Ltd., to sell the hotel “Holiday Inn Laredo” located in Laredo, Texas, U.S.A., for a maximum amount of US$8.6 million. The sale transaction is subject to certain conditions established in this agreement, which are currently being executed.

As all the accounting criteria required to classify the assets as available for sale have been fulfilled as of December 31, 2014, the real estate and equipment of the hotel subject to sale have been presented as “assets classified as held for sale” in the consolidated statement of financial position as of December 31, 2014, which total $50,910. Also, the liabilities and the effects of deferred taxes related to these assets have been presented as “liabilities directly associated with assets classified as held for sale”, because they are directly related to the assets that will be transferred, totaling $6,423.

Furthermore, given that the hotel to be sold it does not represent an important line of business, as established in International Financial Reporting Standards, the transaction has not been considered as a discontinued operation in the consolidated statement of comprehensive income (loss).

FibraHotel

During the third quarter of 2012, a trust called FibraHotel was established mainly to acquire, own, and develop hotels of various categories in Mexico. In late November 2012, FibraHotel acquired 12 hotels of the Entity, of which 10 were owned by the subsidiary Fondo Inmobiliario Posadas, S. A. de C. V., Sociedad de Inversión de Capitales (SINCA).

The execution of the sale was subject to the fulfillment of certain conditions precedent, that were subsequently fulfilled on January 21, 2013 and 11 of the Entity’s hotels were sold for $1,486,594; generating a profit of approximately $331,103, which was recorded in January 2013.

Three more hotels were sold during February, April, and June 2013, as part of a secondary offering of FibraHotel, at a sale price of $406,696, generating a profit of $115,632 recorded in 2013, essentially under the same sale conditions as those for the first 11 hotels sold.

F-13

As all the accounting criteria required for assets available for sale had been fulfilled as of December 31, 2012, total assets subject to sale, including real property and furniture and fixtures of the hotels involved, which amounted $1,364,958, were recorded as “assets classified as held for sale” in the consolidated statement of financial position as of December 31, 2012. Similarly, financial debt and the effects of deferred taxes related to these assets were presented as “liabilities directly associated with assets classified as held for sale”, because they are directly related to the assets that will be transferred.

Similarly, as the hotels sold do not represent a significant line of business as prescribed by International Financial Reporting Standards, the transaction was not considered as discontinued operations in the consolidated statement of comprehensive income (loss). As a result of the sale, the hotels are no longer classified as “proprietary”, but as “managed”, because the Entity continues to operate them. See Note 10 for details on the assets classified as available for sale. e. Acquisition of non-controlling interest

During 2014, based on a share purchase-sale contract, the Entity acquired the non-controlling interest in the equity of Hotelera Inmobiliaria de Monclova, S.A. de C.V. and DA Expansión HLD, S.A. de C.V., for $2,023 and $189, respectively. This transaction generated a gain of $3,627 as a result of the difference between the carrying value of the shares and the purchase price; such gain which was recorded in the consolidated statement of changes in stockholders’ equity. f. Sale of non-strategic assets

On December 20, 2013, through the sale of shares of certain subsidiaries, the Entity sold a series of non-strategic assets, including a plot of land in Chemuyil, Quintana Roo, whose carrying value was $1,299,744 as of December 31, 2012. The selling price of the transaction was set at $677,000 for the sale of shares and $3,000 for real property located in Cancun, Quintana Roo. Of the first amount, $390,000 was paid on December 30, 2013, $185,000, on January 10, 2014 and $40,800, on January 15, 2015.

The remaining $61,200 will be paid between January 15, and December 15, 2015, accruing interest at TIIE plus 5%. This amount is recorded under long-term accounts receivable.

In addition, and as a result of the sale, the Entity recorded an impairment in the value of the Chemuyil land of approximately $763,869, directly in the consolidated statement of comprehensive income (loss).

This transaction resulted in a loss which was recorded in the consolidated statement of comprehensive income as follows:

Selling price $ 677,000 Less - Carrying value of the plot of land in Chemuyil (535,875) Account receivable (143,395) Other (281)

Loss $ (2,551)

The account receivable was settled on January 7, 2014.

The Chemuyil land had been acquired on August 3, 1998 through the execution of an Irrevocable Trust contract with the Instituto del Patrimonio Inmobiliario de la Administración Pública del Estado de Quintana Roo (IPAE), whereby ownership of the land was transferred to the Entity in exchange for a payment of US$10.4 million, subject to certain obligations, including the construction of 250 hotel rooms and their respective shared facilities, at an estimated cost of US$97.4 million. Subsequently, several amendment agreements were executed to extend the original compliance term; the last one was executed on July 1, 2010, extending the original term to June 30, 2013. The new extension included a clause whereby the Entity was obligated to pay the IPAE a contractual penalty of US$10 million in the event of default. It also established a guarantee trust in favor of the IPAE, to which the Entity had contributed 8,799,000 Series “A” shares as of December 31, 2012 to cover the contractual penalty amount.

F-14

Given that on June 30, 2013, the IPAE considered that the commitments had not been fulfilled by the Entity, the guarantee trust settled 5,803,976 shares for $138,488 of which $6,510 is recorded as common stock and $131,978 as a share issue premium. The trust paid the IPAE $127,321 as a contractual penalty. Consequently, the Entity recorded an expense of $144,225, which includes certain related costs under “other expenses” in the consolidated statement of comprehensive income of 2013. g. Tax effects of 2013

i. Up to December 31, 2012, there were several tax lawsuits originated from 2004 to 2008, in which the Entity and its subsidiaries acted as plaintiffs or defendants, whose outcomes cannot be assured as of that date. The tax authorities had alleged the non-payment of federal taxes, mainly income tax, value-added tax, and asset tax. The historical amount claimed in these lawsuits was $1,120,965, including restatement, penalties, and surcharges as of the date of the tax liability assessment. In addition to the proceedings for annulment filed, sureties had been granted through joint obligations and foreclosures of real property, for the equivalent of the amount claimed plus the applicable restatement and surcharges. The lawsuits were in different stages and the Entity had filed several administrative procedures and annulment proceedings against the tax authority’s claims.

During the first half of 2013, the Entity asked the authorities to apply the forgiveness benefits established in various rules and criteria published in the Federal Income Law, better known as “tax amnesty”. Consequently, there were several rulings in favor of the Entity forgiving all of the alleged debt contested in exchange for a sole payment of $142,908, of which $125,585 is recorded in the consolidated statement of comprehensive income under “income taxes” and refers to income tax and $17,323 is recorded under “other expenses”, and is associated with local and value-added tax. The above actions concluded the aforementioned lawsuits.

ii. Under the new Income Tax Law (LISR) in effect in 2014, the tax consolidation scheme was eliminated and, therefore, the Entity and its subsidiaries are obligated to pay the deferred tax up to December 31, 2013, during the following five years as of 2014. This deconsolidation tax of $882,262 was recognized under income taxes in the consolidated statement of comprehensive income (loss) for the year ended December 31, 2013; the respective short and long term liabilities as of December 31, 2014 and 2013 recognized in the statement of financial position amounted to $280,272 and $533,148, respectively.

iii. Similarly, the 2014 LISR eliminated the incentives that allowed the gain on the sale or contribution of real property to a qualified Real Estate Company (SIBRA or FIBRA) in exchange for shares in the SIBRA or FIBRA, to be deferred for tax purposes until the sale of the shares held in the SIBRA or FIBRA occurs. Consequently, if the conditions for deferred of the gain for tax purposes had not been fulfilled as of December 31, 2016, the tax must be accrued on that date. The tax liability for the gain on the aforementioned sale of assets to FibraHotel was not fully recorded previously because the Entity had no plans to sell the shares or the assets it held in FibraHotel. Consequently, due to the change in circumstances, the Entity recorded a deferred tax in the consolidated statement of financial position of $1,297,422 as of December 31, 2013. Based on a series of additional analyses and the tax attributes of the Entity, during 2014 the amount of $1,043,646 was canceled in the consolidated statement of comprehensive income, leaving a liability for $154,059 as of December 31, 2014. h. Corporate office sale and leaseback

The Entity executed a purchase-sale agreement for its corporate property located in Mexico City with Fibra Uno on June 27, 2013 at a selling price of US$14.9 million and a book value of $86,226 at the selling date, resulting in a gain of $108,169.

Similarly, a 10-year lease agreement was signed, subject to a 10-year extension, whereby the Entity is obligated to pay for the use of such offices. As this transaction is classified as a “sale and leaseback”, the difference between the sale price and the fair value of the asset at that date will be amortized over the mandatory lease term.

F-15

i. Discontinued operations - South America’s segment

On July 16, 2012, the Entity announced that it had reached an agreement with Accor, S.A. (Accor), to sell its operations in South America for a total enterprise value of US$278 million, including the assumption of debt. Accor acquired all of Posadas assets in the region which included 15 owned, leased, and managed hotels (four of which were owned), the Caesar Park and Caesar Business brands and a pipeline of an undisclosed number of hotels under management in Brazil, Argentina and Chile.

On October 10, 2012, the sale was officially completed. A portion of the sale price remained subject to adjustment for certain variables referred to in the sale contract, and on that date the Entity received proceeds in the amount of US$238.7 million. In order to ensure the remaining amount of the sale a balance of US$32 million remained in an escrow account in which Accor was the primary beneficiary. These funds would be released to the Entity on various dates from 2014 through 2019, only when certain precedent conditions, established in the sale contract, have been met. On December 31, 2013, the Entity estimated that it would recover approximately US$22.6 million, equivalent to $294,679, which was presented under the heading of “long term account receivables” in the consolidated statement of financial position.

On August 29, 2014, the Entity reached an agreement with Accor on the final selling price, which generated additional revenue of $8,718 due to different adjustments to the price and funds released previously. Such revenue was recorded as income from discontinued operations in the consolidated statement of comprehensive income. j. Issuance of “Senior Notes 2017”

On November 30, 2012, the Entity consummated the issuance of US$225 million of notes known as "Senior Notes 2017" through the Luxembourg Stock Exchange. The intention of the bond issuance was to buy back a portion of the previous issue of US$200 million of notes known as "Senior Notes 2015". The entity offered US$1,060 per US$1,000 of notes outstanding of the “Senior Notes 2015”, to holders accepting the terms and conditions of the repurchase before November 23, 2012. Subsequent to that date, the Entity offered US$1,045 per US$1,000 of notes outstanding.

As a result, the Entity repurchased US$116.7 million of “Senior Notes 2015” with US$127.7 million from the proceeds of the issuance of the “Senior Notes 2017”, thereby releasing certain restrictions related to the “Senior Notes 2015”, mainly with respect to the ability to make certain prepayments related to the bonds. At December 31, 2012, US$83.3 million of "Senior Notes 2015" were outstanding.

The US$225 million “Senior Notes 2017” were issued at a price equivalent of 99.49% of the principal amount and bear interest at an annual rate of 7.875%, with maturity on November 30, 2017. Interest is payable semiannually, beginning on May 30, 2013. The bond is guaranteed by certain subsidiaries of the Entity. The indenture contains certain restrictions on the Entity related to the ability to:

Incur additional indebtedness Grant guarantees Pay restricted investments Sell assets Declare dividends Make certain intercompany transactions Merge with other entities

Issue costs amounted to $125,575, which are capitalized, presented net against the related debt, and are amortized based on the life of the “Senior Notes 2017”, using the effective interest rate method. The Entity incurred a prepayment premium of US$7.0 million related to the early payment of the “Senior Notes 2015”, which was written off to "Commissions and financial expenses" in the consolidated statement of comprehensive income. Additionally, debt issuance costs related to the “Senior Notes 2015” were recorded in the results of the Entity, based on the proportion of the amount repaid, totaling $17,996.

On January 30, 2013, the Entity issued a tack-on of US$50 million to the “Senior Notes 2017”, which were integrated into a single issuance of US$275 million, containing the same terms and conditions previously mentioned.

F-16

On February 20, 2014, the Entity issued an additional US$35 million of 2017 Senior Notes, which accrue interest at an annual rate of 7.875%, maturing in 2017. The 2017 Senior Notes were issued based on a private exchange of US$31.6 million of the 2015 Senior Notes. The 2017 Senior Notes constitute an additional issuance of 2017 Senior Notes, with identical terms, and a total outstanding amount of US$310 million. As a consequence of the cancellation of a portion of the 2015 Senior Notes, the total outstanding principal of Senior Notes 2015 as of that date is US$51.7 million.

Based on applicable regulations, the Notes and related documents were not filed for review or approval with any federal or state securities commission or with any regulatory agency of any country. k. Use of proceeds received

The proceeds received from the transactions described in a. and g. were mainly used for the following purposes:

Date Amount Concept

Purchase of non-controlling interest of Fondo December 19, 2012 and Inmobiliario Posadas, S. A. de C. V., Sociedad de January 2, 2013 $ 428,235 (i) Inversión de Capital (SINCA)

December 21, 2012 2,250,000 (ii) Prepayment of stock certificates

January 2, 2013 900,000 (iii) Payment of convertible bonds

December 13 and 14, 2012 41,300 (iv) Payment of derivatives

Credit payments with Banco Mercantil del Norte, December 28, 2012 282,700 (v) S. A. (Banorte)

Credit payments with Scotiabank Inverlat, S.A. January 21, 2013 270,237 (vi) (Scotiabank)

Credit payments with Banco de Comercio Exterior February 7, 2013 273,409 (vii) S. N. C. (Bancomext)

$ 4,445,881

(i) Purchase of non-controlling interest of SINCA

The Entity acquired, through a purchase-sale agreement, subject to a condition subsequent to make payment on January 2, 2013, among other conditions which were ultimately fulfilled, 47.8% of the share capital of the SINCA, which is the holding of a group of entities that owned 10 hotels that were sold in a transaction with FibraHotel, explained subsequently. This purchase resulted in a gain of $131,104, based on the difference between the carrying value of the non- controlling interest held by the Entity and the amount paid, recorded in the consolidated statement of changes in stockholders' equity. Half of the purchase price was paid on December 19, 2012, and the remainder of $214,118 was paid on January 2, 2013, which incurred interest at an annual rate of 5%. The purchase price also contains contingent consideration, based on the operating and financial performance of certain hotels sold in the subsequent 12 to 18 months. The amount of the contingent consideration, at fair value at December 31, 2012, is nil. The differential at December 31, 2012 was shown under the item “Other liabilities and accrued expenses”. The resolutive condition consisted of just making payment on January 2, 2013 and other conditions were met.

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(ii) Prepayment of stock certificates

On December 11, 2012, at a meeting of the holders of the Stock Certificates issued by the Entity, such holders agreed to receive a prepayment on such Certificates, considering the respective interest and prepayment premium of $15,800. At December 31 2012, no outstanding amounts are due under the Stock Certificates.

(iii) Issuance and payment of convertible debt

On March 7, 2012, at an Extraordinary General Stockholders’ Meeting, the stockholders approved to carry out a private offering of subordinated debentures mandatorily convertible into 183,257,000 Series "A" shares of the Entity, up to the amount of $900,000. The obligations were subordinated to all liabilities of the Entity and were issued in two tranches, the first of up to $679,172 and the second up to $220,828, with collateral to ensure the Entity’s compliance with its obligations. These instruments accrued interest at a fixed rate of 9% annually, paid quarterly and convertible in a period not to exceed 27 months, at a price of six pesos per share. If paid in advance, the interest rate would be 16% fixed annually. Additionally, the stockholders approved the issuance of 183,257,000 Series "A" shares, without par value, held in treasury to fulfill the conversion of the bonds, which would be subscribed upon such conversion. Because the instruments allowed the Entity the possibility to avoid cash payment in relation to the amount of capital through the delivery of a fixed number of shares of equity, the instruments were initially classified as equity, presented in "Contributions for future capital increases" in the accompanying consolidated statement of changes in stockholders’ equity.

Ultimately, however, the Entity decided to pay cash with respect to these obligations and notified the bondholders on December 27, 2012, specifying that liquidation would be on January 2, 2013. Therefore, the total amount of $900,000 was reclassified to "Bank loans and current portion of long-term debt" and the decrease in the shareholders’ equity as “convertible debenture liability entry”. The previously issued shares were canceled by the Stockholders Meeting of the Entity held on March 15, 2013.

(iv) Payments of derivatives

During the first nine months of 2012, the Entity prepaid cross currency swaps (CCS), hedging a notional amount of $834.7 million of stock certificates at December 31, 2011, equivalent to US$79 million, and stock certificates with a notional balance of $677.8 million, equivalent to US$65.8 million at December 31, 2011, resulting in a balance of CCS at September 30, 2012 of $298.1 million and US$28.9.

On December 13 and 14, 2012, the Entity paid $41,300 of CCS covering a notional amount at December 31, 2012 of $97,537, equivalent toUS$9.4 million, resulting in a fair value of derivatives at December 31, 2012 of $19,798.

(v) Prepayment of Banorte loans

On December 28, 2012, the Entity prepaid the balance of its loans with Banorte under revolving credit lines, which were guaranteed by notes receivable related to the financing granted by the sale of Vacation Club memberships.

The receivables from sales of Vacation Club memberships were assigned to a trust located outside Mexico. The Entity transferred certain of the collection rights to those receivables in the trust to Banorte. At December 31, 2012, there are no outstanding amounts owed to Banorte.

(vi) Prepayment of Scotiabank loans

On January 21, 2013, the Entity prepaid the remaining balance of loans amounting to $80,289 and US$14.6 million, equivalent to $189,948, owed to Scotiabank under dual credits that were secured by seven hotels owned by SINCA.

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(vii) Prepayment of Bancomext loans

On February 7, 2013, the Entity prepaid the remaining balance of loans with Bancomext under revolving credit lines, which were secured by notes receivable relating to the financing provided by the sale of Vacation Club memberships.

The receivables from sales of Vacation Club memberships were assigned to a trust located outside Mexico. The Entity had effectively sold those receivables to the trust. At December 31, 2012 the debt with Bancomext was US$22.1 million, equivalent to $288,484.

l. Payment of convertible debt 2012

The Entity had a convertible loan agreement for a US$8 million with the International Finance Corporation (IFC) as of December 31, 2011. Through September 2012, the Entity prepaid US$2.7 million equivalent to $34,815 and October 19, 2012, the Entity paid the remaining balance of US$5.6 million (equivalent to $75,610) plus accrued interest. Both payments are shown as a partial payment of convertible debt in the accompanying statement of changes in stockholders’ equity.

3. Basis of presentation

a. Explanation for translation into English

The accompanying consolidated financial statements have been translated from Spanish into English for use outside of Mexico. Certain accounting practices applied by the Entity in the accompanying consolidated financial statements may not conform to accounting principles generally accepted in the country of use.

b. Application of new and revised International Financing Reporting Standards (IFRS) and interpretations that are mandatorily effective for the current year

In the current year, the Entity has applied a number of amendments to IFRS and new Interpretation issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after January 1, 2014.

Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities

The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definitions of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. To qualify as an investment entity, a reporting entity is required to:

• Obtain funds from one or more investors for the purpose of providing them with investment management services.

• Commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

• Measure and evaluate performance of substantially all of its investments on a fair value basis.

Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities

As the Entity is not an investment entity (assessed based on the criteria set out in IFRS 10 as of January 1, 2014), the application of the amendments has had no impact on the disclosure or the amounts recognized in the Entity consolidated financial statements.

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Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities

The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realization and settlement’.

The Entity has assessed whether certain of its financial assets and financial liabilities qualify for offset based on the criteria set out in the amendments and concluded that the application of the amendments has had no impact on the amounts recognized in the Entity’s consolidated financial statements.

Amendments to IAS 19 Defined Benefit Plans: Employee Contributions

The amendments to IAS 19 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee.

For contributions that are independent of the number of years of service, the Entity may either recognize the contributions as a reduction in the service cost in the period in which the related service is rendered, or to attribute them to the employees’ periods of service using the projected unit credit method; whereas for contributions that are dependent on the number of years of service, the entity is required to attribute them to the employees’ periods of service.

The Entity’s management estimated that the application of these amendments to IAS 19 has had no material impact on the Entity’s consolidated financial statements.

IFRIC 21 Levies

The Entity has applied IFRIC 21 Levies for the first time in the current year. IFRIC 21 addresses the issue as to when to recognize a liability to pay a levy imposed by a government. The Interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The Interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present obligation to pay a levy that will be triggered by operating in a future period.

The application of this Interpretation has had no material impact on the disclosures or on the amounts recognized in the Entity’s consolidated financial statements. c. New and revised IFRSs in issue but not yet effective

The Entity has not applied the following new and revised IFRSs that have been issued but are not yet effective:

IFRS 9, Financial Instruments3 IFRS 14, Regulatory Deferral Accounts1 IFRS 15, Revenue from Contracts with Customers1 Amendments to IFRS 11, Accounting for Acquisitions of Interests in Joint Operations2 Amendments to IAS 16 and IAS 38, Clarification of Acceptable Methods of Depreciation and Amortisation1

1 Effective for annual periods beginning on or after January 1, 2016, with earlier application permitted. 2 Effective for annual periods beginning on or after January 1, 2017, with earlier application permitted. 3 Effective for annual periods beginning on or after January 1, 2018, with earlier application permitted.

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d. Reclassifications

The consolidated financial statements for the year ended December 31, 2013 have been reclassified in the heading “Corporate expenses” with an increase of $51,388 and a decrease for the same amount in the heading “Administrative costs and expenses, brand and others” in the consolidated statement of comprehensive income, and ii) in the presentation of the change from investments in securities in the consolidated statement of cash flows within investing activities; both reclassifications were made to conform the presentation to that used in 2014.

4. Significant accounting policies

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards released by IASB.

b. Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for certain investments in trading securities which are valued at fair value, as disclosed in the notes below.

i. Historical cost

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

ii. Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Entity takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability.

c. Basis of consolidation

The consolidated financial statements incorporate the financial statements of Posadas and its subsidiaries controlled by it. Control is achieved when the Entity:

Has power over the investee; Is exposed, or has rights, to variable returns from its involvement with the investee; and Has the ability to use its power to affect its returns.

The Entity reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

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When the Entity has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Entity considers all relevant facts and circumstances in assessing whether or not the Entity’s voting rights in an investee are sufficient to give it power, including:

The size of the Entity’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; Potential voting rights held by the Entity, other vote holders or other parties; Rights arising from other contractual arrangements; and Any additional facts and circumstances that indicate that the Entity has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Entity obtains control over the subsidiary and ceases when the Entity loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Entity gains control until the date when the Entity ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Entity and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Entity and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Entity’s accounting policies.

The shareholding in the share capital of the subsidiaries is as follows:

Entity Shareholding (%) 2014, 2013 and 2012

Promotora Inmobiliaria Hotelera, S. A. de C. V. and Subsidiaries 100 Controladora de Acciones Posadas, S. A. de C. V. and Subsidiaries 100 Administración Digital Conectum, S. A. de C. V. and Subsidiaries 100 Posadas USA, Inc. and Subsidiaries 100 Hoteles y Villas Posadas, S. A. de C. V. 100 Inversora Inmobiliaria Club, S. A. de C. V. 100 Gran Inmobiliaria Posadas, S. A. de C. V. 100 Soluciones de Lealtad, S. A. de C. V. 100 Konexo Centro de Soluciones, S. A. de C. V. 100 Inmobiliaria del Sudeste, S. A. de C. V. 51

All intragroup amounts and transactions between members of the Entity are eliminated in full on consolidation.

Changes in the Entity’s ownership interests in existing subsidiaries

Changes in the Entity’s ownership interests in subsidiaries that do not result in the Entity losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Entity’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Entity.

F-22

When the Entity loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Entity had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRS). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. d. Financial instruments

Financial assets and financial liabilities are recognized when the Entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss. e. Financial assets

Financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss” (FVTPL), “held-to-maturity” investments, “available-for-sale” (AFS) financial assets and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

1. Effective interest method

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as of FVTPL.

2. Financial assets at FVTPL

Financial assets are classified as of FVTPL when the financial asset is either held for trading or it is designated as of FVTPL.

A financial asset is classified as held for trading if:

It has been acquired principally for the purpose of selling it in the near term; or On initial recognition it is part of a portfolio of identified financial instruments that the Entity manages together and has a recent actual pattern of short-term profit-taking; or It is a derivative that is not designated and effective as a hedging instrument.

F-23

A financial asset other than a financial asset held for trading may be designated as of FVTPL upon initial recognition if:

Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Entity’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or It forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract to be designated as of FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the “Interest income” line item in the consolidated statement of comprehensive income (loss).

3. Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Entity has the positive intent and ability to hold to maturity. Subsequent to initial recognition, held-to maturity investments are measured at amortized cost using the effective interest method less any impairment.

4. Financial assets classified as available-for-sale (AFS financial assets)

AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value through profit or loss.

Listed redeemable notes held by the Entity that are traded in an active market are classified as AFS and are stated at fair value at the end of each reporting period. The Entity also has investments in unlisted shares that are not traded in an active market but that are also classified as AFS financial assets and stated at fair value at the end of each reporting period (because the Entity’s management consider that fair value can be reliably measured). Changes in the carrying amount of AFS monetary financial assets relating to changes in foreign currency rates (see below), interest income calculated using the effective interest method and dividends on AFS equity investments are recognized in profit or loss. Other changes in the carrying amount of assets classified as held for sale are recognized in other comprehensive income and accumulated under the heading of investments revaluation reserve. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. Dividends on AFS equity instruments are recognized in profit or loss when the Entity’s right to receive the dividends is established.

The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate prevailing at the end of the reporting period. The foreign exchange gains and losses that are recognized in profit or loss are determined based on the amortized cost of the monetary asset. Other foreign exchange gains and losses are recognized in other comprehensive income.

AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment losses at the end of each reporting period.

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5. Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including accounts and notes receivables, and cash and cash equivalents) are measured at amortized cost using the effective interest method, less any impairment.

Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

6. Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

Significant financial difficulty of the issuer or counterparty; or Breach of contract, such as a default or delinquency in interest or principal payments; or It becoming probable that the borrower will enter bankruptcy or financial reorganization; or The disappearance of an active market for that financial asset because of financial difficulties.

For certain categories of financial assets, such as trade receivables, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Entity’s past experience of collecting payments in the portfolio exceed the maximum credit period of 11 months, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

F-25

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

In respect of AFS equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

7. Derecognition of financial assets

The Entity derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Entity neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Entity recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Entity retains substantially all the risks and rewards of ownership of a transferred financial asset, the Entity continues to recognize the financial asset and also recognizes a collateralize borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Entity retains an option to repurchase part of a transferred asset), the Entity allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts. f. Inventories and cost of sales

Inventories are stated at average cost, which does not exceed their net realizable value. g. Inventories of Vacation Club

Vacation Club inventories are recorded at cost of construction. Cost of sales is recorded at the time of sales.

The long-term Vacation Club inventories correspond to the cost of reconstruction of hotel buildings, which are remodeled to provide Vacation Club services. Short-term Vacation Club inventory represent hotel building approved for sale by management that are expected to be sold within one year, therefore, they are classified as current assets even though their business cycle could be longer.

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h. Property and equipment

Certain assets (land and buildings) related to hotels were revalued at fair value at January 1, 2011 (date of transition to IFRS). The remaining assets and subsequent acquisitions are carried at acquisition cost.

Furniture and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

The cost of improvements, renovations and replacements to hotel rooms are capitalized within the property and equipment caption and are depreciated over a period of 3 to 5 years. The costs of minor repairs and maintenance are expensed as they are incurred.

Properties in the course of construction for own use, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Entity’s accounting policy. Such properties are classified to the appropriate categories of property and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

The average percentage rate of depreciation of property and equipment are:

(%)

Buildings 2 to 3 Furniture and equipment 10 Vehicles 25 Computer 30 Operating equipment 33

Land is not depreciated.

Depreciation is recognized so as to write off the cost or valuation of assets (other than land and properties under construction) less their residual values over their useful lives, which is 24% in the building’s case as determined by the independent valuation agents, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or if the lease term, if shorter.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. i. Other assets

All direct costs, primarily commissions on Kívac sales, are reflected in other assets and recognized in the consolidated statement of comprehensive income, once the service is rendered and the related revenue is recognized. An estimate of amounts expected to be utilized over the following 12 months is determined and classified within current assets.

1. Internally-generated intangible assets - research and development expenditure

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

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An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, all of the following have been demonstrated:

The technical feasibility of completing the intangible asset so that it will be available for use or sale. The intention to complete the intangible asset and use or sell it. The ability to use or sell the intangible asset. How the intangible asset will generate probable future economic benefits. The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.

2. Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized. j. Impairment of tangible and intangible assets

At the end of each reporting period, the Entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Entity estimates the recoverable amount of the cash- generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

F-28

When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. k. Non-current assets classified as held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Entity is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Entity will retain a non-controlling interest in its former subsidiary after the sale.

After the disposal takes place, the Entity accounts for any retained interest in the associate or joint venture in accordance with IAS 39 unless the retained interest continues to be an associate or a joint venture, in which case the Entity uses the equity method (see the accounting policy regarding investments in associates or joint ventures above).

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. l. Investments in associates

An associate is an entity over which the Entity has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Usually these entities are those in which a shareholding of between 20% and 50% of the voting rights held.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Entity’s share of the profit or loss and other comprehensive income of the associate. When the Entity’s share of losses of an associate exceeds the Entity’s interest in that associate (which includes any long-term interests that, in substance, form part of the Entity’s net investment in the associate), the Entity discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Entity has incurred legal or constructive obligations or made payments on behalf of the associate.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Entity’s share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount of the investment.

The requirements of IAS 39 are applied to determine whether it is necessary to recognize any impairment loss with respect to the Entity’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

F-29

The Entity discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment is classified as held for sale.

When the Entity transacts with an associate of the Entity, profits and losses resulting from the transactions with the associate are recognized in the Entity’s consolidated financial statements only to the extent of interests in the associate that are not related to the Entity. m. Leasing

The Entity as Lessee

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. n. Foreign currencies

In preparing the financial statements of each entity, transactions in currencies other than the Entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:

- Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings. - Exchange differences on transactions entered into in order to hedge certain foreign currency risks. - Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

The recording and functional currencies of the foreign operation are as follows:

Recording and Country functional currencies

United States of America U.S. dollar

For the purposes of presenting these consolidated financial statements, the assets and liabilities of the Entity’s foreign operations are translated into currency units using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (and attributed to non-controlling interests as appropriate).

F-30

On the disposal of a foreign operation (i.e. a disposal of the Entity’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Entity are reclassified to profit or loss.

In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Entity losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognized in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do not result in the Entity losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognized in other comprehensive income. o. Employee benefits

Employee benefits from termination and retirement

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows:

Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements). Net interest expense or income. Remeasurement.

The retirement benefit obligation recognized in the consolidated statement of financial position represents the actual deficit or surplus in the Entity’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

A liability for a termination benefit is recognized at the earlier of when the Entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.

Short-term and other long-term employee benefits

A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.

F-31

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Entity in respect of services provided by employees up to the reporting date.

Statutory employee profit sharing (PTU)

PTU is recorded in the results of the year in which it is incurred and is presented in operating expenses line item in the consolidated statement of comprehensive income.

PTU is determined based on taxable income, according to Section I of Article 10 of the Income Tax Law. p. Income taxes

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

Current income tax (ISR) is recognized in the results of the year in which is incurred. Until December 31, 2013, current income tax was calculated as the higher of the ISR and the Business Flat Tax (IETU).

Deferred income tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.

As a consequence of the 2014 Tax Reform, as of December 31, 2013 deferred IETU is no longer recognized, as such, those effects were cancelled affecting the 2013 results.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Entity is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Entity expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

F-32

Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Effect of income tax due to the tax reform of 2010

On December 7, 2009, amendments to the Income Tax Law applicable from 2010 in which it was established were published that: a) the payment of income tax related to tax consolidation benefits obtained in the years 1999 to 2004 should be paid in installments from 2010 to 2014, and b) the tax related to tax benefits in fiscal consolidation in 2005 and following years will be paid from the sixth to the tenth year following that in which the benefit was obtained.

Tax on assets

The tax on assets (IMPAC) expected to be recoverable is recorded as a tax credit and is presented in the consolidated statement of financial position in the deferred taxes line item. q. Provisions

Provisions are recognized when the Entity has a present obligation (legal or constructive) as a result of a past event, it is probable that the Entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

1. Restructurings

A restructuring provision is recognized when the Entity has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.

2. Reserve for returns related to the Vacation Club

The Entity performs an analysis of sales of Vacation Club memberships to identify sales whose collectability is uncertain. Under IAS 18, Revenue, a reserve for returns is recognized based on the historical experience of the Entity, calculated based on the estimated future cash flows expected to be received from the sale.

3. Contingent liabilities acquired in a business combination

Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognized in accordance with IAS 37 and the amount initially recognized less cumulative amortization recognized in accordance with IAS 18 Revenue.

F-33

r. Financial liabilities and equity instruments

1. Classification as debt or equity

Debt and equity instruments issued by the Entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2. Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Entity are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Entity’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Entity’s own equity instruments.

3. Compound instruments

The component parts of compound instruments (convertible notes) issued by the Entity are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Entity’s own equity instruments is an equity instrument.

At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrument’s maturity date.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to capital and share premium. When the conversion option remains unexercised at the maturity date of the convertible note, the balance recognized in equity will be transferred to retained profits. No gain or loss is recognized in profit or loss upon conversion or expiration of the conversion option.

Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortized over the lives of the convertible notes using the effective interest method.

4. Financial liabilities

Financial liabilities are classified as either financial liabilities “at FVTPL” or “other financial liabilities”.

5. Financial liabilities at FVTPL

Financial liabilities are classified as of FVTPL when the financial liability is either held for trading or it is designated as of FVTPL.

F-34

A financial liability is classified as held for trading if:

It has been incurred principally for the purpose of repurchasing it in the near term; or On initial recognition it is part of a portfolio of identified financial instruments that the Entity manages together and has a recent actual pattern of short-term profit-taking; or It is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as of FVTPL upon initial recognition if:

Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Entity’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or It forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract to be designated as of FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the consolidated statement of comprehensive income.

6. Other financial liabilities

Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

7. Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Financial guarantee contracts issued by the Entity are initially measured at their fair values and, if not designated as of FVTPL, are subsequently measured at the higher of:

The amount of the obligation under the contract, as determined in accordance with IAS 37; and The amount initially recognized less, where appropriate, cumulative amortization recognized in accordance with the revenue recognition policies.

8. Derecognition of financial liabilities

The Entity derecognizes financial liabilities when, and only when, the Entity’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

F-35

s. Revenue recognition

The Entity recognizes revenues as follows:

i. Revenue from hotel operations, including room rentals, are recognized as the hotel services are provided (rooms, sale of food and drinks, etc.);

ii. Revenue from management and brand fees are recognized as earned as set forth in the respective agreements;

iii. Revenue from administration of loyalty programs for third parties are recognized when the service is provided;

iv. Revenue from the operation of Vacation Club is recognized as rental income, separating the portion of the contract assigned to land and the portion that is assigned to the building, which is recognized as financial lease, and;

v. Revenue from the sale of points of Kívac are recognized once the service is provided, including an estimate of those points will never be redeemed; the value of points to be used in the future are classified as current and long-term deferred revenue in the consolidated statement of financial position. t. Classification of costs and expenses

Costs and expenses presented in the consolidated statements of comprehensive income are classified based on a combination of their nature and function. u. Statements of cash flows

The Entity reports cash flows from operating activities using the indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.

Interest paid is usually classified as operating activities and interest and dividends received are usually classified as investing activities. v. Loyalty programs

The fair value of the awards received initially is recognized as deferred income until the benefits are delivered to the client. The liability is presented under the heading of "Other accounts payable and accrued liabilities" in the consolidated statement of financial position. w. Earnings per share of the controlling interest

Basic earnings per share are calculated by dividing the net income attributable to the controlling interest by the weighted average shares outstanding during the period. The diluted earnings per share is determined by adding 1) to the net income utilized in the numerator of the basic earnings per common share computation, interest and exchange rate fluctuation recorded in earnings attributable to voluntarily convertible loans and 2) to the weighted average shares outstanding in the denominator of the computation, the weighted average of outstanding obligations converted to stock based on the conversion factor established in the convertible loan agreements. As of December 31, 2014, 2013 and 2012, the Entity does not have ordinary shares with potential dilutive effects.

F-36

5. Critical accounting judgments and key sources of estimation uncertainty

In the application of the Entity’s accounting policies, which are described in Note 4, the Entity’s management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical judgments and important sources of uncertainty which the Entity’s management has determined at the date of the financial statements that could have a significant impact on the carrying amounts of assets and liabilities during the subsequent financial period:

i. The reserve for doubtful accounts and returns related to the Vacation Club ii. Revenue recognition of Vacation Club and Kívac iii. Financial projections for asset impairment iv. The future benefit of tax losses v. The effects of contingencies faced by the Entity vi. Labor obligations vii. Redemption of loyalty program points viii. The residual value of properties ix. Classification criteria of the operating segments of the Entity x. The estimated amount of investments in securities other than cash equivalents

6. Cash and cash equivalents

Cash consists of cash on hand and demand deposits. Cash equivalents are maintained to meet short-term cash commitments rather than for investment or other purposes. For an investment to qualify as a cash equivalent it must be readily convertible to a known amount of cash and subject to insignificant risk of changes in value.

Therefore, an investment normally qualifies as a cash equivalent when it has a short maturity of generally three months or less from the date of acquisition. Investments in securities are not included in cash equivalents unless they are, in substance, cash equivalents; otherwise, they are presented as investments in securities. Cash is stated at nominal value and cash equivalents are measured at fair value, the changes in value are recognized in profit or loss.

2014 2013 2012

Cash $ 85,792 $ 137,917 $ 123,334 Cash equivalents: Overnight investment 912,000 150,000 1,199,918 Investment in dual structure notes - 418,448 - Other - - 108,615

Total $ 997,792 $ 706,365 $ 1,431,867

7. Investments in securities

2014 2013 2012 Trading: Overnight investment $ 487,294 $ 479,060 $ - Other 31,779 46,291 48,110

$ 519,073 $ 525,351 $ 48,110

F-37

8. Accounts and notes receivable

2014 2013 2012

Notes receivable from Vacation Club $ 1,022,035 $ 824,516 $ 827,874 Other receivables from Vacation Club 250,742 86,748 117,147 Clients and agencies 531,821 659,397 592,422 Recoverable taxes, net 805,284 629,092 394,466 Account receivable from sale of non- strategic assets 102,000 185,000 - Other 156,795 108,738 80,904 2,868,677 2,493,491 2,012,813 Less - Allowance for doubtful accounts (241,597) (242,287) (308,705)

$ 2,627,080 $ 2,251,204 $ 1,704,108

a. Notes receivable from Vacation Club

The sale of memberships of Vacation Club is normally recognized when at least a 10% deposit is received and five-year financing is granted for the remaining portion, with interest charged at market rates. The Entity anticipates that, after the implementation of certain business strategies, those accounts that are at most 11 months old may be reactivated; accounts aged greater than 11 months are normally cancelled. However, estimates of the reserve for doubtful accounts are recorded based on the entire portfolio.

Composition of the trading portfolio

2014 2013 2012 Notes receivable from Vacation Club- Less than 90 days $ 311,336 $ 331,156 $ 401,350 More than 90 and less than 240 days 334,537 290,211 250,896 Between 240 days and 365 days 376,162 203,149 175,628

$ 1,022,035 $ 824,516 $ 827,874

Clients and agencies- Less than 90 days $ 410,312 $ 400,525 $ 425,437 Over 90 days 121,509 258,872 166,985

$ 531,821 $ 659,397 $ 592,422

Allowance for doubtful accounts- Clients and agencies $ (198,474) $ (207,838) $ (277,321) Notes receivable from Vacation Club (43,123) (34,449) (31,384)

$ (241,597) $ (242,287) $ (308,705)

b. Accounts receivable from clients and agencies

The average credit term related to amounts owed for hotel services is 22 days. The Entity does not charge interest on outstanding amounts. Normally, amounts owed within this portfolio are not aged significantly. During 2014 and 2013 the Entity identified and wrote-off an amount of $9,364 and $67,710, respectively, of the reserve for doubtful accounts since it was determined that such amounts do not have the possibility of being recovered.

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9. Vacation Club inventory

2014 2013 2012

Vacation Club inventory $ 268,552 $ 89,342 $ 53,812 Villas and residential lots 18,416 16,654 16,583

$ 286,968 $ 105,996 $ 70,395

Inventories recognized in Vacation Club cost and expenses were $83,453, $75,893 and $88,736 for the years ended December 31, 2014, 2013 and 2012, respectively.

10. Assets classified as held for sale

a. Holiday Inn Laredo transaction:

2014 Assets classified as held for sale: Cash and cash equivalents $ 5,595 Accounts and notes receivable 1,193 Inventories 154 Prepaid expenses 288 Property and equipment - Net 43,680

Total assets classified as held for sale $ 50,910

Liabilities directly associated with assets held for sale: Other liabilities and accrued expenses $ (6,423)

b. FibraHotel transaction:

2012

Properties and hotel equipment held for sale $ 1,364,958

Liabilities directly associated with assets held for sale: Debt (including current and long-term portion) $ (270,237) Deferred income tax (244,579)

Total liabilities directly associated with assets classified as held for sale $ (514,816)

11. Long-term notes receivable

Long-term notes receivable correspond to the long-term portion of accounts receivable from sales of Vacation Club memberships, as follows:

2014 2013 2012

Long-term notes receivable $ 1,803,210 $ 1,568,095 $ 1,379,473 Less: Allowance for doubtful accounts (76,488) (54,786) (24,445)

Total $ 1,726,722 $ 1,513,309 $ 1,355,028

F-39

The maturities of the long-term notes receivable at December 31, 2014 are as follows:

Import

2016 $ 652,844 2017 390,233 2018 282,772 2019 and thereafter 477,361

Total long-term notes receivable $ 1,803,210

12. Long-term accounts receivable

2014 2013 2012

Escrow account for sale of South America segment $ - $ 294,679 $ 319,938 Account receivable for sale of Chemuyil - 102,000 -

Total $ - $ 396,679 $ 319,938

13. Property and equipment

2014 2013 2012

Buildings $ 6,515,874 $ 6,605,272 $ 6,562,092 Furniture and equipment 1,099,930 1,040,745 1,092,547 Computers 414,945 416,987 366,953 Vehicles 29,411 31,508 19,068 8,060,160 8,094,512 8,040,660

Less - Accumulated depreciation (4,084,332) (3,858,338) (3,720,190) 3,975,828 4,236,174 4,320,470

Land 1,837,598 1,853,793 2,866,114 Construction in progress 453,867 247,658 181,002

$ 6,267,293 $ 6,337,625 $ 7,367,586

F-40

Furniture and Construction in Land Buildings equipment Computers Vehicles progress Total

Cost

Balance as of January 1, 2012 $ 3,634,334 $ 9,346,363 $ 1,795,654 $ 382,970 $ 27,677 $ 210,631 $ 15,397,629 Additions - 10,935 84,558 34,750 2,769 24,566 157,578 Disposals - - (148,080) (2,505) (751) (57) (151,393) Assets sold as part of discontinued operations (446,491) (1,313,827) (465,421) (26,860) (5,623) (9,808) (2,268,030) Property and equipment classified as held for sale (321,729) (1,481,379) (174,164) (21,402) (5,004) (44,330) (2,048,008)

Balance as of December 31, 2012 2,866,114 6,562,092 1,092,547 366,953 19,068 181,002 11,087,776 Additions 291,568 440,772 227,706 60,999 17,093 66,656 1,104,794 Disposals (1,303,889) (397,592) (279,508) (10,965) (4,653) - (1,996,607)

Balance as of December 31, 2013 1,853,793 6,605,272 1,040,745 416,987 31,508 247,658 10,195,963 Additions 1,249 18,156 136,457 5,602 6,494 206,209 374,167 Disposals (11,228) - - (7,644) (7,325) - (26,197) Reclassified as held for sale (6,216) (107,554) (77,272) - (1,266) - (192,308)

Balance as of December 31, 2014 $ 1,837,598 $ 6,515,874 $ 1,099,930 $ 414,945 $ 29,411 $ 453,867 $ 10,351,625

Accumulated depreciation and impairment

Balance as of January 1, 2012 $ - $ (3,435,553) $ (1,098,834) $ (326,051) $ (19,830) $ - $ (4,880,268) Eliminated on disposals of assets - - 95,032 2,233 711 - 97,976 F-41 Assets sold as part of discontinued operations - 417,056 412,755 28,806 5,369 - 863,986 Property and equipment classified as held for sale - 537,769 121,174 19,319 4,788 - 683,050 Depreciation expense - (332,186) (99,556) (48,127) (5,065) - (484,934)

Balance as of December 31, 2012 - (2,812,914) (569,429) (323,820) (14,027) - (3,720,190) Eliminated on disposals of assets 763,869 141,678 207,376 10,535 4,010 - 1,127,468 Impairment losses recognized in profit or loss (763,869) (130,962) - - - - (894,831) Depreciation expense - (162,691) (161,522) (39,996) (6,576) - (370,785)

Balance as of December 31, 2013 - (2,964,889) (523,575) (353,281) (16,593) - (3,858,338) Depreciation expense - (208,270) (134,751) (27,163) (4,438) - (374,622) Eliminated on reclassification as held for sale - 106,793 41,648 - 187 - 148,628

Balance as of December 31, 2014 $ - $ (3,066,366) $ (616,678) $ (380,444) $ (20,844) $ - $ (4,084,332)

Total property and equipment - net $ 1,837,598 $ 3,449,508 $ 483,252 $ 34,501 $ 8,567 $ 453,867 $ 6,267,293

14. Investment in associates

% interest at 2014, Principal activity 2013 and 2012 2014 2013 2012 Investment in associates- Inmobiliaria Hotelera Las Animas, S. A. de C. V. Hotels in Xalapa 25.00 $ - $ 27,571 $ 27,294 Inmobiliaria Hotelera de Yucatán, S. A. de C. V. Hotels in Merida 9.2 1,129 6,450 9,806 Other Miscellaneous 750 1,416 3,200

$ 1,879 $ 35,437 $ 3,200

15. Other assets

2014 2013 2012

Kivac sales commissions $ 215,970 $ 144,407 $ 86,816 Guarantee deposits 39,719 56,110 22,912 Development expenses 13,673 13,898 20,768

$ 269,362 $ 214,415 $ 130,496

16. Long-term debt

a. Long-term debt is as follows:

2014 2013 2012 U.S. dollar-denominated: Senior Notes 2017, fixed rate of 7.875% $ 4,432,316 $ 3,474,406 $ 2,801,149 Senior Notes 2015, fixed rate of 9.25% 756,517 1,080,674 1,071,705 Euro-Commercial Paper, fixed rate of 6% 691,179 - - Other loans, at rates between 3.16% and 3.21% 2,261 2,498 3,960 Mortgage loans, fixed interest rate of 2.55% - - 189,948 Mortgage loans with accounts receivable from Vacation Club as collateral at a rate of 4.73% - - 288,484 Convertible bonds, at a rate of 16% - - 900,000 Mortgage loans at average rates of 6.82% - - 80,289

5,882,273 4,557,578 5,335,535

Less- Mortgage loans reclassified as “liabilities directly associated with assets classified as held for sale” - - (270,237) Less - Current portion (1,449,957) (2,498) (1,005,842)

Long-term debt $ 4,432,316 $ 4,555,080 $ 4,059,456

The maturities of long-term debt at December 31, 2014, are as follows:

Thousands of U.S. dollars

2017 310,000

Equivalent in thousands of Mexican pesos $ 4,562,580 Less - debt issuance costs (130,264)

$ 4,432,316

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b. On November 28, 2014, the Entity obtained US$47.2 million through a program known as “Euro- Commercial Paper”, which accrue interest at a rate of 6% annually and mature on November 18, 2015. Interest is recognized in the consolidated statement of comprehensive income (loss) as accrued, and will be paid at maturity. c. On November 30, 2012, the Entity issued a bond for US$225 million known as the “2017 Senior Notes”, which mature on November 30, 2017 and accrue interest at a 7.875% fixed rate. On November 30, 2013, the Entity issued a supplement for US$50 million of “2017 Senior Notes”, with the same characteristics mentioned above, resulting in a total debt of US$275 million.

At December 31, 2013, none of the debt includes mortgage guarantees, while at December 31, 2012 debt with mortgage guarantees amounted to $270,237. The main guarantees correspond to properties (hotels), which net book value amounted to $743,899. At December 31, 2012 such financings accrued interest at the TIIE plus 1.5 to 5 percentage points with respect to loans in pesos. These loans were settled in January 2013 with the proceeds from the sale of hotels to FibraHotel. e. During 2008, the Entity began a Stock Certificates program (stock certificates), for a total authorized amount of up to $3,000,000. The nominal value of the certificates was one hundred pesos and each issue maturing within five years, with interest payable every 28 days. In April 2008, $1,500,000 was available and in July 2008, a second program was opened for $750,000 under the same terms and conditions. Amounts outstanding under this program were settled in 2012 from the resources obtained from the sale of the operations in South America. f. The Entity settled on January 2, 2013, the convertible debentures which were issued in March 2012. g. The Entity had financing at December 31, 2011 with the IFC, in the amount of US$8 million, bearing interest at the London Interbank Offered Rate (LIBOR) plus two percentage points. These loans had a convertible feature into Series "L" shares of the Entity. The portion of the financing corresponding to equity was presented as contributions for future capital increases within stockholders’ equity. During 2012 remaining amount was paid in full. h. At December 31, 2011, the Entity had three revolving credit lines, two with Banco Mercantil del Norte, S. A. (Banorte) and one with Banco de Comercio Exterior, SNC (Bancomext) whose balance at that date was US$28.5 million, US$0.1 million and $510,637, respectively.

Withdrawals under these facilities bore interest at variable rates and were secured by notes receivable relating to the financing granted by the sale of Vacation Club memberships. Collection rights on these receivables had been assigned to trusts located inside and outside of Mexico. According to collateral assignment contracts, the Entity had transferred to Bancomext and Banorte, the collection rights related to the receivables assigned to the trusts. The lines of credit established mortgage guarantees over the Vacation Club properties.

During December 2012, the line of credit with Banorte was settled leaving only the line of credit with Bancomext whose balance at December 31, 2012 was US$22.1 million; the amount of notes receivable amounts assigned to the trust at that date totaled US$31.5 million. The line of credit with Bancomext was settled on February 7, 2013 with the proceeds received from the “2017 Senior Notes” for US$50 million concreted on January 30, 2013.

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i. The most significant restrictions and obligations contained in debt agreements at December 31, 2014, prohibit the Entity from:

Incurring additional indebtedness Granting guarantees Making payments or restricted investments Selling assets Declaring dividends Making certain intercompany transactions Merging with other companies

At December 31, 2014 and the date of the consolidated financial statements, restrictions and obligations have been satisfied.

j. Below is detail of key financial items of the Entity and the subsidiary guarantors of the “2017 Senior Notes”:

Grupo Posadas, S.A.B. de C.V. and guarantor subsidiaries Non-guarantor subsidiaries Total consolidated 2014 2013 2012 2014 2013 2012 2014 2013 2012

Total revenues $ 5,553,097 $ 5,589,003 $ 4,537,562 $ 295,181 $ 2,961,355 $ 1,602,312 $ 5,848,278 $ 8,550,358 $ 6,139,874 Impairment, depreciation and amortization 370,047 1,217,558 316,071 39,218 97,330 115,440 409,265 1,314,888 431,511

Lease expense 329,761 326,513 331,154 - - - 329,761 326,513 331,154 Operating income (loss) 466,512 (618,718) 527,948 78,206 577,138 94,319 544,718 (41,580) 622,267 Consolidated income (loss) 926,686 (1,162,965) 1,058,963 (208,445) (594,849) 296,601 718,241 (1,757,814) 1,355,564

F-44 Total assets 12,829,671 12,023,808 10,132,515 488,280 495,569 4,115,884 13,317,951 12,519,377 14,248,399

Total liabilities $ 8,409,564 $ 7,965,883 $ 5,389,894 $ 799,177 $ 1,165,277 $ 3,635,608 $ 9,208,741 $ 9,131,160 $ 9,025,502

k. Below is a detail of key financial items of the Entity and the subsidiary guarantors of the “2015 Senior Notes”:

Grupo Posadas, S.A.B. de C.V. and guarantor subsidiaries Non-guarantor subsidiaries Total consolidated 2013 2012 2013 2012 2013 2012

Total revenues $ 5,924,392 $ 5,840,173 $ 2,625,966 $ 299,701 $ 8,550,358 $ 6,139,874 Depreciation and amortization 1,256,801 310,227 58,087 121,284 1,314,888 431,511

Lease expense 326,513 331,154 - - 326,513 331,154 Operating (loss) income (527,867) 524,196 486,287 98,071 (41,580) 622,267 Consolidated net (loss) income (2,175,730) 1,314,623 417,916 40,941 (1,757,814) 1,355,564

Total assets 12,284,855 12,699,238 234,522 1,549,161 12,519,377 14,248,399

Total liabilities $ 8,498,735 $ 8,195,915 $ 632,425 $ 829,587 $ 9,131,160 $ 9,025,502

17. Income taxes

The Entity is subject to ISR and through December 31, 2013, to ISR and IETU. Therefore, the income tax payable was the higher between ISR and IETU through 2013.

ISR - The rate was 30% in 2014, 2013 and 2012 and as a result of the new 2014 ISR law (“2014 Tax Law”), the rate will continue at 30% thereafter. The Entity incurred ISR on a consolidated basis until 2013 with its Mexican subsidiaries. As a result of the 2014 Tax Law, the tax consolidation regime was eliminated, and the Entity and its subsidiaries have the obligation to pay the deferred income tax benefit calculated as of that date over a five-year period beginning in 2014, as illustrated below.

While the 2014 Tax Law repealed the tax consolidation regime, an option was established, which allows groups of companies to determine a joint calculation of ISR (tax integration regime). The new regime allows groups of consolidated companies that share common direct or indirect ownership of more than 80%, certain benefits in the tax payment (when the group of companies include both profit and loss entities in the same period), which can be deferred over three years and reported, as updated, at the filing date of the tax return corresponding to the tax year following the completion of the aforementioned three-year period.

The Entity and its subsidiaries opted to join the new scheme, and thus determined income tax for the year 2014 together.

Pursuant to Transitory Article 9, section XV, subsection d) of the 2014 Tax Law, given that as of December 31, 2013, the Entity was considered to be a holding company and was subject to the payment scheme contained in Article 4, Section VI of the transitory provisions of the ISR law published in the Federal Official Gazette on December 7, 2009, or article 70-A of the ISR law of 2013 which was repealed, the Entity must continue to pay the tax that it deferred under the tax consolidation scheme in 2007 and previous years based on the aforementioned provisions, until such payment is concluded.

IETU - IETU was eliminated as of 2014; therefore, up to December 31, 2013, this tax was incurred both on revenues and deductions and certain tax credits based on cash flows from each year. The respective rate was 17.5%. Due to the abolishment of the IETU law, the Entity cancelled deferred IETU previously recorded in 2013.

As of 2008, the Asset Tax Law (LIMPAC) was eliminated, but under certain circumstances, the amount of this tax paid in the 10 years immediately prior to that in which ISR is first paid may be recovered in accordance with applicable tax provisions.

While ISR was previously calculated under the aforementioned consolidation regime, IETU was incurred individually by the holding company and its subsidiaries.

Taxation in the United States - The subsidiaries operating in that country are subject to the payment of income tax at a rate of 35%. a. (Benefit) income tax recognized in profit or loss:

2014 2013 2012 Current tax Current ISR $ 169,835 $ 416,308 $ - Long-term ISR related to tax deconsolidation (Note 2g) - 882,262 56,044 Expense tax amnesty (Note 2g) - 125,585 - 169,835 1,424,155 56,044 Deferred tax Deferred ISR (1,231,092) (262,167) 588,952 Deferred IETU - (105) (28,437)

Total (benefit) income tax $ (1,061,257) $ 1,161,883 $ 616,559 b. Reconciliation of statutory tax rate to effective tax rate - The main differences affecting the taxable income of the Entity were related to the recognition of the effects of inflation, equity in earnings of associated companies, amortization of deferred credits and amortization of prior year losses. Income taxes and the reconciliation of the statutory and effective ISR rates, expressed as a percentage of income before equity in results of associated entities and income taxes, is:

2014

Statutory rate 30% Less: Effect of activation of tax loss and tax effect of SIBRA (Note 2g) 304% Effects of permanent differences and effects of inflation (21)%

Effective rate 313%

F-45

c. The main items originating the balance of the deferred ISR asset (liability) at December 31, are:

2014 2013 2012

Notes receivable $ (266,234) $ (397,128) $ (351,346) Allowance for doubtful accounts 95,425 92,475 83,195 Vacation Club inventory (73,097) (16,594) (54,140) Property and equipment (230,681) (265,057) (123,990) Other assets (127,735) (157,832) (39,149) Reserve for losses of subsidiaries for 2010 tax reform - - (556,584) Reserves and deferred income 341,961 327,708 488,988 Benefit of tax loss carryforwards 2,363,880 1,883,246 190,360 Reserve of tax loss carryforwards (1,030,229) (1,309,717) - Recoverable IMPAC 3,528 3,528 7,178 Tax benefits (Conacyt) (10,876) (21,689) (22,210) Tax effect of SIBRA (993,332) (1,297,422) (843,085)

$ 72,610 $ (1,158,482) $ (1,220,783) d. The benefits of restated tax loss carryforwards for which the deferred ISR asset has been partially recognized, can be recovered subject to certain conditions. At December 31, 2014, 2013 and 2012, the tax loss carryforwards amounted to $7,879,600, $6,277,487 and $634,533, respectively.

Expiration dates as of December 31, 2014 are as follows:

Year Amount

2015 $ 51,804 2016 47,446 2017 63,905 2018 2,489,549 2019 501,653 2020 429,432 2021 1,779,641 2022 239,305 2023 687,150 2024 1,589,715

$ 7,879,600 e. Tax consolidation

ISR liability as of December 31, 2014 related to the effects for benefits and tax desconsolidation will be paid in the following years:

Year

2015 $ 280,272 2016 221,736 2017 162,125 2018 149,287 813,420 Less - current portion (280,272)

$ 533,148

F-46

18. Long-term accrued liabilities

2014 2013 2012

Return reserve from Vacation Club and other $ 144,307 $ 132,464 $ 115,421 Employee benefits 58,840 16,290 21,426 Other accrued liabilities 140,751 127,296 33,164

$ 343,898 $ 276,050 $ 170,011

A reserve for Vacation Club returns exists within current liabilities as of December 31, 2014, 2013 and 2012, amounting to $69,780, $81,623 and $82,405, respectively.

19. Employee benefits

The net period cost for obligations under the pension plan and seniority premiums relating amounted to $17,131, $16,089 and $13,920 as of December 31, 2014, 2013 and 2012, respectively. Other disclosures required by accounting rules are not considered material.

20. Financial instruments

The Entity is exposed to market risks (including interest rate risks and exchange rate risk), credit risk and liquidity risk, which are all managed centrally.

Capital risk management policy - The Entity manages its capital to ensure that it will continue as a going concern while maximizing the return to shareholders through the optimization of debt and equity structure. The overall strategy of the Entity has not been changed compared to 2013.

The Entity’s management reviews its capital structure when it presents its financial projections as part of the business plan to the Entity’s Board of Directors and shareholders. As part of this review, the Board of Directors considers the cost of capital and the risks associated with each class of capital. The Entity analyzes the capital structure for each project independently, in order to minimize the risk for the Entity and optimize shareholder returns.

The Entity’s management, on a monthly basis, reviews the net debt and accrued interest and its relation to the EBITDA (earnings before taxes, interest, currency fluctuations, depreciation and amortization). This review is carried out when the Entity’s financial projections are presented as part business plan to the Board of Directors and shareholders of the Entity.

The Entity is incorporated as a S.A.B. de C.V. in accordance with the Mexican Securities Law and the General Companies Law; fixed minimum capital is $50.

Debt index

The debt index at end of the reporting period was as follows:

2014 2013 2012

Debt (i) $ 5,882,273 $ 4,557,578 $ 5,335,535 Cash and investments in securities 1,516,865 1,231,716 1,479,977

Net debt 4,365,408 3,325,862 3,855,558

Stockholders’ equity (ii) $ 4,109,210 $ 3,388,217 $ 5,222,897

Index of net debt to equity 106% 98% 74%

F-47

(i) Debt is defined as long and short-term borrowings (excluding derivatives and financial guarantee contracts), as described in Note 16.

(ii) Stockholders' equity includes all capital and reserves of the Entity that are managed as capital.

Interest rate risk management - The Entity is not significantly exposed to market risks related to fluctuations in interest rates, because its bank loans at December 31, 2014 and the majority of its debt at December 31, 2013 and 2012 accrue interest at fixed rates. Accordingly, an increase in interest rates would not necessarily result in a significant risk of fluctuations in interest rates. At December 31, 2014, the 2017 and 2015 Senior Notes, and Euro-Commercial paper issued in U.S. dollars represent 88% of the debt of the Entity, and accrues interest at a fixed rate.

Foreign currency risk management - In relation the exchange rate risk, the Entity considers that the risk is material given that at December 31, 2014, 100% of debt is denominated in U.S. dollars. The Entity’s financing is in the same currency as a certain portion of the source of payment given that a percentage of the Entity’s revenues are denominated in U.S. dollars. A depreciation (or appreciation) of 10% in the Mexican peso against the U.S. dollar would result in an additional foreign exchange loss or (gain) in the results and equity of the Entity of approximately $366,636.

The exchange rates from Mexican pesos to U.S. dollars are:

December 31, June 5, 2014 2013 2012 2015

Pesos per U.S. dollar $ 14.7180 $ 13.0765 $ 13.0101 $ 15.5347

Credit risk management - Credit risk refers to the risk that the counterparties will default on their contractual obligations, resulting in a loss for the Entity. The Entity’s principal credit risk stems from cash and cash equivalents, investments in securities and accounts and notes receivable.

The Entity has a policy of maintaining cash and cash equivalents only with recognized, prestigious institutions with a high credit rating. Additionally, investments are limited to instruments with high credit quality. In the case of accounts and notes receivable, the credit risk mainly stems from the Vacation Club portfolio; otherwise, the respective guarantees are obtained in accordance with established credit policies.

The maximum exposure to credit risk is represented by the amounts shown in the consolidated statement of financial position.

Liquidity risk management - The Entity is exposed to liquidity risk regarding its financial liabilities. Financial liabilities included within total current liabilities are due over the next twelve months. Maturities of long-term debt are disclosed in Note 16.

The principal sources of liquidity of the Entity have been cash flows from (i) operating activities generated primarily from operating income from its owned and leased hotels, management revenues, (ii) the sale and financing of Vacation Club memberships, (iii) proceeds from sales of non-strategic assets and (iv) debt financing.

The Entity management is responsible for liquidity management, and has established appropriate policies to mitigate this risk through the monitoring of working capital, which allows management to manage funding requirements in the short, medium and long-term, maintaining sufficient cash reserves, available credit lines, continuously monitoring cash flows, both projected and actual and reconciling the maturity profiles of financial assets and liabilities.

Fair value of financial instruments:

Financial derivatives - At December 31, 2014, a portion of the revenues of the Entity, usually around 17%, have been either directly or indirectly denominated in U.S. dollars. This is due to the fact that the room rates at coastal hotels (primarily at Cancun and Los Cabos) were quoted in U.S. dollars and, historically, a portion of the sale and financing of Vacation Club memberships have been quoted in U.S. dollars.

F-48

Because a portion of revenues are denominated directly or indirectly in U.S. dollars and to minimize the exposure to highly volatile interest rates in pesos, the Entity’s policy has been to maintain a significant portion of its debt in U.S. dollars. This has been achieved by borrowing U.S. dollar denominated debt when credit market conditions allow for it.

Additionally, from time to time the Entity enters into cross-currency swaps. In particular, when entering into cross-currency swaps, the Entity attempts to hedge the positions by matching cash flows on its derivative transactions with cash flows on its indebtedness; however, for accounting purposes, the derivative financial instruments have not been designated as hedges because they do not meet all of the accounting requirements established by IFRS.

The liability for foreign currency swaps was $19,798 at December 31, 2012. There were no swaps in 2014 or 2013.

Valuation techniques and assumptions applied to determine fair value - The fair value of the financial assets and liabilities is determined as follows:

The fair value of the financial assets and liabilities with standard terms and conditions, and negotiated in active liquid markets, are determined based on the prices quoted in the market.

The fair value of the other assets and liabilities is determined in accordance with generally accepted price determination models, which are based on the analysis of discounted cash flows.

Fair value of the financial assets and liabilities - The Entity’s management considers that the carrying amounts of the financial assets (including investments in securities) and financial liabilities recognized at amortized cost in the consolidated statement of financial position, approximate their fair value based on their short-term nature.

The fair value of long-term debt is as follows:

2014 2013 2012

Thousands of US dollars: 2017 Senior Notes US 272,164 US 243,637 US 225,000 Mortgage loans - - 18,978 2015 Senior Notes 51,668 80,360 73,911 Euro-Commercial paper 42,335 - -

US 366,167 US 323,997 US 317,889

21. Derivative financial instruments

The characteristics of debt and CCS hired to hedge such debt are shown in the following table at December 31, 2012:

Notional amount Notional amount (In millions) Start date Maturity (In millions) Fair value

Stock certificates $ 97.5 July, 2008 April, 2013 US 9.4 $ (19,798)

F-49

22. Stockholders’ equity

a. As of December 31, stockholders’ equity is comprised of the following shares without par value:

Number of shares 2014 2013 2012 Serie "A" Serie "A" Serie "A" Serie "L" Serie Total

Authorized capital 512,737,588 576,888,619 467,941,764 108,946,855 576,888,619 Less - Repurchase of shares (16,799,600) (18,899,099) (11,911,566) (6,987,533) (18,899,099) Shares in trust assigned to executives - (25,166,702) (24,758,302) (526,600) (25,284,902) Treasury stock - (33,890,206) (33,890,206) - (33,890,206) Chemuyil trust shares - (2,995,024) (8,799,000) - (8,799,000) (16,799,600) (80,951,031) (79,359,074) (7,514,133) (86,873,207)

495,937,988 495,937,588 101,432,722 101,432,722 490,015,412

b. At December 31, 2014, the share capital is composed solely of Series “A” free subscription.

c. During a Stockholders’ Extraordinary General Meeting held on March 19, 2014, the stockholders approved the cancellation of 2,099,099 ordinary nominative Series “A” shares of the Entity, because the Entity’s management had no plan established to reissue such shares.

d. During a Stockholders’ Extraordinary General Meeting held on March 19, 2014, the stockholders approved the cancellation of the trusts containing the treasury stock, the shares in the Chemuyil trust and the shares held in trust assigned to executives, because as of that date there were no longer any F-50 obligations guaranteed with shares of the Entity, which formed part of the assets of the aforementioned trusts. As a result of the cancellation of the trusts, a remnant was generated for the Entity in the amount of $10,991, which is presented as earned capital.

e. As discussed in Note 2f, during 2013, 5,803,976 shares were sold in the stock market as part of the Chemuyil contractual penalty, resulting in a capital increase of $138,488.

f. During a Stockholders’ Ordinary and Extraordinary General Meeting held on March 15, 2013, the stockholders declared dividends of $83,698, which were paid beginning on April 18, 2013. The consolidated statement of changes in stockholders’ equity shows this amount net of reimbursed dividends of $10,178, due to the release of shares from the different trusts discussed above.

g. During a Stockholders’ Ordinary General Meeting held on March 25, 2014, a subsidiary declared dividends of $16,000, in which non-controlling equity of 50% is held. Such dividend was paid in the same year and is recognized in the consolidated statement of changes in stockholders’ equity under “declaration of dividends to non-controlling equity”.

h. During Stockholders’ Ordinary Meetings held on March 11, and August 15, 2013, subsidiaries declared dividends of $85,184 and $4,065, in which non-controlling equity of 50% and 25%, respectively, is held. Such transaction is recognized in the consolidated statement of changes in stockholders’ equity under “declaration of dividends to non-controlling equity” of $43,608.

i. At December 31, 2014, 2013 and 2012, the legal reserve, presented within retained earnings, amounts to $99,187 (nominal value) and represents 20% of the nominal capital. This reserve may not be distributed to shareholders except in the form of dividends.

j. Stockholders’ equity, except for restated paid-in capital and tax retained earnings, will be subject to ISR payable by the Entity at the rate in effect upon distribution. Any tax paid on such distribution may be credited against annual and estimated ISR of the year in which the tax on dividends is paid and the following two fiscal years. As of 2014 there is an additional 10% rate on dividends.

23. Balances and transactions in foreign currency

Significant monetary position in foreign currencies at December 31, is:

2014 2013 2012 Thousands of US dollars: Current: Monetary assets 80,238 57,470 25,362 Monetary liabilities (107,107) (10,087) (39,808)

(26,869) 47,383 (14,446) Long-term: Monetary assets 87,762 86,657 54,361 Monetary liabilities (310,000) (358,271) (323,901)

(222,238) (271,614) (269,540)

Net liability position (249,107) (224,231) (283,986)

Equivalent in thousands of Mexican pesos $ (3,666,359) $ (2,932,161) $ (3,694,686)

Foreign currency transactions made by entities located in Mexico are mainly income from hotel operations, certain sales of Vacation Club memberships and inventory and interest expense.

24. Related party transactions

Employee benefits granted to key management personnel (and/or directors) of the Entity, were as follows:

2014 2013 2012

Short and long-term benefits $ 91,643 $ 102,911 $ 107,332

Termination benefits $ 5,574 $ - $ 9,600

25. Discontinued operations

During the third quarter of 2012, the Entity sold its South American operations. The financial position at December 31, 2011 and results of the discontinued operations in 2013 and 2012, presented within discontinued operations in the consolidated statements of comprehensive income, are set out below.

a. Consolidated statement of financial position data.

September 30, 2012

Cash and cash equivalents $ 65,635 Accounts receivable 153,709 Inventories 8,661 Other assets 6,946 Current assets 234,951

Property and equipment 1,404,044 Other assets 381,251

Total assets $ 2,020,246

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September 30, 2012

Current portion of long-term debt $ 23,767 Suppliers 19,387 Other accounts payable and accrued liabilities 143,568

Total current liabilities $ 186,722

Long-term debt $ 71,300 Other accounts payable and accrued liabilities 6,429 Deferred income tax 322,036

Total liabilities $ 586,487 b. Consolidated statements of comprehensive income data

9 months ended September 30, 2012

Revenue $ 783,689 Other income 50,065 833,754 Operating expenses: Administrative 713,520 Other expenses 27,635 741,155

Operating income 92,599

Other financial income (expense) (7,147) Income before income taxes 85,452 Income taxes 21,151

Income from discontinued operations (attributable to controlling interest) $ 64,301 c. Consideration received

2012

Consideration received in cash and cash equivalents $ 2,834,506 Contingent consideration at fair value 319,938

$ 3,154,444 d. Gain on sale of the South American operations

2012

Consideration received $ 3,154,444 Net assets sold and operations during the year 1,278,400

Gain on sale $ 1,876,044

The gain on sale is included in results for the year within discontinued operations in the consolidated statement of comprehensive income.

F-52

26. Information by geographical areas and business segments

The operating segment information is presented according to the information presented to and analyzed by the Entity’s management. In addition, the Entity presents condensed information by geographic area and operational segments.

The Entity operates in different geographical areas including Mexico, United States of America and South America (Brazil, Argentina and Chile up to 2012). The main financial captions by geographical area as of and for the year ended December 31, 2013 are:

United States of Mexico America Total consolidated

Total operating revenues $ 8,493,756 $ 56,602 $ 8,550,358

Depreciation, amortization and real estate leasing $ 1,635,641 $ 5,760 $ 1,641,401

Operating loss $ (65,465) $ 23,885 $ (41,580)

Consolidated net loss $ (1,773,534) $ 15,720 $ (1,757,814)

Total assets $ 12,378,038 $ 141,339 $ 12,519,377

Total liabilities $ 9,116,703 $ 14,457 $ 9,131,160

The main financial caption by geographic area at December 31, 2012 were as follows

South United States of Mexico America America Total consolidated

Total operating revenues $ 6,075,260 $ - $ 64,614 $ 6,139,874

Depreciation, amortization and real estate leasing $ 755,526 $ - $ 7,143 $ 762,669

Operating income $ 606,662 $ - $ 15,605 $ 622,267

Consolidated net income $ (530,748) $ 1,876,044 $ 10,268 $ 1,355,564

Total assets $ 14,120,643 $ - $ 127,756 $ 14,248,399

Total liabilities $ 9,008,833 $ - $ 16,669 $ 9,025,502

F-53

The operating segment information is presented according to the discretion of the Entity’s management.

Information by reportable segment for the year ended December 31, 2014 is as follows:

Hotel management, Sale of non-strategic Hotel operation brand and other Corporate Vacation Club assets Total Eliminations Total consolidated Statement of comprehensive income:

Total revenues $ 2,746,820 $ 1,822,798 $ 25,827 $ 1,970,489 $ 26,197 $ 6,592,131 $ (743,853) $ 5,848,278 Cost and general expenses 2,350,664 1,394,370 - 1,565,046 26,197 5,336,277 (743,853) 4,592,424 Corporate expenses - - 256,202 - - 256,202 - 256,202 Depreciation, impairment and amortization - - 409,265 - - 409,265 - 409,265 Other expenses, net - - 45,669 - - 45,669 - 45,669

Operating income (loss) $ 396,156 $ 428,428 $ (685,309) $ 405,443 $ - $ 544,718 $ - $ 544,718

Information by reportable segment for the year ended December 31, 2013 is as follows:

Hotel management, Sale of non-strategic Hotel operation brand and other Corporate Vacation Club assets Total Eliminations Total consolidated Statement of comprehensive income:

Total revenues $ 2,708,706 $ 2,043,439 $ - $ 1,776,043 $ 2,781,588 $ 9,309,776 $ (759,418) $ 8,550,358 Cost and general expenses 2,351,678 1,597,414 - 1,440,589 2,216,417 7,606,098 (759,418) 6,846,680

F-54 Corporate expenses - - 247,157 - - 247,157 - 247,157 Depreciation, impairment and amortization - - 1,314,888 - - 1,314,888 - 1,314,888 Other expenses, net - - 183,213 - - 183,213 - 183,213

Operating income (loss) $ 357,028 $ 446,025 $ (1,745,258) $ 335,454 $ 565,171 $ (41,580) $ - $ (41,580)

Information by reportable segment for the year ended December 31, 2012 is as follows:

Hotel management, Sale of non-strategic Hotel operation brand and other Corporate Vacation Club assets Total Eliminations Total consolidated Statement of comprehensive income:

Total revenues $ 3,071,734 $ 2,231,270 $ - $ 1,716,785 $ - $ 7,019,789 $ (879,915) $ 6,139,874 Cost and general expenses 2,648,964 1,761,306 - 1,312,682 - 5,722,952 (879,915) 4,843,037 Corporate expenses - - 212,070 - - 212,070 - 212,070 Depreciation, impairment and amortization - - 431,511 - - 431,511 - 431,511 Other expenses, net - - 30,989 - - 30,989 - 30,989

Operating income (loss) $ 422,770 $ 469,964 $ (674,570) $ 404,103 $ - $ 622,267 $ - $ 622,267

27. Commitments

a. At December 31, 2014, 2013 and 2012, the Entity has entered into long-term contracts to lease hotel and corporate properties, which generally have terms of 10 years. Lease payments are calculated based on percentages applied to income generated from hotel operations, varying between 12% and 25%. During the years ended December 31, 2014, 2013 and 2012, lease expense was $329,761, $326,513 and $331,154, respectively. At December 31. 2014, the minimum rent estimated for the following years is shown below:

Years Amount

2015 $ 326,593 2016 318,035 2017 322,342 2018 326,756

b. At December 31, 2014, 2013 and 2012, the Entity has entered into rental contracts for computer equipment, which usually have a term of three years. Rental payments are based on the value of the rented equipment and vary in function with the requirements of the operational departments of the Entity. For the years ended December 31, 2014, 2013 and 2012, rental expense amounted to $54,767, $45,937 and $40,509, respectively. At December 31, 2014, the estimated rental payments for the following years is shown below:

Years Amount

2015 $ 34,845 2016 23,633 2017 6,250 2018 1,810

28. Subsequent events

On January 15, 2015, the Entity made the payment of the “2015 Senior Notes” amounting to US$51.7 million, with the proceeds of Euro-Commercial paper.

29. Contingencies

a. There is a tax lawsuit under way for the year 2006, for an unpaid liability assessed by the International Tax Inspection Office of the Tax Administration Service (SAT) in the amount of $767,248, for which it is not possible to determine a result for the Entity at the date of issuance of the consolidated financial statements. The tax authorities have alleged nonpayment of income tax, for which reason the Entity filed a motion for reconsideration with the SAT, which has yet to be resolved. According to the Entity’s management and its external advisors in this matter, there are sufficient legal arguments to obtain a favorable result from such lawsuit, for which reason management does not believe a loss is probable and has not recorded a provision.

b. The Entity faces a number of claims arising from the normal course of its operations. As the claims are generally in their initial stages or the impossibility of reliably estimating a probable outflow of resources related to such claims, the Entity has not recorded any provisions with respect to the claims. However, in the opinion of the Entity’s management, and its legal counsel, the outcome of these matters are not expected to significantly affect the consolidated financial position or results of operations of the Entity.

F-55

30. Authorization to issue the financial statements

The consolidated financial statements were authorized for issue on June 5, 2015, by Ing. Arturo Martínez del Campo Saucedo, Corporate Chief Financial Officer, consequently they do not reflect events after this date, and subject to the approval of the Ordinary Shareholders Meeting of the Entity, who may be modified in accordance with the provisions of the General Law of Commercial Companies.

* * * * * *

F-56 Grupo Posadas, S. A. B. de C. V. and Subsidiaries

Unaudited Condensed Consolidated Interim Financial Statements as of March 31, 2015, and for the three months ended March 31, 2015 and 2014

F-57 Grupo Posadas, S. A. B. de C. V. and Subsidiaries

Unaudited Condensed Consolidated Interim Financial Statements for the Three Months Ended March 31, 2015 and 2014

Table of contents Page

Unaudited Condensed Consolidated Interim Statement of Financial Position as of March 31, 2015 )

Unaudited Condensed Consolidated Interim Statements of Comprehensive Loss for the three months ended March 31, 2015 and 2014 )

Unaudited Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2015 and 2014 )

Unaudited Condensed Consolidated Interim Statements of Cash Flows for the three months ended March 31, 2015 and 2014 )

Notes to Unaudited Condensed Consolidated Interim Financial Statements )

F-58

Grupo Posadas, S. A. B. de C. V. and Subsidiaries Unaudited Condensed Consolidated Interim Statement of Financial Position As of March 31, 2015 (In thousands of Mexican pesos)

March 31, 2015 December 31, March 31, 2015 December 31, Assets Notes (Unaudited) 2014 Liabilities and stockholders’ equity Notes (Unaudited) 2014

Current assets: Current liabilities: Cash and cash equivalents $ 592,277 $ 997,792 Bank loans and current portion of long-term debt 8 $ 714,980 $ 1,449,957 Trade accounts payable 393,816 400,101 Investments in securities 450,000 519,073 Other liabilities and accrued expenses 1,013,111 806,166 Income tax payable 278,189 280,272 Accounts and notes receivable - Net 5 2,853,462 2,627,080 Vacation Club deferred income 363,738 65,344 Current portion of long-term value added tax 111,397 133,539 Inventories 34,037 34,068 Liabilities directly associated with assets classified as held for sale 4,109 6,423 Prepaid expenses 187,058 133,311 Total current liabilities 2,879,340 3,141,802 Long-term liabilities: Vacation Club inventory 260,359 286,968 Debt 8 4,576,024 4,432,316 Accrued liabilities 349,173 343,898 Other current assets 32,760 27,733 Value added tax payable 243,284 248,719 Vacation Club deferred income 562,267 508,858 Assets classified as held for sale 57,250 50,910 Income tax payable 542,433 533,148

F-59 Total long-term liabilities 6,273,181 6,066,939 Total current assets 4,467,203 4,676,935 Total liabilities 9,152,521 9,208,741

Stockholders’ equity: Non-current assets: Contributed capital: Long-term notes receivable - Net 6 1,804,263 1,726,722 Capital stock 10 495,937 495,937 Contributions for future capital increases 12,516 12,516 Vacation Club inventory in construction 314,395 303,150 Share repurchase reserve 16,800 16,800 Additional paid-in capital 157,429 157,429 Property and equipment - Net 7 6,290,120 6,267,293 682,682 682,682 Earned capital: Investment in associates 1,879 1,879 Share repurchase reserve 535,556 535,556 Retained earnings 2,599,281 2,645,031 Other assets 285,338 269,362 Items of other comprehensive income 27,076 27,244 3,161,913 3,207,831 Deferred tax assets 32,001 72,610 Total controlling interest 3,844,595 3,890,513 Non-controlling interest 198,083 218,697 Total non-current assets 8,727,996 8,641,016 Total stockholders’ equity 4,042,678 4,109,210

Total assets $ 13,195,199 $ 13,317,951 Total liabilities and stockholders’ equity $ 13,195,199 $ 13,317,951

See accompanying notes to condensed consolidated interim financial statements.

Grupo Posadas, S. A. B. de C. V. and Subsidiaries Unaudited Condensed Consolidated Interim Statements of Comprehensive Loss For the three months ended March 31, 2015 and 2014 (In thousands of Mexican pesos, except loss per share)

For the three months ended March 31, 2015 March 31, 2014

Revenues and income: Hotel operation $ 751,624 $ 644,303 Vacation Club 658,411 450,921 Hotel management, brand and other 331,338 247,056 Other income 11,730 2,560 1,753,103 1,344,840

Operating costs and expenses: Hotel operation cost and expenses 271,116 242,660 Vacation Club cost and expenses 487,442 374,755 Hotel management cost and expenses 303,923 273,135 Administrative 47,081 33,698 Sales, advertising and promotion 36,531 27,282 Maintenance and energy 71,896 72,348 Property taxes and insurance 7,781 6,125 Corporate expenses 83,035 57,238 Depreciation and amortization 87,822 95,937 Real estate leasing 96,980 82,068 Other expenses, net 3,596 25,241 1,497,203 1,290,487

Operating income 255,900 54,353

Interest expense 109,620 97,317 Interest income (15,233) (7,695) Commissions and financial expenses 16,062 12,236 Exchange loss (gain), net 127,346 (8,727) 237,795 93,131

Equity in results of associated entities - (6,382) Income (loss) before income tax 18,105 (45,160)

Income tax expense (benefit) 72,594 (13,548) Consolidated loss from continuing operations (54,489) (31,612)

Loss from discontinued operations (69) (537)

Consolidated loss for the period (54,558) (32,149)

(Continued)

F-60

For the three months ended March 31, 2015 March 31, 2014

Other comprehensive income (loss): Exchange differences on translating foreign operations (168) 2,051

Consolidated comprehensive loss for the period $ (54,726) $ (30,098)

Consolidated loss for the period attributable to: Controlling interest $ (45,750) $ (33,074) Non-controlling interest (8,808) 925

Consolidated loss for the period $ (54,558) $ (32,149)

Consolidated comprehensive loss for the period attributable to: Controlling interest $ (45,918) $ (31,023) Non-controlling interest (8,808) 925

Consolidated comprehensive loss for the period $ (54,726) $ (30,098)

Loss per share: From continuing and discontinued operations - Basic and diluted loss per common share (in pesos) $ (0.09) $ (0.07) From continuing operations - Basic and diluted loss per common share (in pesos) $ (0.09) $ (0.07)

Weighted average shares 495,937,988 495,937,588

(Concluded)

See accompanying notes to condensed consolidated interim financial statements.

F-61

Grupo Posadas, S. A. B. de C. V. and Subsidiaries Unaudited Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity For the three months ended March 31, 2015 and 2014 (In thousands of Mexican pesos)

Contributed capital Earned capital Contributions for Shares repurchase Additional paid-in Shares repurchase Other items of Non-controlling Total stockholders’ Capital stock future capital increases reserve Shares held in trust capital reserve Retained earnings comprehensive result interest equity

Balance at the beginning of 2014 $ 495,937 $ 12,516 $ 133,509 $ (3,322) $ 157,429 $ 559,371 $ 1,776,394 $ 25,982 $ 230,401 $ 3,388,217

Increase in non-controlling interest ------540 540 Consolidated comprehensive loss ------(33,074) 2,051 925 (30,098)

Balance as of March 31, 2014 $ 495,937 $ 12,516 $ 133,509 $ (3,322) $ 157,429 $ 559,371 $ 1,743,320 $ 28,033 $ 231,866 $ 3,358,659

Balance at the beginning of 2015 $ 495,937 $ 12,516 $ 16,800 $ - $ 157,429 $ 535,556 $ 2,645,031 $ 27,244 $ 218,697 $ 4,109,210

Decrease in non-controlling interest ------(11,806) (11,806) Consolidated comprehensive loss ------(45,750) (168) (8,808) (54,726)

F-62 Balance as of March 31, 2015 $ 495,937 $ 12,516 $ 16,800 $ - $ 157,429 $ 535,556 $ 2,599,281 $ 27,076 $ 198,083 $ 4,042,678

See accompanying notes to condensed consolidated interim financial statements.

Grupo Posadas, S. A. B. de C. V. and Subsidiaries Unaudited Condensed Consolidated Interim Statements of Cash Flows For the three months ended March 31, 2015 and 2014 (In thousands of Mexican pesos)

For the three months ended March 31, 2015 March 31, 2014 Cash flows from operating activities: Consolidated loss for the period $ (54,558) $ (32,149) Adjustments for: Income tax expense (benefit) 72,594 (13,548) Depreciation and amortization 87,822 95,937 Equity in results of associated entities - 6,382 (Income) loss on sale of fixed assets (327) 1,821 Interest income (15,233) (7,695) Unrealized foreign exchange loss 141,697 46,184 Interest expense 109,620 97,317 341,615 194,249 Movements in working capital: Accounts and notes receivable - Net (303,664) 142,940 Inventories 31 (1,327) Prepaid expenses (53,747) (43,800) Vacation Club inventory 26,609 36,643 Other assets (24,137) (39,133) Trade accounts payable (6,285) 15,261 Other liabilities and accrued expenses 192,922 75,474 Vacation Club deferred income 351,803 34,225 Income taxes paid (108,435) (2,905) Net cash generated by operating activities 416,712 411,627

Cash flows from investing activities: Purchases of property and equipment (118,125) (251,785) Investments in securities 69,073 60,351 Interest collected 15,233 7,695 Sales of furniture and equipment 395 475 Net cash used in investing activities (33,424) (183,264)

Cash flows from financing activities: Debt payments (752,074) - Proceeds from borrowings - 44,930 Interest paid (36,729) (52,741) Net cash used in financing activities (788,803) (7,811)

(Continued)

F-63

For the three months ended March 31, 2015 March 31, 2014

Net (decrease) increase in cash and cash equivalents (405,515) 220,552

Cash and cash equivalents at the beginning of the period 997,792 706,365

Cash and cash equivalents at the end of the period $ 592,277 $ 926,917

(Concluded)

See accompanying notes to condensed consolidated interim financial statements.

F-64

Grupo Posadas, S. A. B. de C. V. and Subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2015 and 2014 (In thousands of Mexican pesos)

1. Nature of business

Grupo Posadas, S. A. B. de C. V. (Posadas) and Subsidiaries (the Entity) are primarily engaged in the ownership, operation and management of hotels as well as to the purchase and sale of real estate within the tourism industry. As of March 31, 2015 and December 31, 2014, the Entity operated a total of 133 hotels with 21,742 rooms and 127 hotels with 21,094 rooms, respectively. The Entity mainly operates hotels under its Fiesta Americana, Fiesta Inn, One Hotels and Gamma brands.

The Entity enters into long-term management contracts with all the hotels that it operates. From the total of hotels that the Entity operated at March 31, 2015 and December 31, 2014, 17 in both periods are owned hotels and 13 and 14, respectively, were operated under leasing contracts. The remaining 103 and 96 hotels, respectively, are owned by third parties and operated by the Entity at March 31, 2015 and December 31, 2014. For purposes of these condensed consolidated interim financial statements, these hotels are referred to as the Entity’s “owned”, “leased” and “managed” hotels, respectively.

Posadas receives fees pursuant to the long-term management contracts it has with all of the hotels it operates. Certain fees, including management, brand use fee, reservation services and technology usage, among others, are based on hotel revenues. Posadas also receives an incentive fee based on the hotels’ operating income.

Additionally, the Entity operates a Vacation Club business called Fiesta Americana Vacation Club (FAVC), as well as its new product "Front Door" focused on the high-income sector, through which members purchase a “40-year-right-to-use” evidenced by an annual allocation of FAVC points. FAVC points can be redeemed to stay at the Entity’s seven FAVC resorts in Los Cabos (villas and resort), Acapulco, Cancun, Cozumel, Chetumal and Puerto Vallarta, as well as any of the hotels in its portfolio. In addition, members of FAVC can also redeem their FAVC points to stay at any Resorts Condominium International (RCI), affiliated resort or Hilton Grand Vacation Club resorts throughout the world. At the same time, the Entity markets a product called "Kívac" consisting of sales of points, with a maturity of up to 5 years that can be redeemed for stays at any of the hotels in the Entity’s portfolio.

During 2012, the Entity initiated a restructuring of its business with a focus towards ownership of strategic assets and the growth of its hotel management business and FAVC. As part of this strategy, the Entity has sold several hotels and other non-strategic assets. As of March 31, 2015, the Entity continues with the organizational restructuring to significantly reduce the number of entities that compose it.

The hotel industry is seasonal and particularly sensitive to macroeconomic and social changes, leading to volatility in revenues, income and the related costs during any given year. The Entity seeks to reduce the impact of seasonality on its results through marketing strategies such as agreements with institutions, competitive prices and intensive promotion. Therefore, the impact of seasonality in the accompanying condensed consolidated interim statements is not considered significant.

The corporate offices of the Entity are located in Prolongación Paseo de la Reforma 1015 Piso 9 Torre A, Col. Santa Fe, México, Distrito Federal.

F-65

2. Significant events

Payment of 2015 Senior Notes

On January 15, 2015, the Entity made the payment of the “2015 Senior Notes” amounting to US$51.7 million, which matured on that date.

3. Basis of presentation

a. Basis of preparation

The accompanying condensed consolidated interim financial statements as of March 31, 2015 and for the three months ended March 31, 2015 and March 31, 2014 have not been audited. They have been prepared in accordance with International Accounting Standard (IAS or IFRS when referring to the comprehensive set of International Financial Reporting Standards) 34, Interim Financial Reporting. The Entity has included all adjustments (consisting mainly of ordinary, recurring adjustments) considered necessary for the fair presentation of the accompanying unaudited condensed consolidated interim financial statements. The results of operations for the periods presented are not necessarily indicative of results for the full year.

These unaudited condensed consolidated interim financial statements do not include all of the information required in a complete set of annual consolidated financial statements, and should be read in conjunction with Entity’s consolidated financial statements as of and for the year ended December 31, 2014.

The unaudited condensed consolidated interim financial statements have been prepared on the historical cost basis except for certain financial instruments which are measured at fair value.

b. New and revised IFRS in issue but not yet effective

The Entity has not applied the following new and revised IFRS that have been issued but are not yet effective:

IFRS 9, Financial Instruments3 IFRS 14, Regulatory Deferral Accounts1 IFRS 15, Revenue from Contracts with Customers2 Amendments to IFRS 11, Accounting for Acquisitions of Interests in Joint Operations1 Amendments to IAS 16 and IAS 38, Clarification of Acceptable Methods of Depreciation and Amortisation1

4. Significant accounting policies

The accounting policies and methods of computation applied by the Entity in these condensed consolidated interim financial statements are the same as those applied by the Entity in its consolidated financial statements as of December 31, 2014 and for the year then ended.

F-66

5. Accounts and notes receivable

March 31, December 31, 2015 2014 (Unaudited)

Notes receivable from Vacation Club $ 1,118,749 $ 1,022,035 Other receivables from Vacation Club 367,816 250,742 Clients and agencies 652,398 531,821 Taxes recoverable, net 764,449 805,284 Account receivable from sale of non- strategic assets 45,901 102,000 Others 159,254 156,795 3,108,567 2,868,677

Less - Allowance for doubtful accounts (255,105) (241,597)

$ 2,853,462 $ 2,627,080

a. Notes receivable from Vacation Club

The sale of memberships of Vacation Club is normally recognized when the 10% deposit is received and five-year financing is granted for the remaining portion, with interest charged at market rates. The Entity anticipates that, after the implementation of certain business strategies, those accounts that are at most 11 months old may be reactivated; accounts aged greater than 11 months are normally cancelled. However, estimates of the reserve for doubtful accounts are recorded based on the entire portfolio.

b. Accounts receivable from clients and agencies

The average credit term related to amounts owed for hotel services is 22 days. The Entity does not charge interest on outstanding amounts. Normally, amounts owed within this portfolio are not aged significantly. During 2014, the Entity identified and wrote-off an amount of $9,364, of the reserve for doubtful accounts since it was determined that such amounts did not have a possibility of recovery.

6. Long-term notes receivable

Long-term notes receivable correspond to the long-term portion of accounts receivable from sales of Vacation Club memberships, as follows: March 31, December 31, 2015 2014 (Unaudited)

Long-term notes receivable $ 1,867,245 $ 1,803,210 Less: Allowance for doubtful accounts (62,982) (76,488)

Total $ 1,804,263 $ 1,726,722

The maturities of the long-term notes receivable at March 31, 2015 are as follows: Amount (Unaudited)

2016 $ 642,131 2017 420,960 2018 312,477 2019 and thereafter 491,677

Total long-term notes receivable $ 1,867,245

F-67

7. Property and equipment

March 31, December 31, 2015 2014 (Unaudited)

Buildings $ 6,568,872 $ 6,515,874 Furniture and equipment 1,129,499 1,099,930 Computers 415,743 414,945 Vehicles 31,720 29,411 8,145,834 8,060,160

Less - Accumulated depreciation (4,166,093) (4,084,332) 3,979,741 3,975,828

Land 1,837,598 1,837,598 Construction in progress 472,781 453,867

$ 6,290,120 $ 6,267,293

8. Long-term debt

a. Long-term debt is as follows:

March 31, December 31, 2015 2014 (Unaudited) U.S. dollar-denominated: Senior Notes 2017, fixed rate of 7.875% $ 4,576,024 $ 4,432,316 Euro-Commercial Paper, fixed rate of 6% 712,790 691,179 Other loans, at rates between 3.16% and 3.21% 2,190 2,261 Senior Notes 2015, fixed rate of 9.25% - 756,517 5,291,004 5,882,273

Less - Current portion (714,980) (1,449,957)

Long-term debt $ 4,576,024 $ 4,432,316

The maturities of long-term debt at March 31, 2015, are as follows:

Thousands of U.S. dollars

2017 310,000

Equivalent in thousands of Mexican pesos $ 4,697,802 Less - debt issuance costs (121,778)

$ 4,576,024

b. On November 30, 2012, the Entity issued a bond for US$225 million known as “2017 Senior Notes”, which mature on November 30, 2017 and accrue interest at a 7.875% fixed rate. On November 30, 2013, the Entity issued a supplement for US$50 million of “2017 Senior Notes”, with the same characteristics mentioned above, resulting in a total debt of US$275 million.

F-68

On February 20, 2014, the Entity issued an additional US$35 million under the “2017 Senior Notes”, which mature on November 30, 2017 and accrue interest at a 7.875% fixed rate. The “2017 Senior Notes” were issued based on a private exchange of US$31.6 million of the “2015 Senior Notes”. The additional issuance was carried out under the same terms as the original issuance, resulting in a total debt of US$310 million. c. On November 28, 2014, the Entity obtained US$47.2 million through a program known as “Euro- Commercial Paper”, which accrues interest at a rate of 6% annually and matures on November 18, 2015. Interest is recognized in the condensed consolidated interim statement of comprehensive income as accrued, and will be paid at maturity. d. On January 15, 2010, the Entity issued debt securities for US$200 million under a Senior Notes program, due on January 15, 2015 (“2015 Senior Notes”). The securities accrue interest at a rate of 9.25% annually, with semiannual coupons. The remaining balance of the program was reduced by the additional issuance of “2017 Senior Notes”, resulting in a total debt of US$51.7 million at December 31, 2014, which was paid on January 15, 2015. e. The most significant restrictions and obligations contained in debt agreements at March 31, 2015, prohibit the Entity from:

Incurring additional indebtedness Granting guarantees Making payments or restricted investments Selling assets Declaring dividends Making certain intercompany transactions Merging with other entities

At March 31, 2015 and the date of the unaudited condensed consolidated interim financial statements, restrictions and obligations have been satisfied.

F-69 f. Below is detail of key financial items of the Entity and the subsidiary guarantors of the “2017 Senior Notes”:

Grupo Posadas, S.A.B. de C.V. and guarantor subsidiaries Non-guarantor subsidiaries Total consolidated March 31, March 31, March 31, March 31, March 31, March 31, 2015 2014 2015 2014 2015 2014 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Total revenues $ 1,700,445 $ 1,202,239 $ 52,658 $ 142,601 $ 1,753,103 $ 1,344,840 Depreciation and amortization 76,241 71,140 11,581 24,797 87,822 95,937

Real estate leasing 96,980 82,068 - - 96,980 82,068 Operating income (loss) 223,263 86,820 32,637 (32,467) 255,900 54,353

Consolidated (loss) income $ (76,592) $ (69,036) $ 22,034 $ 36,887 $ (54,558) $ (32,149)

March 31, December 31, March 31, December 31, March 31, December 31, 2015 2014 2015 2014 2015 2014 (Unaudited) (Unaudited) (Unaudited)

Total assets $ 12,244,745 $ 12,829,671 $ 950,454 $ 488,280 $ 13,195,199 $ 13,317,951

Total liabilities $ 8,380,039 $ 8,409,564 $ 772,482 $ 799,177 $ 9,152,521 $ 9,208,741 F-70

9. Financial instruments

Fair value of financial instruments:

Financial derivatives - At March 31, 2015, a portion of the revenues of the Entity, usually around 17%, have been either directly or indirectly denominated in U.S. dollars. This is due to the fact that the room rates at coastal hotels (primarily at Cancun and Los Cabos) were quoted in U.S. dollars and, historically, a portion of the sale and financing of Vacation Club memberships have been quoted in U.S. dollars.

Because a significant portion of revenues are denominated directly or indirectly in U.S. dollars and to minimize the exposure to highly volatile interest rates in pesos, the Entity’s policy has been to maintain a significant portion of its debt in U.S. dollars. This has been achieved by borrowing U.S. dollar denominated debt when credit market conditions allow for it.

Valuation techniques and assumptions applied to determine fair value - The fair value of the financial assets and liabilities is determined as follows:

The fair value of the financial assets and liabilities with standard terms and conditions, and negotiated in active liquid markets, are determined based on the prices quoted in the market.

The fair value of the other assets and liabilities is determined in accordance with generally accepted price determination models, which are based on the analysis of discounted cash flows.

Fair value of the financial assets and liabilities - The Entity’s management consider that the carrying amounts of the current financial assets (including investments in securities) and current financial liabilities recognized at amortized cost in the consolidated statement of financial position, approximate their fair value because of their nature.

The fair value of long-term debt is as follows:

March 31, December 31, 2015 2014 (Unaudited)

Thousands of US dollars: 2017 Senior Notes US 273,347 US 272,164 Euro-Commercial paper 42,389 42,335 2015 Senior Notes - 51,668

US 315,736 US 366,167

10. Stockholders’ equity

a. As of March 31, 2015 and December 31, 2014, stockholders’ equity is comprised of the following shares without par value:

Number of shares March 31, 2015 December 31, 2014 Series "A" Series "A"

Authorized capital 512,737,588 512,737,588 Less - Repurchase of shares (16,799,600) (16,799,600) (16,799,600) (16,799,600)

495,937,988 495,937,988

F-71

b. At March 31, 2015 and December 31, 2014, the share capital is composed solely of Series “A” free subscription.

c. At March 31, 2015 and December 31, 2014, the legal reserve, presented within retained earnings, amounts to $99,187 (nominal value) and represents 20% of the nominal capital. This reserve may not be distributed to shareholders except in the form of dividends.

d. Stockholders’ equity, except for restated paid-in capital and tax retained earnings, will be subject to ISR payable by the Entity at the rate in effect upon distribution. Any tax paid on such distribution may be credited against annual and estimated ISR of the year in which the tax on dividends is paid and the following two fiscal years. As of 2014 there is an additional 10% rate on dividends.

11. Related party transactions

Employee benefits granted to key management personnel (and/or directors) of the Entity, were as follows:

March 31, December 31, 2015 2014 (Unaudited)

Short and long-term benefits $ 23,740 $ 91,643

Termination benefits $ - $ 5,574

F-72

12. Information by business segments

The operating segment information is presented according to the information presented to and analyzed by the Entity’s management.

Information by reportable segment for the three months ended March 31, 2015 is as follows:

Hotel management, Hotel operation brand and other Vacation Club Corporate Total Eliminations Total consolidated Statement of comprehensive income (Unaudited):

Total revenues $ 753,929 $ 530,832 $ 658,411 $ 11,730 $ 1,954,902 $ (201,799) $ 1,753,103 Cost and general expenses 641,627 370,087 512,835 - 1,524,549 (201,799) 1,322,750 Corporate expenses - - - 83,035 83,035 - 83,035 Depreciation and amortization - - - 87,822 87,822 - 87,822 Other expenses, net - - - 3,596 3,596 - 3,596

Operating income (loss) $ 112,302 $ 160,745 $ 145,576 $ (162,723) $ 255,900 $ - $ 255,900

Information by reportable segment for the three months ended March 31, 2014 is as follows:

F-73 Hotel management, Hotel operation brand and other Vacation Club Corporate Total Eliminations Total consolidated Statement of comprehensive income (Unaudited):

Total revenues $ 651,439 $ 419,086 $ 450,921 $ 2,560 $ 1,524,006 $ (179,166) $ 1,344,840 Cost and general expenses 569,003 327,060 395,174 - 1,291,237 (179,166) 1,112,071 Corporate expenses - - - 57,238 57,238 - 57,238 Depreciation and amortization - - - 95,937 95,937 - 95,937 Other expenses, net - - - 25,241 25,241 - 25,241

Operating income (loss) $ 82,436 $ 92,026 $ 55,747 $ (175,856) $ 54,353 $ - $ 54,353

13. Contingencies

a. There is a tax lawsuit is in process related to 2006, for an unpaid liability assessed by the International Tax Inspection Office of the Tax Administration Service (SAT) in the amount of $767,248. The tax authorities have alleged nonpayment of income tax, for which reason the Entity filed a motion for reconsideration with the SAT, which has yet to be resolved. According to the Entity’s management and its external advisors in this matter, there are sufficient legal arguments to obtain a favorable result from such lawsuit, for which reason management does not believe a loss is probable and has not recorded a provision.

b. The Entity faces a number of claims arising from the normal course of its operations. As the claims are generally in their initial stages or due to the impossibility of reliably estimating a probable outflow of resources related to such claims, the Entity has not recorded any provisions with respect to the claims. However, in the opinion of the Entity’s management, and its legal counsel, the outcome of these matters are not expected to significantly affect the unaudited condensed consolidated interim financial position or results of operations of the Entity.

14. Authorization to issue the financial statements

The condensed consolidated interim financial statements were authorized for issuance on June 5, 2015, by Ing. Arturo Martínez del Campo Saucedo, Corporate Chief Financial Officer, and consequently do not reflect events after such date.

* * * * * *

F-74 [THIS PAGE INTENTIONALLY LEFT BLANK] REGISTERED OFFICE OF GRUPO POSADAS, S.A.B. de C.V. Attention: Corporate Finance Department Prol. Paseo de la Reforma 1015 Torre A, Piso 9 Colonia Santa Fe, Delegación Álvaro Obregón México, D.F., México 01210

TRUSTEE, REGISTRAR, TRANSFER AGENT AND PRINCIPAL PAYING AGENT The Bank of New York Mellon 101 Barclay Street, 7th Floor East New York, New York 10286 United States

LUXEMBOURG LISTING AGENT, LUXEMBOURG TRANSFER AGENT AND LUXEMBOURG PAYING AGENT The Bank of New York Mellon (Luxembourg) S.A. Vertigo Building - Polaris–2-4 rue Eugène Ruppert - L-2453 Luxembourg

LEGAL ADVISOR TO GRUPO POSADAS, S.A.B. de C.V. As to U.S. law Curtis, Mallet-Prevost, Colt & Mosle LLP 101 Park Avenue New York, New York 10178-0061 United States As to Mexican law Curtis, Mallet-Prevost, Colt & Mosle, S.C. Rubén Darío 281, Piso 9 Colonia Bosque de Chapultepec México, D.F., México 11580

LEGAL ADVISOR TO THE INITIAL PURCHASERS As to U.S. law Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 United States

As to Mexican law Ritch, Mueller, Heather y Nicolau, S.C. Blvd. Manuel Ávila Camacho 24, piso 20 Colonia Lomas de Chapultepec México, D.F., México 11000

INDEPENDENT AUDITORS Galaz, Yamazaki, Ruiz Urquiza, S.C. Paseo de la Reforma 489, Floor 6 Colonia Cuauhtemoc México, D.F., México 06500 Fiesta Americana Los Cabos Golf & Spa Resort

Fiesta Americana Condesa Cancún

Live Aqua Cancún Fiesta Americana Mérida

Fiesta Americana Villas Acapulco

U.S.$350,000,000

Grupo Posadas, S.A.B. de C.V. 7.875% Senior Notes Due 2022

Global Coordinator Citigroup Joint Bookrunners Citigroup BofA Merrill Lynch J.P. Morgan

June 30, 2015