GRUPO POSADAS, S.A.B. de C.V.

GRUPO POSADAS, S.A.B. de C.V. Paseo de la Reforma 155, PH-B Col. Lomas de Chapultepec Del. Miguel Hidalgo Mexico, D.F. 11000 Series A and Series L shares representing the corporate capital of Grupo Posadas, S.A.B. de C.V. quoted on the Mexican Stock Exchange Market, S.A.B. de C.V. Quote codes: Posadas A Posadas L The shares are registered in the National Securities Registry and quoted on the Mexican Stock Exchange Market, S.A.B. de C.V. Registration in the National Securities Registry does not imply certification of the merit of the securities, or of the issuer s solvency, of the accuracy or truthfulness of the information contained, nor does it validate the acts which, if applicable, were made in violation of the law. ANNUAL REPORT PRESENTED IN KEEPING WITH THE PROVISIONS GENERALLY APPLICABLE TO SECURITIES ISSUERS AND OTHER MARKET PARTICIPANTS FOR THE CORPORATE YEAR ENDING DECEMBER 31st OF 2009

INDEX 1) GENERAL INFORMATION 2 a) Glossary of Terms and Definitions 3 b) Executive Summary 4 c) Risk Factors 7 d) Other Securities 20 e) Significant Changes in Rights of Securities Registered in the RNV. 23 f) Public Documents 23 2) THE COMPANY 23 a) Company History and Development 23 b) Business Description 24 i) Principal Activity 24 ii) Distribucion Channels 26 iii) Patents, Licenses, Trademarks and Other Contracts 26 iv) Principal Clients 28 v) Applicable Legislaction and Tax Status 28 vi) Human Resources 30 vii) Environmental Performance 31 viii) Market Information 31 ix) Corporate Structure 33 x) Description of Principal Assets 34 xi) Judicial, Administrative or Arbitration Proceedings 37 xii) Representative Shares of Corporate Capital 38 xiii) Dividends 38 3) FINANCIAL INFORMATION 39 a) Selected Financial Information 39 b) Financial Information per Business Line, Geographic Zone and Export Sales 40 c) Relevant Loan Information 40 d) Comments and Analysis of the Management on the Operating Results and Financial Situation of the Company 41 i) Operating Results 41 ii) Financial Situation, Liquidity and Capital Resources 52 iii) Internal Control 58 e) Estimates, Critical Accounting Allowances or Reserves 59 4) ADMINISTRATION 60 a) External Auditors 60 b) Related Party Transactions and Conflicts of Interest 60 c) Administrators and Shareholders 60 d) Corporate By-laws and Other Agreements 66 5) STOCK MARKET 69 a) Stock Structure 69 b) Share Behavior on the Securities Market 70 c) Market Maker 71 6) PERSONS RESPONSIBLE FOR THE INFORMATION CONTAINED IN THE ANNUAL REPORT 72 1

7) ATTACHMENTS 74 Opinion of the independent auditors and consolidated financial statements 2009 and 2008 Opinion of Audit Committee 2

1) GENERAL INFORMATION a) Glossary of Terms and Definitions TERM BMV or Stock Exchange DEFINITION Shall mean Mexican Stock Exchange Market, S.A.B. de C.V. CNBV Shall mean National Banking and Securities Commission. Company or Posadas Shall mean Grupo Posadas, S.A.B. de C.V. and its subsidiaries. Issuer Grupo Posadas, S.A.B. de C.V. Audited Financial Statments The financial statements audited by Galaz, Yamazaki, Ruiz Urquiza, S.C. for the corporate years ending December 31, 2008 and 2007 included in the present Annual Report. Report The present Annual Report. RNV National Securities Registry under the National Banking and Securities Commission. $ or Pesos or M.N. Currency of legal tender in the United Mexican States. US or Dollars Currency of legal tender in the United States of America. M Millions. NIF Mexican financial information norms. 3

b) Executive Summary This summary is not intended to contain all of the information which may be relevant to make investment decisions regarding the securities that are herein mentioned. Therefore, the investing public should read all of the Annual Report, including the audited financial statements and, in the respective case, the corresponding notes before making an investment decision. Grupo Posadas, S.A.B. de C.V. and Subsidiaries ( the Company ) is better known for operating hotels in various Latin American countries, principally in Mexico and Brazil. According to Hotels magazine, we are the major Latin American operator based on the number of hotels and hotel rooms. We also believe that we are the leading operator in Mexico based on the number of hotels, rooms, geographic coverage, income and market participation. We stand apart from other operators by offering superior franchise services which include, among others, centralized reservation and marketing services, income optimization services, information collection and analysis platforms, robust loyalty programs and strong well-defined brands. Through our subsidiaries, to December 31, 2009, we operated 110 hotels (including four vacation club resorts), for a total of 19,454 rooms in 57 destinations in Mexico, United States, Brazil, Argentina and Chile. We are concentrated in Mexico, where we operated at the end of 2009, 94 hotels for a total of 16,487 rooms in 44 destinations. We also operated 3 hotels and 679 rooms in the state of Texas in the United States of America, 10 hotels in Brazil for a total of 1,899 rooms, two hotels in Argentina with 247 rooms and a hotel in Chile with 142 rooms. To December 31, 2009, of the 110 hotels operated, the Company had a majority holding in 33 hotels, operated 58 and leased 19. Our hotels are located in both urban as well as beach destinations serving a broad base of tourist and business travelers. Approximately 80% of our rooms are in urban destinations. We also operate a vacation club business through Fiesta Americana Vacation Club o ( FAVC ). FAVC markets and sells memberships to members so that members purchase a 40 year right to use represented by annual FAVC points. The FAVC points may be used for lodging at any of the four FAVC complexes located in Los Cabos, Baja California Sur, Acapulco, Guerrero, Cancun and Kohunlich in Quintana Roo, Mexico, as well as in any of the hotels operated by the Company. Additionally, FAVC members may use their points at Resorts Condominium International (RCI) complexes and Hilton Hotels Corp. or any complex affiliated to the latter in different parts of the world. In the majority of cases, we provide financing to those persons who buy memberships. In recent years we have marketed both our management abilities as well as our technological platforms through a series of service providing entities which were originally developed to support our hotel operations business: Ampersand, which manages loyalty programs for diverse unrelated businesses; Konexo, a call center; Conectum, which provides third-party management services or "shared services" for different industries; and GloboGo, which offers on-line travel planning services. The Company has expanded through strong positioning and development of its brands, which insure service consistency and client recognition. The Company operates its hotels in Mexico principally through the brands Live Aqua, Fiesta Americana, Fiesta Inn and One Hotels. The Live Aqua brand is a luxury brand for our lifestyle hotel located in Cancun. The Fiesta Americana hotels offer a wide variety of services and luxury rooms appealing to high economic level tourism in beach destinations and executive business travelers in city destinations. On the other hand, the Fiesta Inn hotels are smaller in size, with more moderate prices, comfortable rooms, a variety of services and located in small to medium sized cities, as well as in the suburbs of large urban areas. One Hotels attract business travelers who are looking for the best price at an excellent location since these hotels have standardized services and are located in urban areas. In Brazil, Argentina and Chile, the Company operates its luxury hotels under the Caesar Park brand, and has presence in the four star market in the principal industrial and commercial cities in those countries through its Caesar Business brand. The Company has achieved a leadership position by using different strategies and taking advantage of opportunities that have allowed it to constantly grow, creating a diversified and balanced portfolio: owned, leased and managed hotels, both city and beach hotels, serving both tourist as well as business travelers with a geographic coverage that extends across five countries, a Vacation Club which is leader in profitability and the capitalization of our management abilities into businesses that help third parties do better business. 4

This summary is not intended to contain all of the information which may be relevant to make investment decisions regarding the securities that are herein mentioned. Therefore, the investing public should read all of the Annual Report, including the audited financial statements and, in the respective case, the corresponding notes before making an investment decision. Selected Financial Information The following summarizes the Company s financial information. The information herein presented has been prepared in accordance with the Mexican financial information norms ( NIF ), issued by the Mexican Council for Financial information Norm Research and Development, A.C. ( CINIF ), which decided to rename the generally accepted accounting principles previously issued by the Mexican Public Accountants Institute, AC., as NIF. This consolidated financial information summary is presented for the years 2009, 2008 and 2007, based on the Company s consolidated financial statements which have been audited by Galaz, Yamazaki, Ruiz Urquiza, S.C., the Company s external auditors. The financial information presented should be reviewed jointly with the financial statements indicated in the previous paragraph and, if applicable, its respective notes. Likewise, the financial information summary should be reviewed with all the explanations provided by the management of Posadas in the Financial Information Chapter, specifically in the section Comments and Analysis of the Management on the Operating Results and Financial Status of the Company. Some figures may vary due to rounding off. 5

Audited Consolidated Financials (figures in millions of pesos) For the years that ended on December 31st: 2009 2008 2007 Income Statement Data: Total revenues Ps. 7,082.9 Ps. 6,904.5 Ps. 5,974.2 Corporate expenses 89.1 97.6 90.3 Depreciation, amortization, and real estate leasing 814.9 722.3 664.8 Operating income (EBIT) 805.9 1,140.8 1,031.9 Comprehensive financing cost (income) 269.3 1,509.6 196.9 Taxes 132.2 (111.2) 159.6 Net income 262.4 (701.8) 200.6 Majority net income 266.4 (615.4) 126.1 Balance Sheet Data (End of Period): Current assets Ps. 2,463.8 Ps. 2,667.0 Ps. 2,440.8 Property, plant and equipment, net 9,083.7 9,386.7 9,266.0 Total assets 13,212.9 13,544.8 13,144.8 Current liabilities 2,415.9 2,659.0 1,934.8 Long-term debt 4,031.2 4,193.7 3,884.4 Total liabilities 8,753.8 8,793.2 7,428.7 Stockholders equity 4,433.0 4,458.8 5,292.4 Other Financial Data: EBIT / Total revenues 11.4% 16.5% 17.3% Net result / Total revenues 3.7% n.d. 3.4% EBITDA $1,242.9 $1,529.9 $1,462.9 EBITDA Margin 17.5% 22.2% 24.5% Indebtedness / EBITDA 4.0 X 3.5 X 2.9 X Current assets / Current liabilities 1.02 X 1.00 X 1.26 X Total liabilities / Equity 1.97 X 1.97 X 1.40 X The shares which represent the corporate capital of the Company are listed on the Mexican Stock Exchange Market, S.A.B. de C.V., where they have quoted since 1992. The number of shares in circulation (weighted average) to December 31, 2009 amounts to approximately 486 M. Of the number of shares of capital subscribed, approximately 81% are series A common shares with full voting rights and 19% are represented by series L shares with limited voting rights. Additionally, approximately 20,000 series A shares and 48,000 series L are quoted on the PORTAL system (Private Offerings, Resales and Trading through Automated Linkages) of the NASD (National Association of Securities Dealers) in the form of ADS (American Depositary Shares). Series A shares have shown minimum negotiability according to the BMV s rating while the Series L shares low negotiability to the BMV rating, therefore both series operate according to a BMV bid scheme. Trading in series A and series L shares has never been suspended by the regulatory authorities. The following table shows the annual behavior of the series A and series L shares during the last five years on the Stock Market: 6

POSADAS A 2005 2006 2007 2008 2009 Price (High) 10.31 12.04 18.25 20.06 16.30 Price (Low) 8.00 10.31 12.14 14.10 10.60 Price (Closing) 10.31 12.04 18.25 14.10 16.30 Average daily volume 5.4 21.7 10.5 3.9 0.6 (thousands of shares) POSADAS L Price (High) 10.00 12.04 18.25 19.00 14.00 Price (Low) 7.50 9.00 12.04 11.00 9.00 Price (Closing) 9.50 12.04 18.25 11.00 14.00 Average daily volume 9.5 76.8 20.9 18.5 0.4 (thousands of shares) Source: Bloomberg (The daily average volume is based on trading days). For more information regarding share behavior see section 5 b) Stock Market Share Behavior on the Securities Market. c) Risk Factors The investing public should consider carefully all the information contained in the Annual Report, and specifically the following risk factors. These risks are not the only ones that the Company faces. Additional risks and uncertainty of which the Company is not aware or that are currently thought immaterial may have a material adverse effect on the Company s business, operations, financial situation and operating results. Risks Relating to Our Hotel and Vacation Club Business Substantial volatility in the global capital markets, unavailability of financing in the global capital markets at reasonable rates and widely documented commercial credit market disruptions since the fall of 2008 have had a significant negative impact on financial markets, as well as the global and domestic economies. The effects of these disruptions are widespread and difficult to quantify, and it is impossible to predict when the global financial markets will improve. There is now general consensus among economists that the economies in which we operate and much of the rest of the world were and may continue to be in a recession, and we are experiencing reduced demand for our hotel rooms and vacation club units. Substantial increases in air and ground travel costs, and decreases in airline capacity arising primarily from reduced flights have also reduced demand for our hotel rooms and vacation club units. Accordingly, our financial results have been impacted by the economic slowdown and our future financial results and growth may be further harmed if current global economic conditions persist or worsen, resulting in wide-ranging, adverse and prolonged effects on general business conditions, and adverse effects on our results of operations and liquidity. The effects of the current economic situation are extremely difficult to forecast and mitigate. 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 current economic downturn, which has had and continues to have a significant adverse effect on the operating and financial results of our business. Approximately 34% of the rooms that we manage are in Hotels classified as luxury hotels. Luxury hotels generally command higher room rates. In an economic downturn, these hotels are susceptible to a decrease in revenues, as compared to hotels in more economical categories, since hotels in this segment 7

generally target business and high-end vacation. In periods of economic difficulties, such as the current situation, business and leisure travelers reduce their travel costs or limit or reduce the number of trips. If the current economic conditions persist, it may have an adverse effect on our operating and financial results. The geographic concentration of our hotels in Mexico and Brazil exposes us to any adverse developments specifically affecting those countries. The Company s operation are principally concentrated in Mexico since of the 110 hotels operated 94, that is 85% of the rooms operated are located in Mexico and these represent 89% of income while 10 hotels, or 10% of rooms and 8% of income correspond to Brazil. In spite of the fact that inventory in Mexico is diversified to serve the city and beach segments as well as vacation and business travelers, the Company is significantly dependent on its Mexican operations. If these Mexican operations do not function according to the Company s designed plan and strategy, it could have material adverse effect on the Company s operations, financial situation or its overall operating results. A regional, national or global outbreak of influenza or other diseases, such as the recent international outbreak of H1N1 influenza, could adversely affect our business and operating results. In April 2009 an outbreak of influenza A (H1N1) occurred in Mexico and the United States which spread to more than 70 countries, leading the World Health Organization to declare the first global flu pandemic in over 40 years. In Mexico, localized public-health measures were implemented as a result of the H1N1 influenza outbreak, including travel bans, the closings of schools and businesses, and cancellations of events. The H1N1 influenza epidemic adversely impacted public perception of the safety or desirability of travel to and within Mexico, which materially reduced demand for our hotel and vacation club businesses and, correspondingly, significantly reduced our income. New H1N1 influenza outbreaks or other communicable diseases could impact travel and lead to the implementation of additional public-health measures and result in reduced demand for public accommodations, such as our hotels and vacation clubs, and negatively affect our business and operating results. Likewise, any outbreaks or recurrence of avian flu, SARS, H1N1 influenza or other adverse public health developments in Mexico or Brazil may have a material adverse effect on our business operations. We face competition for management and leasing agreements. Competition for guests. The hotel business is highly competitive. Foreign investors, using Mexican corporations, may directly or indirectly purchase a 100% holding in tourism-related businesses, including construction, sale, rent, or operation of realty in Mexico. Competition in the hotel sector is represented by a variety of national and international hotel operators, some of these, especially international operators, are substantially bigger than the Company and may have greater marketing and financial resources than the Company. Said operators may operate under recognized international and Mexican brands. In addition to competing for guests with other Mexican resorts, the Company also competes for guests with resorts in other countries. Competition for management and leasing agreements. When the Company seeks to grow through increasing the number of hotel properties, it faces competition from other entities seeking the same opportunities. The Company competes with other entities that have greater financial resources or that have better-recognized international brands so as to enter into management contracts and leases with hotel owners. In addition to the competition for new opportunities, the Company is also subject to competition from other hotel chains when the Company s existing management or lease contracts expire. Although in the past the Company has been successful in renewing its management contracts, there can be no assurance that the Company will continue to be as successful in the future. Competition may generally reduce the number of growth opportunities in the future, increase the bargaining power of hotel owners and reduce the Company s operating margins. 8

Our Management Contracts and Leases may be terminated or not renewed under various circumstances, which may have a material impact on our operating results. Under certain of our Management Contracts, the owner may cease our property management services and terminate the contracts if specified performance standards for the hotel are not met or if we breach any material obligation under these Agreements. In addition, although our Management Contracts and/or Leases ordinarily limit the owner s ability to transfer or convey such hotels or to assign the rights to a third party and seek other protective measures, we cannot assure 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. We have not experienced any problems with respect to renewal of our management or lease agreements, but we cannot insure 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 conveyances or our inability to renew such Contracts on terms favorable to us may have an adverse effect on our income. In addition, hotel owners may choose to wait out expiration of our management contracts. As of December 31, 2009, the average remaining term of our Management Contracts was 6.4 years. In addition, as regards some of our owners, we do not have the right to assign the Management Contract to a third party without prior consent from the relevant hotel owner. The termination of Management Contracts could have a material adverse effect on our operating results. Our income may not be sufficient to cover our obligations under our lease agreements. Of the hotels we operate, we Lease 19 from third-party owners. We must comply with our lease obligations, including lease payment obligations and other obligations that require us to incur determined operating expenses, even if the hotel operation is not profitable. During the year ending December 31, 2008, eight of our 23 leased hotels during such period did not generate sufficient revenues to cover our lease payment obligations. To December 31, 2009, 13 of our 19 leased hotels during such period did not generate sufficient revenues to cover our lease payment obligations. In accounting terms, leases are not capitalized and are registered as expense as they accrue. Our financial and operating condition may be adversely affected to the extent that our income and operating profits are not sufficient to cover our obligations under the lease agreements. Our growth strategy may not improve our operating results. The Company has a growth strategy for its hotel, vacation club and service businesses. The Company s ability to expand will depend on a number of global economy factors including, but not limited to, the conditions of the United States, Mexican, Brazilian, Argentine and Chilean economies, the ability of investors to construct new properties for the Company to manage and/or lease and the selection and availability of new hotels locations. There can be no assurance that our expansion plans can be achieved, or that the new hotels or vacation club developments will meet with consumer acceptance or be operated profitably. In this same manner, the Company continues to develop new businesses related to offering thirdparty services, such as loyalty program management, rendering management services and contact services. Our new services businesses may not be successful and may affect our hotel business. We have recently created certain services businesses, including Ampersand, Konexo, Conectum and GloboGO, which, on a consolidated basis, represented 14% of our revenues for the year ending December 31, 2009. These service businesses have grown in comparison with our competencies, and we have attempted to leverage to diversify our operations beyond the hotel industry; however there can be no assurances that these services businesses will perform in accordance with our expectations. Moreover, our efforts to establish these service businesses are likely to divert management attention and resources. If we take longer than anticipated or are not able to successfully establish the service businesses, their anticipated benefits may not be partially or fully attained, or it may take longer to attain than expected. In addition, we rely on several of these businesses to perform certain critical functions, such as administering our loyalty program, operating our call center and providing outsource processing services such as accounting, payroll and technology services. If any of these companies cease to provide us with their 9

respective services, or if they provide them less effectively, our operations and financial condition would be adversely affected. Our properties are subject to risks relating to Acts of God and any such event may materially adversely affect our operating results. The properties that the Company operates are subject to Acts of God, such as natural disasters, particularly in locations where we own and/or operate various hotels. Some of these events may be hurricanes, earthquakes, epidemics, terrorism and environmental hazards, which may be either uninsurable or insurance costs are too expensive with significant deductibles to the Company. Notwithstanding, that said properties are insured against All Risks the damage that said events may cause represent a materially adverse risk factor to the properties managed and to the income derived from these properties, to the Company s financial situation or to its operating results. The Company operates 19 hotels in beach locations which are subject to hurricanes and which may be affected by loss of business due to business activity reduction caused by a hurricane. The coastal areas of Mexico are prone to hurricanes, and our financial condition will be affected if its hotels suffer damage from hurricanes, as well as from the loss of business due to hurricane activity in these areas. High crime rates and the threat of violence may adversely and materially affect our results. Insecurity in cities and in the country, as well as internal and foreign perception of the country s lack of public safety may influence on tourist and business traveler flow to the destinations in which the Company operates a hotel. High crime rates, violence resulting from drug-trafficking activities and kidnappings have been experienced in several areas of Mexico and Brazil, including areas in which we operate, and have been widely covered in the media. Therefore, both tourists and business travelers may be deterred from traveling to Mexico and Brazil which would materially and adversely affect our revenues and operating result due to decreased travel and reduced demand for the destinations affected by such events. We have significant amounts of indebtedness which become due in the next several years, and we cannot assure secure refinancing on favorable terms. 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 and liquidity disruptions which have caused market spreads on prospective debt financings to widen considerably. These circumstances have materially impacted liquidity in the financial markets, making financing terms for 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, and increased defaults. These factors and the continuing market disruption have had, and may continue to have, an adverse effect on the Company, including on its 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. We are subject to significant claims in Mexican tax disputes for which we do not maintain reserves. We are involved in various tax proceedings, including several tax disputes with federal tax authorities regarding our operations in the States of Baja California Sur and Quintana Roo alleging underpayments by the Company and some of our subsidiaries for an aggregate accumulated amount of approximately Ps.1,121.0 million. The foregoing amount does not include other amounts such as fines, surcharges and updates interest that we may be required to pay if these claims are unfavorable to the Company. On November 12, 2004, the Servicio de Administracion Tributaria (Tax Administration Service), or SAT, the Mexican federal revenue service, alleged that we failed to pay income taxes in fiscal year 2000 and levied a claim seeking Ps.103.2 (U.S.$7.7) million. We filed a juicio de nulidad (annulment action) before the Tribunal Federal de Justicia Fiscal y Administrativa (Federal Fiscal and Administrative Justice Court), or TFJFA, to challenge the claim. One of our subsidiaries, Inmobiliaria Hotelera Posadas S.A. de C.V., has 10

provided a payment guarantee in the amount of the claim in connection with the annulment action. Said proceeding is pending decision. On April 28, 2005, the SAT alleged that Compañia Hotelera Los Cabos S.A. de C.V., one of our subsidiaries, failed to pay value-added taxes and income taxes in fiscal year 2000 and levied a claim seeking Ps.252.6 million. The Company initiated an administrative proceeding before the SAT to challenge the claim. The SAT did not act on our challenge and, consequently, we filed an annulment action before the TFJFA to challenge the claim. On January 23, 2006, the SAT alleged that Compañia Desarrolladora Los Cabos S.A. de C.V. failed to pay certain value added taxes and income taxes in the fiscal year 2000 and levied a claim seeking approximately Ps.244.8 million. The Company initiated an administrative proceeding before the SAT to challenge the claim. The SAT did not act on the administrative proceeding filed and, consequently, we filed an annulment action before the TFJFA to challenge the claim. One of our subsidiaries, Inmobiliaria Hotelera Posadas S.A. de C.V., has provided a payment guarantee in the amount of the claim in connection with the annulment action. Said proceeding is pending decision. On September 4, 2007, the SAT alleged that the Company failed to pay income taxes in fiscal year 2000 and levied a claim seeking Ps.430.7 million. The Company filed an annulment action before the TFJFA to challenge the claim. Two of the Company s subsidiaries, Operadora del Golfo de Mexico, S.A. de C.V. and Gran Inmobiliaria Posadas, S.A. de C.V. have granted a lien on one of our hotels with a value in excess of the amount of the claim. The annulment action is pending decision. On April 25, 2008, the SAT alleged that the Company failed to pay certain asset and income taxes in fiscal year 2001 and levied a claim seeking Ps.89.7 (U.S.$6.6) million. The Company filed an annulment action before the TFJFA to challenge the claim. Two of our subsidiaries, Posadas de Mexico, S.A. de C.V. and Hoteles La Mansion, S.A. de C.V., have provided payment guarantees in the amount of the claim in connection with the annulment action. The annulment action is pending decision. If any of these various actions is resolved unfavorably to the Company s interest, we may ultimately be required to pay the amounts levied together with the corresponding updates, surcharges and fines. In the respective case, these amounts are likely to be significant if so resolved. Generally speaking, tax proceedings pose a significant amount of unpredictability and, as a result, we cannot forecast the outcome of any of these proceedings, when they may be resolved or the final amounts that may be payable in connection therewith. To this date, the Company s management has not allocated any reserve in relation to such disputes since based on the opinion of the Company s tax advisors, and as permitted by NIFs, that an unfavorable outcome is possible but less than probable, and as such the actions of the Company s Management are based on the latter opinion. If all or a significant part of these actions were decided adversely to us, it could have a material adverse impact on our business, financial situation and operating results. We are exposed to currency and exchange rate risk on our debt, and we have entered into derivatives contracts. Historically, the majority of our indebtedness had been denominated in U.S. dollars. As of December 31, 2009, approximately 83% of our indebtedness was denominated in U.S. dollars (Ps.3,827.0 (U.S.$283.7) million). In addition, approximately half of our indebtedness bore interest at variable rates. As a result, we were also exposed to risks from fluctuations in 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. In times when non-u.s. dollar markets are available to issue debt, we enter into derivative financial instruments with financial institutions so as to balance our debt in alignment with our revenues. Specifically, income from certain hotels in Mexico, Brazil and Argentina whose room rates are typically quoted in U.S. dollars, as well as the sale and financing of time-share club memberships which are also typically quoted in U.S. dollars. We do not usually enter into derivative financial instruments for any other purpose than those stated, however these are limited in amount and frequency, and 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 in which we generally pay U.S. dollar amounts based on fixed interest rates and receive peso amounts based on peso floating interest rates. 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 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 11

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. If financial markets experience periods of heightened volatility, as they have recently, our operating results 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 operating results. In addition, volatile market conditions may require us to post collateral to counterparties in our derivatives transaction, which would affect our cash flow position, the availability of cash for our operations and may impact our financial condition and operating results. Our derivative transactions may also be subject to the risk that our counterparties will 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 derivatives and stock exchange markets, there may be fewer financial entities available with which we could continue entering into derivative financial instruments to protect the Company against currency risks and the financial condition of our counterparties may be adversely affected under stressful conditions. Any failure to protect our brands could have a negative impact on the value of our brand names and adversely affect our business. We believe our brands and trade names are an important component of our business. We rely on laws that protect intellectual and industrial property rights to protect our registered proprietary rights. The success of our business depends in part upon our continued ability to use our industrial property rights to increase brand awareness and further develop our brands 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 to said purpose and which may result in counterclaims or other claims against the Company, divert management attention and could significantly harm our operating results. From time to time, we apply to register or keep certain trademarks registered. There is no guarantee that such trademark or trade name registrations will be granted. We cannot assure that all of the steps we have taken to protect our trademarks in Mexico and other countries in which we operate our business will be adequate and sufficient to prevent imitation of our trademarks by third parties. The unauthorized reproduction of our trademark and trade names may result in diminishing the value of our brand, losing of competitive advantage or brand goodwill, and could adversely affect our business. Costs of compliance with employment laws and regulations could adversely affect operating results. Collective bargaining agreements for hotel employees are up for renewal periodically. Although under the terms of the management contracts, the collective bargaining agreement or the individual contracts, as applicable, the employees at our managed hotels are employed by the hotel owners, nevertheless such employees may direct their claims against us. In such circumstances, if we are not successful in defending our position before a labor court, we may be held liable for those employee 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 expiring contracts may result in labor strikes or disruptions which could adversely affect our revenues and profitability. Labor costs, including those related to indemnity payments under labor laws are significant, may also escalate beyond our expectations which could have a material adverse effect on our operating margins. 12

We depend on our key employees. We are dependent on the members of our Executive Committee and other key members of our executive management staff, the loss of whose services could have a material adverse effect on our business and future operations. Our insurance coverage may be insufficient to cover potential losses. We carry insurance coverage for general civil liability, damage to property, business interruption and other risks with respect to our owned, managed and leased hotels and we make available insurance programs and package to the owners of hotels we manage. These 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 each occurrence has 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 indemnification limits under the terms of the policies. Sub-limits exist for certain types of claims such as service interruption, debris removal, expediting costs or landscaping plant material replacement, and other landscaping elements, however the amounts covered under these sub-limits are significantly lower than the amounts covered under 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 hotels that participate in our insurance program. Therefore, if covered events occur that affect more than one of our owned hotels and/or managed 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, armed conflicts or guerillas, certain forms of nuclear, biological or chemical terrorism, certain forms of political risks, some environmental hazards and/or certain events of acts of God that may be deemed outside of the general coverage limits of our policies, uninsurable or for which carrying insurance coverage is cost-prohibitive. Obtaining payment from insurance providers of a particular claim that we believe to be covered under our policy may also be considered a risk. 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 or leased by us, as well as the anticipated future income from any such hotels. In that event, we might nevertheless remain bound for any lease payments or any other financial obligations related to the hotel. Our vacation club business is subject to regulation. We develop and operate vacation club resorts and we market and sell time-share memberships in our vacation club. We generally sell the memberships pursuant to interest-accruing monthly installment payment arrangements. These activities are all subject to regulation by various federal agencies, including the standards established by the Normas Oficiales Mexicanas (Official Mexican Standards). For example, Mexican regulations grant the purchaser of a time-share vacation club membership the right to rescind the purchase contract at any time within a minimum statutory rescission period of five business days runs upon the signing of the contract. In addition, the Procuraduria Federal del Consumidor (the Mexican Consumer Protection Agency) must authorize our model contract for the sale of time-share memberships. Although we believe that we are in material compliance or in the process of complying with all applicable and enforceable laws and regulations to which time-share vacation club marketing, sales and operations are currently subject, including the terms of our agreements, changes in these legal requirements or a determination by a regulatory authority that we were not in compliance may adversely affect our business and the manner in which we operate our vacation club. The vacation club business is subject to risk of member defaults. At present, we bear the risk of defaults under purchase contracts for vacation club (time-share) 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 price of the 13

membership and offer monthly installment payment plans that accrue interest for the balance of the purchase price. We recognize as income the entire value of a purchase contract at the time 10% of the purchase price is paid, and we create a reserve for future uncollectible accounts based on our market experience and knowledge. At the time a purchaser enters into a time-share installment purchase agreement the defaults on said sale is covered by the reserve. It may be the case that our reserve would not be sufficient to offset breaches which could negatively affect our financial results. Also, historically, substantially all of our vacation club sales have been denominated in U.S. dollars. Due to the on-going financial crisis, a significant portion of our vacation club revenues have been recalculated, albeit at a higher interest rate, at the request of certain members facing liquidity difficulties. The great majority of Mexican members that wanted to convert their installment payment obligations from U.S. dollars were able to do so. We expect to continue to offer peso-denominated payment plans to Mexican residents challenged by the current economic situation. Recently we have financed our receivables in pesos, generating a better currency match of cash flows. Notwithstanding our redenomination 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. While membership payments are made in U.S. dollars throughout the payment period in force, and sales revenues are recognized in U.S. dollars at the time the contract is signed, the value of the memberships may ultimately be discounted to the extent that the ratio of pesos is depreciated in relation to the U.S. dollar. We do not completely hedge against our exposure to exchange rate fluctuation risk. Traditionally, we have not executed hedging transaction for this exposure. Risks Relating to the Hospitality Industry 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 downturn; impact of public insecurity, armed encounters and terrorism on travel desirability; domestic and international political and geopolitical conditions, including civil uprisings and unrest, expropriation, nationalization and repatriation; travelers fears of exposures to contagious diseases; decreases in demand or increases in offer of memberships of vacation clubs or ownership interests; the impact of internet intermediaries on pricing and our increasing reliance on technology; cyclical over-building of hotel and vacation club properties; restrictive changes or interpretations of laws or regulations, as well as any other governmental actions, including those relating to zoning and land use, health and safety, the environment, taxation, travel and immigration; changes in tourist and travel patterns; changes in operating costs including, but not limited to, energy, labor and labor-related liabilities such as social security, insurance and unanticipated costs incurred or foreseen due to natural disasters and their consequences; disputes with third-party property owners which may result in litigation; disputes relating to the right to use brands and trade names; 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 or consumers; the financial condition of third-party property owners; and 14

the financial condition of the airline industry and its impact on the hotel 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 or reorganization of the hotel owner, the failure to meet certain financial or performance criteria and, in some cases, if the property is sold. 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 are not able to maintain existing management agreements or obtain new management agreements on terms as favorable as the existing agreements. We are subject to government 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, handicap accessibility, construction, occupational health and safety, and general building and zoning requirements in the various jurisdictions in which our hotels are located. Owners and managers of hotels may also be subject to laws governing the relationship with hotel employees. Compliance with and monitoring these laws may be cumbersome. Failure to comply with the preceding laws may materially and adversely affect our operating results. Environmental laws, ordinances and regulations of the various jurisdictions in which we operate regulate our properties and may make us liable for the costs of removing or cleaning up hazardous or toxic substances on, under, or in property we currently own, operate 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 if present could jeopardize our ability to develop, use, sell or rent the affected realty or to borrow money using such property as a guarantee. 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, including archeological zones, may have a material adverse effect on our financial condition and operating results. In addition, Mexican environmental regulations have been increasingly stringent over the last decade. This trend is likely to continue and may be influenced by the environmental agreement entered into by Mexico, the United States and Canada in connection with the North American Free Trade Agreement, or NAFTA. 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 (or other) condition or prospects. The hotel industry is seasonal in nature. The hotel industry is cyclical by nature. Of the 19,500 hotel rooms that the Company operated to December 31, 2009, approximately 20% are located in beach destinations where the cyclical nature is more pronounced in contrast to hotels that cater primarily to business travelers. Generally, our resort hotel revenues are greater in the first and third quarters than in the second and fourth quarters, which reflect winter vacations. This seasonal cycle may generate quarterly fluctuations in the Company s revenues. Concentration in Internet distribution channels may negatively impact our distribution costs. A significant number of our hotel rooms are booked through internet travel intermediaries that have expanded in the past several years. To the extent that internet bookings increase, these internet travel intermediaries may be able to obtain higher commissions or reduced room rates. Moreover, some of these internet travel intermediaries are attempting to commoditize hotel rooms, by increasing the price and general quality indicators (such as three-star downtown hotel ) at the expense of brand identification. These agencies hope that consumers will eventually develop brand loyalties to their reservations systems rather than to the brands of the hotel supplier. Although we expect to derive most of our business from our direct distribution channels (call center, our corporate sales booking tools and our websites) and traditional distribution channels, if the amount of sales made through internet intermediaries increases significantly, our business and profitability may be harmed. 15

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, income management, quality and brand control, procurement, reservation systems, operation of our customer loyalty program, and guest distribution and services. These technologies may 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 electronic payment card industry. Further, the development and maintenance of these technologies may require significant capital. There is no assurance that as various systems and technologies becomes outdated, or new technology is required, we will be able to replace or introduce these as quickly as our competition or within budgeted costs and timeframes for such technology. Furthermore, there can be no assurance that we will achieve the benefits that may have been anticipated from any new technology platform or system. The hotel and vacation club industries are capital intensive. For our hotel properties to remain attractive and competitive, the Company or the hotel owner, as applicable, must periodically spend a percentage of their cash flow. This creates an ongoing need for cash and, to the extent the Company or the hotel owners, as the case may be, cannot fund capital expenditures from cash flow generated by operations, then the funds must come from additional financing. In addition, the Company to continue growing its vacation club business, the Company needs to use cash flow or contract additional indebtedness to develop new units. Accordingly, the Company s financial results may be affected by the cost and availability of such funds. General Risks of Real Estate Investment. The Company is subject to the risks inherent in real property ownership. Profitability on the Company s hotels may be affected by changes in local economic conditions, competition from other hotels, interest rate variations and financing availability, environmental legislation impact and compliance with environmental laws, continuous need for improvements and remodeling, especially of old structures, tax modification affecting realty, adverse changes in governmental and fiscal policies, as well as disasters, including earthquakes, hurricanes and other natural disasters, adverse changes in state laws and other factors beyond the Company s control. Lack of Real Estate liquidity. Real estate are relatively liquid. The Company s ability to diversify its hotel properties investment in response to economic or other conditions may be limited. There can be no assurance that the market value of any of the Company s hotel will not decrease in the future. The Company cannot guarantee that it will be able to dispose of a hotel if it deems it advantageous or necessary, nor can the Company assure that the sale price of any of its properties will recoup or exceed the amount of its original investment. According to NIFs, book value of the Company s properties to December 31, 2007 was restated using factors derived from the National Consumer Price Index ( INPC ). Beginning on January 1, 2008, the Company suspended recognizing inflationary effects. Moreover, the Company s practice is to capitalize improvements, remodeling, and replacements. In regards to ownership of foreign subsidiaries, they are valued at historical cost and converted into pesos, as explained in Note 2c in the Audited Financial Statements. New service businesses may not be successful and may affect our hotel business. Recently we have created certain service business, including Ampersand, Konexo, Conectum and GloboGo that consolidated represent 14% of the Company s total income to December 31, 2009 and 2008. These businesses have been developed from our hotel business but it cannot be assured that these businesses will fulfill our expectations. Furthermore, the implementation and development of these businesses may distract the management team and divert funds. If the implementation of these service businesses takes longer than planned or if it is not successfully completed, the forthcoming benefits may be less or null. However, we depend on these businesses to operate various businesses, such as the Fiesta Rewards program, the contact or call center, accounting processing, payroll payments, and technology services. If any of these companies cease to provide their respective services to us, or if they provide them less effectively, the Company s operations and financial condition would be adversely affected. 16

Our clients may undergo financial difficulties and we may be unable to recover accounts receivables. During a contract term, the financial situation of our clients may change thus affecting their ability to pay their obligations and our ability to collect commissions and for the services provided. Although there are several ways to collect accounts receivables, these methods may be costly and are also time consuming yet do not guarantee recovery. Inability to collect on our accounts may adversely affect the Company s profitability. A failure in operating systems could cause service delays or interruptions which could cause us to lose customers and income. We rely on our telecommunication infrastructure to provide our hotel customers reliable access to our reservation system, customer services and other services, including internet and telephone. Some of the risks to our network and infrastructure include, amongst others, physical damage, natural disasters such as hurricanes, earthquakes, flooding and storms, and other events beyond our control. Although we carry the necessary insurance against loss and we have installed alternate backup systems, service interruptions or reduced customer capacity may occur, either of which could cause us to lose customers and revenues or incur additional expenses which would adversely affect the Company s operations, financial condition and operating results. Holding Company Structure. The Issuer is a holding company which principal assets are the share of its subsidiaries. Even though at present the majority of the subsidiaries are not contractually limited to pay dividends to the Issuer, any financing or other agreement that in the future restricts the subsidiaries ability to pay dividends or make other payments to the Company may adversely affect the latter s liquidity, financial situation and operating results. Generally, Mexican corporations may pay dividends to their shareholders if dividend payments and the financial statements reflecting distributable net profits have been approved by the shareholders, after establishing the legal reserves, and only if all losses have been absorbed or paid. Since the Company is a holding company the possibility that the Issuer may satisfy the demands of its creditors ultimately depends on its ability to participate in its subsidiaries asset distribution upon liquidation. The Issuer s right, and therefore its creditors right to participate in said asset distribution, is effectively subordinated to the subsidiaries creditors payment claims (including claims having legal preference and the Company s creditors claims which are guaranteed by said subsidiaries). We will be obligated to adopt new accounting standards in 2012 that may affect our consolidated financial statements and may affect the measurement methods used by the financial community to evaluate our results. We currently prepare our financial statements in accordance with NIFs. In January 2009, the CNBV approved a new regulation requiring all publicly listed companies in Mexico, including us, to apply international NIFs, or IFRS (International Financial Reporting Standards) in preparing their consolidated financial statements, including presentation of comparable annual statements for the prior year, by January 1, 2012. Because our financial statements prepared in accordance with IFRS may differ from our financial statements prepared in accordance with NIFs, the methods used by the financial community to assess our financial results and value our publicly traded securities, such as debt-to-equity ratios may be affected. As of the date hereof, we have not assessed the impact of adopting IFRS on our financial statements. Risks Relating to Mexico Mexican economic conditions and governmental policies. The Company is incorporated according to Mexican law, and its corporate offices as well as an important part of its assets are located in Mexico. As a result, the Company s operating results have been and in the future shall be significantly affected by the political, social and political conditions in Mexico. 17

The Mexican federal government has exercised, and continues to exercise, significant influence over the Mexican economy. Due to the above government economic policies, these may have a significant impact on the private sector, on the Company in particular, as well as on market conditions, on prices and payment of the securities issued by Mexican entities, including those issued by the Company. In the past Mexico has experienced periods of slow, including negative, economic growth, the peso suffered drastic devaluations and currency exchange systems were implemented. Beginning in 1994, and during 1995, Mexico underwent an economic crisis characterized by devaluation of the peso in regard to other currencies, increased inflation, high interest rates, capital flight, negative economic growth, reduction in consumer purchasing power, and a high unemployment rate. The Mexican economy suffered another economic slowdown during the second semester of 1998 due to a fall in the price of oil, an important part of the Nation s income, and from the existing volatility in emerging markets, caused by economic crisis in Asia, Brazil and Russia. From 2001 to 2003, Mexico experienced a period of low economic growth, resulting from a slowdown in the United States economy. In 2001 the Gross Domestic Product (PIB) decreased 0.2% and increased in 2002 and 2003 by 0.7% and 1.3%, respectively. To the contrary, in 2004, 2005, 2006, 2007 and 2008 the Mexican economy experienced GDP growth of 4.4%, 3.0%, 4.8%, 3.7% and 1.3%, respectively, principally driven by a low interest rate and controlled inflation environment. However, by 2009 the economy presented a decrease of 6.5% as a consequence of the pronounced global economic slowdown that began in the last quarter of 2008 and of the influenza A (H1N1) epidemic which broke out at the end of April 2009. During the first semester of 2009, the global financial markets became highly volatile causing in the short term the bankruptcy and rescue of some financial institutions, mainly in the United States of America. As a consequence of the preceding, local investors became risk adverse and this was reflected in the securities markets, less credit and a market liquidity crisis, as well as a depreciation of the peso in relation to the U.S. dollar of about 25%. The crisis and the slowdown in the Mexican economy may generate a material adverse effect on the Company s operations and financial conditions. Currency fluctuations To December 31, 2009, approximately 83% of our total indebtedness is denominated in U.S. dollars, while the majority of the Company s sales are Peso denominated an important portion of its debt, as well as accounts payable are denominated in Dollars, see Note 17 to the Company s audited consolidated financial statements included in this Annual Report. The peso has been subjected to significant depreciations in the past and may be depreciated in the future. Peso depreciation would negatively impact the Company s results and financial condition due to the implicit increase in financing costs. This would be because the peso cost of the Company s debts in dollars would increase and would affect the Company s ability to pay its dollar denominated debt. The closing currency exchange rate to December 2009 was $13.0437 Mexican pesos per United States of America dollar which represented a 3.7% appreciation during the corporate year and presented high volatility during 2009. In regards to the use of derivative instruments, we principally use cross currency swaps for which we, generally, pay a fixed interest rate in U.S. dollars and receive a variable interest rate in pesos. To December 31, 2009, the Net Mark to Market derivatives position was $270.4 M. During periods of high volatility, like those recently experienced in the markets, these may represent important variations such as exchange losses or gains and, to a lesser extent, interest rate variations that may significantly affect operating results. Inflation Even though inflation rates have decreased since 1998, Mexico has suffered in the past high inflation rates. Inflation caused high interest rates, peso devaluations and, during a good part of the 80 s and the beginning of the 90 s, governmental controls on currency exchange rates. Since a significant portion of the Company s operating costs are denominated in pesos, a significant inflation increase may in turn cause an increase in the Company s operating costs. Inflation may affect our customer s purchasing power and so adversely affect demand for hotel rooms and vacation club memberships. Inflationary fluctuations could have an important impact on the Company s financial condition and operating results. Annual inflation rates, according to the INPC s measurements published by the Banco de Mexico, have been 3.8%, 6.5% and 3.6% for 2007, 2008, and 2009, respectively. 18

Interest Rates Similar to the value of the peso in relation to the dollar and inflation rates, historically interest rates in Mexico have experienced periods of volatility. Adverse situations which have affected the Mexican economy, including increased inflation, have resulted in substantial increases to interest rates in the Mexican market during said periods. Interest rate movements directly affect the Company s integrated financing results by increasing its financing costs since a part of its bank indebtedness is contracted at variable rates. However, the low interest rates recently experienced by the international markets have reduced the Company s financial risk. Interest rates on 28-day CETES (Mexican treasury bills) averaged for 2007, 2008, and 2009: 7.2%, 7.7% and 5.5%, respectively. To date, the Company has promptly complied with all of its due dates, both of interest and capital payments, derived from banking, securities and operating commitments. Risks Relating to Brazil According to Brazil s Central Bank, in 2009 the GDP only decreased 0.2% and the principal decreasing sectors were the industrial and agricultural sectors. Inflation for 2009 was 3.7% which favorably compares with the 6.9% reported for the previous year. In 2009, the Brazilian Real (R$) appreciated 26.1% in relation to the U.S. dollar, from R$ 2.3 per U.S. Dollar on December 31, 2008 to R$ 1.7 per U.S. Dollar on December 31, 2009. The currency exchange rate appreciation reflected the lesser volatility perceived by the exchange market originated by the global financial crisis. To December 31, 2009, we operated 100 hotels in Brazil. Risks related to Argentina According to Argentina s Central Bank, in 2009 the GNP decreased 2.8% due to the global financial crisis and the influenza outbreak. Inflation increased marginally to 7.9% for 2009 and the Argentine Peso depreciated by 8.6% in relation to the U.S. Dollar from P$ 3.5 per dollar on December 31, 2008 to P$ 3.8 per dollar to December 31, 2009. On this same date, we operate two hotels in Argentina. Risks related to downturn in United States of America economic activity The risk of a downturn in the United States of America may imply changes to the spending patterns of the inhabitants of that country, such as postponing or cancelling travel decisions, which may be reflected in lower occupancy in the Company s hotels, specifically those beach destinations with greater influx of these types of tourists, such as Cancun and Los Cabos. To December, 31, 2009, approximately an 80% of the Company s rooms are located in city destinations, and the remaining 20% in beach hotels. To December 31, 2009, we operate three hotels in the southern part of the state of Texas. Risks related to Chile According to Chile s Central Bank, in 2009 the GNP decreased 1.5%, inflation decreased to levels of - 0.9%, and the Chilean Peso depreciated by 20% in relation to the U.S. Dollar. To December 31, 2009 we operate one hotel in Chile. External Information Sources and Expert Statements All of the information contained in the present annual report is responsibility of Grupo Posadas, S.A.B. de C.V. and has been prepared by this Company. This Annual Report contains, amongst others, information related to the hotel and construction industry. This information has been collected by a series of sources, including the Ministry of Tourism, and the National Institute for Statistics, Geography, and Computing, amongst others. Likewise, the Company has utilized information from a series of public sources, including among others, the Banco de Mexico. The information which is not based on a source has been prepared in good faith by the Company, based on its knowledge of the industry and the market in which it participates. The terms and methodology used by the different sources are not always congruent among themselves, and for these reasons, comparisons are difficult. 19

The present Annual Report includes certain statements concerning the future of Posadas. These statements appear in different parts of the Report and make reference to the intention, the opinion, or the present expectations of the Company or its officers regarding future plans and economic and market tendencies that affect the Company s financial situation and its operating results. The statements should not be interpreted as a future yield guarantee and employ risks and uncertainty; real results may vary due to different factors from those expressed herein. The information contained in this Report including, amongst others, the sections Risk Factors Comments and Analysis of the Management of the Operating Results and Financial Situation of the Company and the Company identify some important circumstances that may cause said variations. Possible investors are advised to take said expectation statements with the appropriate reservations. The Company is not obligated to publicly reveal the results of the review of the expectations statements so as to reflect events or circumstances subsequent to the date of this Report, including possible business plan changes or the application of capital investments in expansion plans or to reflect the occurrence of unexpected events. d) Other Securities In March 1992, the Issuer registered the shares representing its corporate capital in the National Securities and Intermediaries Registry, today the National Securities Registry ( RNV ) under the CNBV so as to trade on the BMV. The Issuer has fully and timely delivered, since its registration and trading, its quarterly and annual reports, both to the BMV, as well as to the CNBV, in compliance with the Securities Market Law because its Series A and Serie L shares are registered in the National Securities Registry and trade on the Mexican Securities Exchange, S.A.B. de C.V. Likewise, the CNBV, through official letter number DGA-042-542 dated January 23, 2001, authorized the Company s registration in the then Special Section of the RNV, a program denominated Commercial Europaper up to the amount of 100 M U.S. Dollars to be issued abroad for issues with a one year period. The Company renewed this program in 2004. To December 31, 2009 the Company has no balance for commercial paper issues. In December 2001, based on official letter number DGE-616-14608 dated December 5, 2001, for a total authorized amount of $1,000 M (One thousand million pesos 00/100 M.N.), the Issuer registered a Certificados Bursatiles program in the RNV under the CNBV. On December 6, 2001, the Issuer first issued Stock Exchange Certificates in accordance to the program authorized in December 2001 in the amount of $200 M (Two hundred million pesos 00/100 M.N.). This issue was completely liquidated in December 2004. In February 21, 2002, the Issuer made the second issue of Stock Exchange Certificates in accordance to the program authorized in December 2001 in the amount of $300 M (Three hundred million pesos 00/100 M.N.). This issue was completely liquidated in February 2006. On July 12, 2002, the Issuer made the third issue of Stock Exchange Certificates in accordance to the program authorized in December 2001 in the amount of $250 M (Two hundred fifty million pesos 00/100 M.N.). This issue was completely liquidated in July 2006. In September 2002, in keeping with official letter number DGE-521-14821 dated September 17, 2002, for a total authorized amount of $1,500 M (One thousand five hundred million pesos 00/100 M.N.), the Issuer registered a Stock Exchange Certificate program in the National Securities Registry (RNV) under the CNBV. To December 31, 2003, the Issuer had received $ 875 M (eight hundred seventy-eight million pesos 00/100 M.N.) under the provisions of this program. This issue was completely liquidated in February 2005. On May 15, 2003, the Issuer carried out the fourth issue of Stock Exchange Certificates under the program authorized in December 2001, in the amount of $250 M (Two hundred fifty million pesos 00/100 M.N.), which was liquidated on May 6, 2009. On May 28, 2004, in accordance with official letter number DGE-362-362, the Issuer placed abroad Debt Securities for a total authorized amount of up to US250 M (Two hundred fifty million U.S. Dollars), the Issuer registered a Debt Securities program denominated Senior Notes with the then RNV Special Section under the CNBV. In January 14, 2005, la Issuer increased the issue of Debt Securities denominated Senior Notes and update its registration in the then RNV Special Section under the CNBV, in conformity with official letter 20

number DGE-054-23554 for a total authorized amount of up to an additional US75 M (Seventy-five million U.S. Dollars). On April 11, 84.1% of this issue was repurchased and on March 9, 2010 the US35.8 M balance was prepaid. On December 19, 2007, under official letter number 153/1850141/2007, the Issuer registered a longterm Stock Exchange Certificate revolving placement program with the RNV under the CNBV, with registration number 0710-4.15-2007-003 for a total authorized amount of $1,500 M (One thousand five hundred million pesos 00/100 M.N.). On April 7, 2008, the Issuer obtained an increase for the long-term Stock Exchange Certificate revolving placement program from the RNV under the CNBV under official letter number 153/17163/2008 up to a total authorized amount of $3,000 M (Three thousand million pesos 00/100 M.N.). On April 7, 2008, the Issuer obtained authorization under registration number 0710-4.15-2007-003-1 to carry out on April 8, 2008 the first issue under the Stock Exchange Certificate revolving placement program for a total authorized amount of $1,500 M (One thousand five hundred pesos 00/100 M.N.). On July 9, 2008, the Issuer obtained authorization to additionally issue on July 10, 2008, under official letter CNBV 153/17592/2008, $750 M (Seven hundred fifty million pesos 00/100 M.N.), under the Stock Exchange Certificate revolving placement program for a total authorized amount of $2,250 M (Two thousand two hundred fifty million pesos 00/100 M.N.). On January 15, 2010, the Issuer made a placement abroad of Debt Securities denominated Senior Notes 2015 for a total authorized amount of up to US200 M (Two hundred million U.S. Dollars 00/100). By means of official letter number 153/3212/2010, the National Banking and Securities Commission made note in the National Securities Registry of the aforestated placement. Maintenance Requirements The Company is obligated to provide the CNBV and the BMV with determined financial, economic, accounting, administrative and legal information, amongst others, that is described hereinbelow, based on the text of Generally Applicable Provisions to Securities Issuers and other Securities Market Participants, published on March 19, 2003 and modified according to resolutions published October 7, 2003, September 6, 2004, September 22, 2006, September 19, 2008 and January 27, 2009. During the last three corporate years, the Company has fully and timely delivered the Information required by the authorities. I. Annual information: (a) The third business day immediately following the date on which the ordinary general shareholders meeting is held which issues a resolution on the results of the corporate year, which should be held within the 4 months following the close of the corporate year: 1. Report and opinion mentioned in article 28, section IV of the Stock Exchange Law. 2. Annual financial statements or their equivalents in keeping with the nature of the Issuer accompanied by an external auditor s opinion, as well as of the Issuer s associates which contribute more than 10 percent to its consolidated profits or total assets. 3. Communication signed by the secretary of the board of directors reporting the update status of books containing the records of the minutes of the shareholders meetings, sessions of the board of directors, share record book and, if a variable capital corporation, the registering increases and decreases in corporate capital.. 4. Document referred to by article 84 of the general provisions, signed by the External Auditor. (b) No later than June 30 of each year: 1. Annual Report corresponding to the immediately preceding corporate year. 21

2. Report corresponding to the immediately preceding corporate year related to compliance with the Better Corporate Practices Code. II. Quarterly Information: Within the twenty business days following the end of each of the first quarters of the corporate year, and within forty business days following the conclusion of the third quarter, the financial statements, as well as the economic, accounting and administrative information described in the corresponding electronic formats, at least comparing the numbers of the quarter in question with the numbers for the same period of the previous corporate year. III. (a) (b) Legal Information: The day of its publication the call to the shareholders meeting. The business day immediately following the meeting in question: 1. Summary of the resolutions adopted in the shareholders meeting which is held in compliance with the provisions of article 181 of the General Law of Business Corporations, which expressly includes the application of profits and, in the respective case, the dividend determined, the number of the coupon or coupons to be paid, as well as the location and date of payment. (c) Within the five business days following the shareholders meeting: 1. Copy authenticated by the secretary of the board of directors of the Company or by a person empowered to authenticate the record of the minutes of the shareholders meeting, accompanied by the attendance list signed by the ballot inspectors designated for said purpose, indicating the number of shares corresponding to each shareholder and, in the respective case, by the shareholder s representative, as well as the number of shares represented. 2. Copy authenticated by the secretary of the board of directors of the corporate bylaws of the Company, if modifications to the by-laws have been agreed to in the corresponding meeting. (d) At least five business days before the act referred to in each one of the following notifications: 1. Notification of delivery or exchange of shares. 2. Notification of payment of dividends, which should state the amount and proportion of the dividends. 3. Any other notification addressed to the shareholders or the investing public. (e) IV. On June 30 every five years, the formalization of the general shareholders meeting which approved the verification of the Company s corporate by-laws with the Company s registered corporate by-laws information in the Public Registry of Commerce. Purchase of own shares: The Company is obligated to inform the BMV, no later than the business day immediately following the agreement to operations for the purchase of its own shares. V. Relevant Events: The Company is obligated to inform the BMV of its relevant events, in the manner and on the terms stipulated by the Stock Market Law and the General Provisions. 22

e) Significant Changes to Security Rights Registered in the RNV. The Company has not made any changes to the security rights registered in the RNV. f) Public Documents The information contained in this Annual Report may be consulted or further developed with the investor relations area of the Company at telephone 5326-6757, or directly at the domicile of the Company located on Paseo de la Reforma Number 155, PH-B, Colonia Lomas de Chapultepec, C.P. 11000 in Mexico D.F., as well as on the Internet page of the Stock Exchange at www.bmv.com.mx, where also the Better Corporate Practices Code may be consulted. For more information please consult the Company s Internet page at: www.posadas.com. 2) THE COMPANY a) History and Development of the Company Grupo Posadas, S.A.B. de C.V., was incorporated on April 18, 1967, under the original corporate name of Promotora Mexicana de Hoteles, S.A. in Mexico, Federal District, with a corporate life of 99 years. The Company is domiciled at Paseo de la Reforma Number 155, PH-B, Colonia Lomas de Chapultepec, Postal Code 11000, Mexico, D.F. and its telephone is 53-26-67-00. The Company has its roots in 1967, when Gaston Azcarraga Tamayo established Promotora Mexicana de Hoteles, S.A. for the purpose of participating in the tourism section by building and operating a hotel in the Federal District, the Fiesta Palace, now known as Fiesta Americana Reforma. In 1969, Promotora Mexicana de Hoteles associated itself with American Hotels, a subsidiary of American Airlines so as to establish Operadora Mexicana de Hoteles, S.A. de C.V., a Mexican Company created to manage hotel properties. The first Fiesta Americana hotel opened in 1979 in Puerto Vallarta; at present it is operated by the Company. The Company s new facet dates back to 1982, when Promotora Mexicana de Hoteles, S.A. and Gaston Azcarraga Tamayo bought 50% of the corporate capital of Posadas de Mexico S.A. de C.V. Initially, Posadas de Mexico was established in 1969 by Pratt Hotel Corporation, a United States corporation, to operate Holiday Inn franchises in Mexico. In 1990 Promotora Mexicana de Hoteles, bought the remaining 50% of shares representing the corporate capital of Posadas de Mexico S.A. de C.V. The latter purchase brought forth the largest hotel Company in Mexico, operating 13 hotels at that time. Its principal corporate purpose was the management of the Holiday Inns and the management of the Fiesta Americana hotels (FA). At the end of the 80 s, the Mexican hotel industry was going through a period of saturation and the Company realized that management of third party hotels reported more reservations than those obtained. Consequently, the Company decided to focus on developing its own brands (Fiesta Americana (FA) and Fiesta Inn (FI)), while it continued operating the Holiday Inn franchises in some viable destinations. In 1992, the Company changed its name from Promotora Mexicana de Hoteles, S.A. de C.V. to Grupo Posadas, S.A. de C.V. In March of this same year, the Company was listed on the Mexican Stock Exchange. In 1993 it began to attack the business traveler segment by opening the first Fiesta Inn in a city destination. In 1998, the Company began to expand to South America by acquiring the Caesar Park chain, along with brand rights in Latin America. Likewise in 2001, the Company opened its first Caesar Business hotel in Sao Paulo, Brazil. The Company entered the Vacation Club business in 1999 opening the first resort under the brand Fiesta Americana Vacation Club in Los Cabos, Mexico. Since then Posadas has added three resorts under this concept in Cancun, in Acapulco and another in the archeological zone of Kohunlich. 23

In 2001, we opened our first Caesar Business hotel en Brazil, and in 2007 we opened our first Caesar Business hotel en Santiago de Chile. Likewise, in 2001, we began to implement our Posadas Central Inventory so as to consolidate the hotel inventory information in only one date base. In 2003, the Company established the management services center Conectum which is responsible for management control of owned, leased and third party hotels. Today, Conectum is making inroads with businesses and industries that are not related to Posadas. In December 2005, the Company made a strategic investment in Grupo Mexicana de Aviacion, S.A. de C.V., in which it maintains a minority holding. In this same year the brand Live Aqua was launched into the market, a luxury brand for our lifestyle hotel located in Cancun. In the General Extraordinary Shareholders Meeting held in November of 2006, the Company adopted the form of sociedad anonima bursatil, which is translated as stock market corporation, and changed its corporate name to Grupo Posadas, S.A.B. de C.V., in order to comply with the provisions of the Stock Market Law. Mexico. In December 2007 the first hotel under the brand One Hotels opened in the city of Monterrey, In 2008, development of non-hotel businesses continued with the consolidation of Ampersand which engages in the management of loyalty programs, the Konexo call center. At present both services are offered to both entities and industries related to Posadas, as well as to third parties. In 2009, in spite of the global recession, the Company continued promoting a development plan focused on increasing its inventory, laid the foundation to begin an ambitious time-sharing and vacation property project on the Riviera Maya, and starts to develop new businesses with a view toward industries other than those of Posadas, thus making an important contribution to the profits of the Company. Principal Investments 2007-2009 During the past years, the Company s strategy has been to continually grow through hotel administration contracts, which implies allocating limited capital expenses to determined expansion projects and focused on investment in maintenance of already existing properties. 2009: The following explains the principal investments that the Company has made between 2007 and In 2007 total capital expenses were US50 M (converted to the yearly average exchange rate) of which approximately US26 M were for hotel maintenance and US18 M for projects, principally for building a contact center or Call Center in Morelia, the last construction stage of the One Hotel on Patriotismo in Mexico City and the hotel One in Queretaro. The remaining capital expenses were used for corporate purposes, principally in technology. In 2008 capital expenses amounted to US39 M (converted to the yearly average exchange rate). Of these, 27% was for hotel maintenance; 36% to projects; 30% for the Vacation Club; and the remaining 7% of capital expenses was used for corporate purposes, mainly in the area of technology. In 2009 capital expenses totaled US35 M (converted to the yearly average exchange rate). Hotel maintenance comprised 13%; 25% to projects and corporate, principally to the technology area; and 62% for the Vacation Club. b) Business Description i) Principal Activity The principal activities of Grupo Posadas, S.A.B. de C.V. and its Subsidiaries are the construction, purchase, promotion, operation and management of hotels that principally operate under commercial brands of: Live Aqua, Fiesta Americana Grand, Fiesta Americana, Fiesta American Villas, Fiesta Inn, One Hotels, Caesar Park y Caesar Business, of these to December 31, 2009, 33 are self-owned, 58 belong to third parties 24

and are managed by Posadas, and 19 are leased. Our hotel operations are concentrated in Latin American countries, principally in Mexico and Brazil. Through our subsidiaries we operate 110 hotels (including four Vacation Clubs) located in Mexico, Brazil, Argentina, Chile and the United States of America. Our hotel locations are distributed in beach and city destinations, offering services to both business and pleasure travelers. Approximately 80% of our rooms are located in urban destination, while 20% are in beach destinations. In 1999, we began to sell time-shares through the denominated Vacation Club with Fiesta Americana Vacation Club. This concept has been developed in different stages in Los Cabos, Baja California Sur, Cancun and Kohunlich, Quintana Roo and in Acapulco, Guerrero; and for its operations alliances have been formed with Hilton Grand Vacation Club and Resort Condominiums International (RCI), which has allowed us to penetrate the foreign market with greater force, In the majority of cases, we provide financing to those clients who buy memberships in this Vacation Club. Posadas income evidences seasonal behavior throughout the year. For beach hotels, occupancy tends to be higher during the Winter and vacation times (Easter Week, Summer) while city hotels have stable occupancies throughout the year. However, with the purchase of Caesar Park this cyclical effect has been reduced since the high seasons in South America are contrary to the cycles that exist in Mexico. Additionally, in recent years we have marketed our management skills and technological platforms developed from our experience in hotel services, providing loyalty program management services, client contact services or call center, shared management services and outsourcing, amongst others. The Company plans to operate in Mexico 44 additional hotels with approximately 6,000 rooms that should open during the following 36 months. Of these hotels, 17 will operate under the brand Fiesta Inn, 2 under the brand Fiesta Americana, 23 under the three star hotel chain One Hotels and two Live Aqua hotels; 10 of the aforementioned hotels are in construction. In line with the Company s strategy of operating a greater number of hotels with minimum investment, the Company plans to only own 1% of the aforementioned rooms and the remaining rooms by means of management contracts and leases with third party investors. The Company estimates total investment for the aforecited Mexican development plan at approximately US347 M. In regards to South America, the Company s development plan contemplates operating two hotels under the Caesar Business brand, two others under the Caesar Park brand and one under the Fiesta Inn brand for a total of approximately 500 rooms. Also in keeping with the Company s strategy of operating greater number of hotels with minimum investment, the Company will not own any of the mentioned hotels but instead has signed a lease agreement with third party investors. The Company estimates the investment required by the South American development plan at approximately US30 M. Some of the Company s principal suppliers are: Accenture, Axxa Seguros, Bachoco, Bonafont, Comercial Norteamericana, Blancos Sampedro de Acapulco, Oneida, Oracle, Ivonne, Tensa, Fetech, Johnson Controls, Otis, York, Goirand, Grupo Nacional Provincial and Dell Mexico. It should be mentioned that the Issuer is not dependent on any supplier. Due to the fact that the Company sustains its development on hotel management, the price volatility of the principal raw materials related to hotel construction would affect it indirectly through some developer. The product or similar service categories, or those individual products that represent 10% or more of total consolidated income for each one of the last 3 corporate years, indicating the amount and percentage are found in section: iii) Patents, Licenses, Brand and Other Contracts in this Annual Report and in Section 3, Financial Information, subsection b) Financial Information by Business Line, Geographic Zone and Export Sales in this Annual Report. For the Company s financial information according to business line and geographic zone, see section 3 b) Financial Information by Business Line, Geographic Zone and Export Sales. 25

ii) Distribution Channels The Company considers that investment in new systems and technology is critical to its growth. During the course of its history, the Company has developed new systems and technology which has permitted it to optimize product distribution, manage its operations and cultivate employee talent. The technology platform which the Company uses to market and sell hotel rooms is a Company developed system denominated Inventario Central, or Central Inventory. Central Inventory consolidates into one database room availability for the entire hotel portfolio, updated in real time in line with room availability changes. This database may be simultaneously consulted by all the distribution channels which the Company uses to sell its rooms. Said distribution channels include the Company s own reservation central located in Morelia, Michoacan, global distribution systems or GDS, travel agencies, Internet intermediaries, and the Company s own web site. On the other hand, one of the Company s most important distribution channels is its loyalty program. The Fiesta Rewards program has contributed significantly to the Company s retention of valuable clients and to keeping income stable during various business cycles. Members affiliated to Fiesta Rewards receive various benefits such as preferential rates and may redeem the points obtained at participating hotels for, amongst other things, hotel stays, airplane tickets and car rentals. The Fiesta Rewards program is the loyalty program amongst Mexican hotel chains with the largest number of members. In addition, since 2001, the Company launched the program Caesar Rewards for its hotels in South America. iii) Patents, Licenses, Brands and Other Contracts The Company operates under three principal models, owned hotels; third party hotels managed by Posadas and hotels leased and managed by Posadas. The Company considers that its experience as a hotel operator, that it has its very own reservations system, recent technological investments as well as a loyalty reward system are the principal attributes which can add value for independent hotel owners. In recent years the Company s strategy has concentrated on selling hotel management and operation services so as to increase yield on capital invested by signing management contracts with local partners to develop new properties and by converting already existing properties to the Company s brands. In to continue with its growth strategy, the Company is continually looking for opportunities to operate hotels in new locations. The Development division is responsible for identifying locations for new projects. The Company does not apply strict statistical or numerical parameters when deciding to expand its operations to a particular location, instead it takes into consideration the city s population, the level of economic activity and the willingness of local investor to invest their capital in said location. Once the location s expansion potential has been identified by the Development area, the Company s Market area evaluates the feasibility of the proposal by analyzing offer and demand in the locality, competition and rate ranges. The Company has signed management contracts to operate hotels that do not belong to it but that give it control over the operation of the property. In addition, the Company has executed contracts over the use of its brands from which it receives royalty income. In some cases, the Company has also signed lease agreements on the properties that it operates. As consideration for the technical and operational assistance from the Company and the use of its patents and brands in Mexico and South America the managed hotels pay royalties to Posadas. These royalties are calculated as a percentage of the total sales of each hotel or of other services that are marketed under its brands. Likewise, Company is the holder of various registered trademarks which it has created and developed throughout the years, such as: Live Aqua, Fiesta Americana Grand, Fiesta American, Fiesta Inn, One Hotels, Fiesta Americana Vacation Club, Caesar Park, Caesar Business, Fiesta Rewards, Ampersand, Conectum, and Konexo, amongst others. At the end of 2009, the average life of the Company s hotel management contracts (excepting its own and leased hotels) was 6.4 years. 26

The Company basically operates under 8 brands in 5 different countries: Brand mix of Posadas Hotels Brands Category (1) Rooms Location Segment Rooms range Lifestyle 1 200-400 371 Gran Tourism 4 200-600 1,013 Luxury Resorts and large cities Luxury Resorts and large cities International and domestic tourists (high income) International and domestic tourists (high income) 5-Stars 14 150-600 4,200 Luxury Resorts and large cities Foreign and domestic tourists and business travellers 4-Stars 60 90-220 8,747 3 Stars 10 100-130 1,266 Medium and small size cities and suburbs of large cities Medium size cities and industrial zones Domestic and foreign business travellers Local business travellers 5-Stars 4 100-300 677 Resorts International and domestic tourists Gran Tourism 5 150-300 753 Large cities and coastal destinations International and domestic tourists and business travellers 4-Stars 8 120-400 1,535 Other 4-5 Stars 4 100-130 892 Medium and small size cities and suburbs of large cities Medium and small size cities International and domestic tourists and business travellers International and domestic tourists and business travellers Total 110 19,454 Source : Posadas (1) According to the Mexican clasification system 27

Financings To finance its operations and growth, to December 31, 2009, the Company had signed eleven loan agreements with domestic and foreign institutions, a foreign bond issue, a syndicated loan, six bilateral loans, five guaranteed and one issue stock exchange certificates. See Financial information Relevant Loan Information. Derivative Financial Instruments The Company uses derivative financial instruments relating hedges to debt incurred, the derivative financial instruments being used involve exchange of principal and interest from one currency to another (CCS) and instruments to fix variable debt interest rates (IRS); the preceding is for economic hedging purposes, The derivative financial instruments contracted by the Company have been generated, almost in their totality, from an economic viewpoint, for hedging purposes. However for accounting purposes, they have not been denominated as hedges, since they do not meet all NIF requirements for such purpose, and hence they have been classified in accounting terms as instruments for negotiation purposes. The Company has signed a collateral contract to the ISDA (Credit Support Annex) master contract stipulating conditions binding the Company to guarantee margin calls should the mark to market value exceeds the loan limits agreed to by the parties (threshold amount. The reference or underlying variables for the derivative financial instruments applicable to Cross Currency Swaps (CCS) held by the Issuer may be subject to market, loan and operation risks that may result in unexpected and material losses. A serious fall in the valuation of assets, an unanticipated loan event or unforeseen circumstances which may cause a correlation of factors that were previously uncorrelated, may cause losses resulting from risks which were not duly considered when a derivative financial instruments was structured and traded. Some of these factors are the exchange rate (FX), change in the Libor rate represented in basis points (pbs), the change in Spread or Basis pbs and the change in the TIIE rate represented in pbs. Currently, the hedge for these instruments is maintained, the depreciation corresponding to monthly markets valuations are recorded in the net profit and loss statement of savings corresponding to the monthly flow exchanges for each coupon in pesos and dollars as part of the Comprehensive Financial Result ( CIF ). For greater detail please see section: 3) Financial Information, ii) Financial Situation, Liquidity and Capital Resources, Derivative Financial Instruments. iv) Principal Clients Given the nature of the hotel industry, the Company does not depend on any or several clients which if lost would adversely affect the Company s operating results or financial situation. The Company has a commercial strategy based on targeting business and vacation sectors in the Mexican and South American markets through the Fiesta Americana, Fiesta Inn, One Hotels, Caesar Park and Caesar Business brands; the wholesale sector in the North American market principally in the resorts area, and the groups and conventions sector in the Mexican market for Fiesta Americana and Fiesta Inn. v) Applicable Legislation and Tax Status The Company s operations are subject to federal, state and municipal regulations in each of the jurisdictions in which the Company operates. In Mexico, each of the Company s hotels is granted a business license by both the state and the municipality to operate locally, as well as different licenses and permits for the operations carried out in each. The Company should also register its hotels in the Mexican Registro Nacional de Turismo (National Tourism Registry), together with any related services such as restaurants and bars provided by such hotel. State and municipal laws in Mexico also regulate safety, civil defense and sanitation matters amongst others. Additionally, each Company hotel is required to have appropriate sanitary permits and hotel construction projects are required to have a construction license. In its opinion, the Company deems that it has reasonably complied or in the process of complying with all applicable Mexican licenses in Mexico. Likewise, the Company s Mexican operations are subject to different federal regulations, such as those related to consumer protection Federal Consumer Protection Law (Ley Federal de Proteccion al Consumidor) and Mexican Official Standards, General Law of National Patrimony (Ley General de Bienes Nacionales) in relation to federal zone concessions, and the General Law of Ecological Stabilization and Environmental Protection (Ley General de Equilibrio Ecoligico y de la Proteccion al Ambiente). Under the latter law, companies are under the regulatory jurisdiction of the Mexican Ministry of the Environment and Natural 28

Resources (Secretaria del Medio Ambiente y Recursos Naturales). Mexican environmental regulations have become stricter in the past decade, a trend that is likely to continue in the future due to the environmental agreements entered into 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 comply with applicable environmental laws and regulations. The Company develops and operates resorts under the Fiesta Americana Vacation Club concept. In this business the Company markets and sells timeshare memberships to its clients under different financing plans. These activities are subject to regulations. For example, Mexican law grants the purchaser of a vacation club membership the right to rescind the purchase contract at any time within a minimum five business day statutory rescission period that begins upon the signing of the contract. In addition, the Mexican Consumer Protection Agency (Procuraduria Federal del Consumidor) must authorize the model contract for vacation club memberships sales. In addition to the regulations discussed above, each of the Company s hotels is subject to extensive federal, state and local regulations in Mexico, the United States, Brazil, Argentina and Chile, 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, parking garages and the sale of alcoholic beverages. Stock Market Law On December 28, 2005, the Stock Market Law was published in the Federal Official Bulletin, which became enforceable since June 28, 2006. In the extraordinary general shareholders meeting held on November 30, 2006, the Company modified its bylaws to incorporate the newly established requirements. The Stock Market Law, amongst other things (i) clarifies public tender offer rules classifying them as obligatory or voluntary, (ii) issues information disclosure criteria for the shareholders of issuers, (iii) adds and strengthen the duties of the board of directors, (iv) precisely determines the board of directors duties as well as those of its members, the secretary and the director general, introducing new concepts such as duties of due diligence and loyalty, (v) substitutes the concept of statutory auditor and their obligations towards the audit committee, the corporate practices committee and external auditors, (vi) defines the director general s obligations and those of high level officers, (vii) broadens minority shareholders rights, and (viii) broadens the penalty definition for breaches of the new Stock Market Law. The Company deems that it has complied with all relevant aspects of applicable laws and regulations and has obtained all the licenses and permits allowing it to run its business in compliance with the laws. Tax regulations in Mexico Mexican enterprises are subject to Income Tax ( ISR ) and to Single Rate Business Tax ( IETU ). The ISR is calculated by considering certain inflationary effects as taxable or deductible, such as depreciation calculated on constant price values. ISR The 2008 and 2009 rate is 28% and will be 30% for the years from 2010 to 2012, 29% for 2013 and 28% for 2014. The Company pays consolidated ISR with its subsidiaries since 1990. Modifications to the ISR Law were published on December 7, 2009, and became applicable in 2010. Said modifications provide that: a) the ISR related to tax consolidation benefits obtained from 1999 to 2004 must be paid in installments from 2010 to 2015, and b) the tax resulting from tax benefits obtained from 2005 and on tax consolidation must be paid during the sixth to the tenth year following the year in which the benefit was obtained. The tax payments related to tax consolidation benefits obtained from 1990 to 1998 may be required in those cases established by the tax provisions. IETU Both incomes and deductions and some tax liabilities are determined based on each tax year s cash flows. The tax rate is 17.0 % and 16.5% for 2009 and 2008, respectively, and 17.5% from 2010. Likewise, once this law became enforceable, the IMPAC Law was repealed. The preceding allows that, under certain circumstances, the tax paid in the ten years prior to the year in which ISR is paid may be refunded on the terms of the tax provisions. Additionally, unlike ISR, the parent holding Company and its subsidiaries will incur IETU on an individual basis. The income tax paid is the greater amount resulting from either ISR or IETU. Based on financial projections, the Company has determined that in Mexico it will essentially pay on a consolidated basis ISR, and some subsidiaries will pay IETU, consequently, the Company computed both 29

deferred ISR and deferred IETU. In addition, unlike ISR, the parent holding Company and its subsidiaries will incur IETU on an individual basis. The cash deposits tax ( IDE ) provides for 3% rate applicable to the amount exceeding $15 thousand pesos per account per month. Additionally, state taxes are levied on the Company s activities, such as the Accommodation Tax and other taxes regarding certain occasionally incurred levied activities, such as contests, games of chance and lotteries. Tax regulations in Brazil According to current Brazilian law, the subsidiaries operating in that country are subject to federal income and social contribution taxes, which are computed at the rates of 26% and 8%, respectively. Federal income tax may be reduced by certain amounts, when applicable, if companies invest an equivalent amount in government-approved projects and in other Brazilian areas or industries. Tax regulations in Argentina According to current Argentinean law, the subsidiary operating in that country is subject to both income and minimum presumed income taxes. The income tax rate in force is 35% on the estimated taxable income of each tax year. The minimum presumed income tax is computed at 1% on the potential income from certain performing assets; thus, the Company s tax obligation will be the greater of the two taxes. Tax regulations in the US According to current United States law, the subsidiaries operating in that country are subject to Income Taxes computed at a 35% rate. Tax regulations in Chile According to current Chilean law, the subsidiary operating in that country is subject to business income tax incurred when income is accrued and benefits are distributed among shareholders or partners. If foreign company branches withdraw or send said benefits abroad, this activity is taxable. The rate in force for accrued profits is 15% and for distributed profits is 35%. vi) Human Resources To December 31, 2009, the Company had approximately 15,600 employees. In Mexico, around 57% of the employees are unionized. Generally, a union represents the unionized employees of each hotel. The collective bargaining agreements are generally reviewed annually for salary adjustments and every two years for other clauses contained therein. Each of the individual hotel unions is affiliated to any of the larger national labor organization: either the CTM (Confederacion de Trabajadores de Mexico) or the CROC (Confederacion Revolucionaria de Obreros y Campesinos). During the past ten years, the Company has not had any relevant labor disputes with any union that represents our employees. The Company believes that we have good employee relations at all of our properties, as well as with the unions to which our employees belong. The Company has operating staff training programs and has training schools specifically designed for operating the Fiesta Americana, Fiesta Inn and One Hotels brands. The training programs include kitchen and reception employees up to hotel managers. Posadas also supports rotation of hotel executive officers in its different properties for the purpose of enhancing their management skills. Occasionally, Posadas hires temporary employees. Likewise, the Company has a pension plan, seniority premiums and severance pay for non-unionized personnel thus complementing the legal seniority premium and pensions granted by law. In order to have access to the pension plan, employees must be older than sixty. The annual cost of legal seniority premiums, retirement and pension plans for personnel that meets certain requirements is calculated by an independent actuary based on the projected unit credit method. To respond for these liabilities, the Company keeps certain investments in pension and retirements reserves that to December 31, 2009, amounted approximately to $65 M. 30

A group of executives and employees has the right to receive an annual bonus based on the Company s global profits, as well as on individual performance. Some key executives have the right to receive Series A shares according to the Company s Compensation Plan. See Stock Structure for a description of said shares characteristics hereinbelow. vii) Environmental Performance Since 2000 the Company has a denominated Risk Unit department exclusively engaged in dealing with environmental and civil defense issues that may take place both at the Company s hotels and corporate offices. The Risk Unit reports to the General Hotel Operations Division through the Engineering and Maintenance Division. At the same time, the person responsible for said division is supported by the hotels maintenance managers to comply with the laws established by the competent authorities, as well as with the Company s environmental and civil defense policies. The director of this area is certified by the NFPA ( National Fire Protection Association ) as a fire protection specialist, this contemplates fire prevention at all Posadas properties, including the use of fire hydrants, sprinklers, fire extinguishers, fire detectors and alarms. Additionally, all properties have a Corrective Action Plan formulated by the Risk Unit using NFPA policies, which determines the actions needed to obtain the required hotel certifications. In drafting this Corrective Plan, the Unit works jointly with specialized consultants and insurance companies to monitor compliance with the required certification standards. Furthermore, Mexican construction and hotel industries are subject to federal and state laws as well as environmental protection and care, hotel operations and safety regulations, among others. The Company believes that it is taking the measures within its reach to reasonably comply with hotel and environmental laws, and it has obtained or is in the process of obtaining the licenses, permits and concessions required for the operation of its hotels. viii) Market information Industry s Global Context The tourism industry is susceptible to an ample variety of risks, from international safety and terrorism fear to changes in consumer habits and preferences. At an international level, the industry has suffered several crises during the last few years. These crises have been caused by the convergence of several destabilizing factors such as the September 11, 2001 terrorist attacks in the United States, subsequent attacks in Bali and Madrid, the SARS outbreak, the global economic recession and the bad economic situation of the commercial aviation industry mainly derived from high fuel prices. Also, natural disasters such as the Indian Ocean tsunami and the long and strong hurricane season, and particularly the impact of Hurricane Wilma on the Yucatan peninsula affected our Cancun and Cozumel properties in 2005 and 2006. In 2009, global tourism results were negative due to predicted risks such as terrorism and the United States and world economic slowdown caused by high world market volatility as a consequence of the global financing crisis aggravated by uncertainty regarding the A H1N1 flu pandemic and insecurity in our country, all of which provoked that 2009 was one of the most difficult years for the tourism industry. According to numbers estimated by the World Tourism Organization or WTO (for its abbreviation in English), in 2009 international tourist arrivals due to business, pleasure or other purposes decreased 4% and amounted to 880 million. These estimations represent a slight improvement in relation to previous predictions, resulting from a 2% recovery during the last quarter of the year. Notwithstanding, international tourist arrivals had decreased 10%, 7% and 2% respectively during the first three quarters. Asia and the Pacific, and the Middle East led the recovery and growth became positive in both regions during the second half of 2009. As in previous crises, in 2009 consumers tended to travel to places closer to their homes. Internal tourism has tolerated the crisis better and it has even showed significant growth in different destinations, often because of specific government support measures aimed at promoting this trend. Europe ended the year with a 6% drop after a very complicated first semester (-10%). Particularly, Central, Oriental and Northern Europe destinations were severely affected, whereas the results of Occidental, Southern and Mediterranean Europe were somehow better. Asia and the Pacific (-2%) reported an extraordinary comeback. Even though arrivals decreased 7% between January and June, the 3% growth reported in the second half of 2009 shows an improvement in the region s economic results and its perspectives. 31

In the Americas (-5%), the Caribbean returned to the path of growth in the last four months of 2009. The result was weaker in other sub-regions, since the A H1N1 flu outbreak aggravated the impact of the economic crisis. Middle East (-6%), although far from the growth levels of previous years, showed positive results in the second half of 2009. Africa (+5%) displayed strong behavior and the Sub-Saharan destinations were those which registered best results. Unless it is stated otherwise, the source of information contained in this section was the Ministry of Tourism ( SECTUR ) and the Company has not independently verified this information. Tourism in Mexico International. Mexico is the Latin American country which attracts most international tourism, and it is one of the most important worldwide tourist destinations. The following chart shows how Mexico ranked amongst the countries with the 2007 highest international arrivals: Position Country Millions of arrivals of international tourists 1 France 81.9 2 Spain 59.2 3 United Staes 56.0 4 China 54.7 5 Italy 43.7 6 United Kingdom 30.7 7 Germany 24.4 8 Ukrane 23.1 9 Turkey 22.2 10 Mexico 21.4 To the date this report was issued, with the exception of Mexico, there were no numbers displaying international tourist arrivals to diverse countries in 2009. Mexico received 21.5 M international tourists in 2009, a 5.2% decrease as to the previous year. This was mainly due to a lower number of interior tourist arrivals (tourists who visited destinations other than those on the United States of America border) which diminished by 11.4%, from 13.3 M in 2008 to 11.78 M in 2009. However, there was a 3.6% increase in the number of border tourist arrivals (tourists who visit destinations close to the border with the United States of America) from 9.3 M in 2008 to 9.7 M in 2009. Besides the decrease in the number of total tourists, there was a 15.2% decrease in total incomes from US13.3 billion in 2008 to US11.3 billion in 2009. Domestic. According to the total traveler number, the domestic touristic industry is the largest tourism sector in Mexico. Approximately, the size of domestic tourism more than doubles (2.7 times) international tourism. Most of Mexican domestic tourism stays in four-star and lower category lodgings, since they are pricesensitive travelers. 32

Tourism in South America South American business and vacation traveler s markets are well-served in principal cities such as Sao Paulo, Rio de Janeiro, Buenos Aires and Santiago. Tourism statistics in South America show a 5% decrease in 2009 in relation to the previous year for an approximate total of 20 million international tourists, given that the A (H1N1) influenza outbreak aggravated the impact of the economic crisis according to WTO information. Competition The hotel industry is highly competitive. The Company s beach hotels compete against other beach hotels in Mexico and other countries. In general, the Company s hotels (both city and beach hotels) compete against diverse Mexican and International hotel operators, some of which are substantially larger than the Company and operate under well-known international brands. In mid-size cities and large city suburbs, the Company s hotels primarily compete against Mexican and international chains as well as different independent hotel operators. Depending upon the hotel s category, competition is based mainly on price, installation and services quality, as well as physical location in a particular market. Hotel operators must make continuing expenditures for modernization, refurbishment and maintenance to prevent competitive obsolescence of its properties and thereby lose competitiveness. The competitiveness of the Company s hotels has been enhanced by our frequent guest program (Fiesta and Caesar Rewards) and the Fiesta Americana Vacation Club. Principal competitors of Fiesta Americana hotels are other international and Mexican chains such as Camino Real, Hyatt, Sheraton and Intercontinental. Competitors of Fiesta Inn hotels are both independent local hotel operators and international and Mexican chains such as Holiday Inn, Hampton Inn, NH Hotels and City Express. Caesar Park hotels compete primarily against other five-star brands, such as Sheraton, Hyatt, Hilton, Marriott, Sofitel and Intercontinental. Principal competitors of Caesar Business hotels are other brands focused on business travelers such as Blue Tree, Four Points and some other Accor brands such as Novotel. The vacation club industry is also highly competitive. Fiesta Americana Vacation Club competes primarily against Palace Resorts, Mayan Palace and Royal Holiday Club in Mexico, and generally with other vacation club Caribbean destinations and other coastal resort areas operating under this concept. Although the Company considers itself a leader in Mexico as to the number of operated hotels and rooms and geographical coverage, there is no official publication that proves either the market presence of its hotels in relation to existing competitors or its competitive position. Notwithstanding, it is important to state in this regard that according to one of the 2009 Hotels magazine publications, we are the largest Latin American hotel operator based on the number of operated hotels and rooms. xi) Corporate Structure The Company is organized as a holding corporation and carries out a very important number of its operations by itself and through approximately 140 subsidiaries. The following chart presents the organizational structure of the Company s main operating subsidiaries, as well as the principal activity of each entity. The Company s principal subsidiaries are Inmobiliaria Hotelera Posadas, S.A. de C.V. and Gran Inmobiliaria Posadas S.A. de C.V. which directly or indirectly own several hotels properties owned and operated by the Company. Another relevant subsidiary is Sudamerica en Fiesta S.A. de C.V., direct or indirect owner of the South American properties. Posadas de Latinoamerica S.A. de C.V. which concentrates all hotel leasing contracts. Lastly, the Company has 52% of Fondo Inmobiliario Posadas S.A. de C.V., a Capital Investment Corporation ( SINCA ), in which Nacional Financiera participates with 24% and Constructora Marhnos with 24%. Constructora Marhnos currently owns eight Fiesta Inn hotels and two hotels under the One Hotel brand. 33

Grupo Posadas S.A.B. de C.V. Inmobiliaria Hotelera Posadas S.A. de C.V. Hotel Condesa del Mar S.A. de C.V. Posadas de México S.A. de C.V. Fondo Inmobiliario Posadas Posadas USA Inc. (100%) (100%) (100%) (100%) S.A. de C.V. (52%) Compañía Hotelera los Cabos, S.A. de C.V. (100%) (FAVC - Los Cabos) Hoteles Fiesta Inn, S.A. de C.V. (100%) Promotora Inmobiliaria Hotelera, S.A. de C.V. (100%) Altiuspar Solutions S.A. de C.V. (100%) M.L. Investment Co. (100%) Ridgedale Corp. (100%) Bia Acquisition Ltd. Desarrolladora Caribe, S.A. de C.V. (100%) (FAVC) Hoteles Fiesta Americana, S.A. de C.V. (100%) Inmobiliaria Administradora del Valle, S.A. de C.V. (100%) (FI Guadalajara) Konexo Centro de Soluciones, S.A de C.V. (100%) (100%) Servicios Centrales de Proyectos Ecológicos del Sureste, S.A. de C.V. (100%) Fiesta Americana Vacation Credit, S.A. de C.V. (100%) Operadora del Golfo de México, S.A. de C.V. (100%) Inversora Inmobiliaria Club S.A. de C.V. (100%) Promotora Dinatur de Sonora S.A. de C.V. (100%) Arrendadora Posadas S.A. de C.V. (100%) Posadas de Latinoamérica, S.A. de C.V. (100%) Fiesta Vacation, S.A. de C.V. (100%) Comisiones e Incentivos Fiesta, S.A. de C.V. (100%) Inmobiliaria Hotelera de Aguascalientes, S.A. de C.V. (100%) (FI Aguascalientes) Hotelera Administradora de Monterrey, S.A. de C. V. (100%) (FI Monterrey la Fe - Apto) Promotora Turística de Saltillo S.A. de C.V. (100%) (FI Saltillo) Soluciones de Lealtad S.A. de C.V. (100%) Sistema Director de Proyectos S.A. de C.V. (100%) Administradora Profesional de Hoteles, S.A. de C.V. (100%) Administradora Inmobiliaria Posadas,S.A. de C.V. (100%) Cobranza, S.A. de C.V. (100%) Altiuspar, Inc. (100%) Administradora Porto Ixtapa S.A. de C.V. (100%) Inmobiliaria y Administradora Minerva, S.A. de C.V. (100%) (FA Guadalajara - Land) Tesorería Central Posadas S.A. de C.V. (100%) Administradora de Propiedad Industrial de Latino America, LLC S.A. de C.V. (100%) Axioma Demostrado, S.L. (100%) Administradora de Propiedad Industrial Fiesta Americana, LLC S.A. de C.V. (100%) Administradora de Propiedad Industrial Posadas, Compañía Inm. Hotelera de Chihuahua, S.A. de C.V. (100%) (FI Chihuahua) Corporación Hotelera de Ciudad Juárez, S.A. de C.V. (100%) (FI Ciudad Juárez) Servicios Hoteleros Posadas S.A. de C.V. (100%) Sunwild, Ltd (100%) Servicios Administrativos Los Cabos, S.A. de C.V. (100%) South America Investment (100%) Posadas Sudamerica Emprendimientos Hoteleiros (100%) Posadas Venture, B.V. (100%) LLC (100%) Inmobiliaria Hotelera Napoles, S.A. de C.V. (100%) (One Patriotismo) Porto Ixtapa, S.A. de C.V. (100%) Conectum S.A. de C.V. Inmobiliaria Carretera (100%) Impulsora de Vacaciones Fiesta S.A. de C.V. (100%) Promotora del Caribe, S.A. (99.9%) Constitución de Queretaro, S.A. de C.V. (100%) (One Queretaro) Operadora Porto Ixtapa, S.A. de C.V. Operadora FAVC S.A. de C.V. Promociones Hoteleras del Caribe, S.A. de C.V. (99.9%) (FA Condesa Cancun) Promotora Turistica de Mexicali, S.A. de C.V. (100%) (FI Mexicali) (100%) (100%) Hotelera Península Maya, Hotelera Administradora de Aeropuertos, S.A. de C.V. (100%) YIPA, S.A. de C.V. (100%) Promotora Hotelera de Querétaro, S.A. de C.V. (100%) (FI Querétaro) S.A. de C.V. (100%) (Explorean Costa Maya) Compañía Desarrolladora Los Cabos, S.A. de C.V. (100%) Gran Inmobiliaria Posadas, S.A.de C.V. (100%) Gran Operadora Posadas, S.A. de C.V. (100%) Inmobiliaria Opus, S.A. de C.V. (100%) Inmuebles Cozumel Reef, S.A. de C.V. (100%) Sian Hotelera S.A. de C.V. (100%) Hoteles La Mansión, S.A. de C.V. (100%) Inmobiliaria Punta Mita, S.A. de C.V. (100%) Inmobiliaria Insurgentes y Viaducto, S.A. de C.V. (100%) Kohunlich Adventures, S.A. de C.V. (100%) Hotelera del Sudeste, S.A. de C.V. (51%) (FA Mérida) Hotelera Inmobiliaria de Monclova, S.A. de C.V. (50%) (FI Monclova) Turística Hotelera Cabos Siglo XXI, S.A. de C.V. (100%) Inmobiliaria de la Ciudad de Loreto, S.A. de C.V. (100%) Promotora Hotelera Villahermosa, S.A. de C.V. (100%) Sudamérica en Fiesta, S.A. (88%) Proyectos y Construcciones OB S.A. de C.V. (50%) (FI León) Inmobiliaria Hotelera de Toluca, S.A. de C.V. (79%) (FI Toluca) Caesar Park Argentina, S.A. (100%) (CP Buenos Aires) Posadas do Brasil Ltd. (100%) Source: Posadas x) Description of Principal Assets Hereinbelow is a list of the Company s hotels to December 31, 2009, including number of rooms, age, location and type (owned, operated or rented): 34

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Hotel Opening Country Tipe of Contract Number of rooms Live Aqua (Cancún) 2004 Mexico Leased 371 FA Aguascalientes 1993 Mexico Managed 192 FA Centro Monterrey 1994 Mexico Managed 207 FA Condesa Cancún 1989 Mexico Ow ned 502 FA Cozumel Dive Resort 1991 Mexico Ow ned 224 FA Grand Coral Beach 1990 Mexico Managed 602 FA Grand Los Cabos 1999 Mexico Ow ned 249 FA Grand Chapultepec 2001 Mexico Managed 203 FA Grand Guadalajara Country Club 2007 Mexico Managed 208 FA Guadalajara 1982 Mexico Ow ned 391 FA Hacienda Galindo 1977 Mexico Ow ned 168 FA Hermosillo 1982 Mexico Ow ned 221 FA León 1991 Mexico Managed 211 FA Mérida 1995 Mexico Ow ned 350 FA Puerto Vallarta 1979 Mexico Managed 291 FA Queretaro 2003 Mexico Managed 173 FA Reforma 1970 Mexico Ow ned 616 FA Santa Fé 2006 Mexico Leased 172 FA Veracruz 1995 Mexico Managed 233 FAVC Cancún 1981 Mexico Ow ned 179 FAVC Condesa Acapulco 1971 Mexico Ow ned 324 FAVC Los Cabos 2000 Mexico Ow ned 134 FAVC Explorean Kohunlich 1999 Mexico Ow ned 40 FI Acapulco 2000 Mexico Managed 220 FI Aeropuerto Ciudad de México 1970 Mexico Ow ned 327 FI Aguascalientes 1993 Mexico Ow ned 125 FI Celaya 2003 Mexico Managed 124 FI Centro Histórico 2003 Mexico Leased 140 FI Ciudad del Carmen 2003 Mexico Managed 131 FI Ciudad Obregón 2007 Mexico Managed 123 FI Ciudad Juárez 1999 Mexico Ow ned 166 FI Colima 2004 Mexico Managed 104 FI Cuautitlán 2004 Mexico Leased 128 FI Cuernavaca 2008 Mexico Managed 155 FI Culiacán 2003 Mexico Leased 142 FI Chihuahua 1993 Mexico Ow ned 152 FI Coatzacoalcos 2008 Mexico Managed 122 FI Durango 2008 Mexico Managed 138 FI Ecatepec 2005 Mexico Leased 143 FI Guadalajara 1995 Mexico Ow ned 158 FI Hermosillo 2002 Mexico Leased 155 FI Insurgentes Viaducto 2003 Mexico Leased 210 FI La Paz 2005 Mexico Managed 120 FI León 1995 Mexico Ow ned 160 FI Mazatlán 1994 Mexico Managed 117 FI Mexicali 2004 Mexico Ow ned 150 FI Monclova 1996 Mexico Ow ned 121 FI Monterrey Centro 2000 Mexico Managed 231 FI Monterrey Fundidora 2007 Mexico Managed 155 FI Monterrey La Fe - Aeropuerto 1998 Mexico Ow ned 161 FI Monterrey Norte 1995 Mexico Managed 156 FI Monterrey Valle 1994 Mexico Ow ned 176 FI Morelia 1998 Mexico Leased 253 FI Naucalpan 1997 Mexico Leased 119 FI Nogales 2004 Mexico Managed 107 FI Nuevo Laredo 2001 Mexico Managed 111 FI Oaxaca 1993 Mexico Managed 143 FI Orizaba 2003 Mexico Managed 103 FI Pachuca 1998 Mexico Leased 114 FI Perinorte 1996 Mexico Leased 123 FI Perisur 2001 Mexico Leased 212 FI Poza Rica 2005 Mexico Managed 107 FI Puebla FINSA 2006 Mexico Managed 123 FI Querétaro 2000 Mexico Ow ned 175 FI Reynosa 2006 Mexico Managed 127 FI Saltillo 1997 Mexico Ow ned 149 FI Santa Fé 2006 Mexico Leased 189 FI San Luis Potosí 1996 Mexico Managed 135 FI San Luis Potosí Oriente 2004 Mexico Leased 140 FI Tampico 2002 Mexico Managed 124 FI Tepic 2008 Mexico Managed 139 FI Tijuana 2000 Mexico Leased 127 FI Tijuana Otay 2005 Mexico Leased 142 FI Tlalnepantla 1994 Mexico Ow ned 131 FI Toluca 1998 Mexico Ow ned 144 FI Toluca Centro 2009 Mexico Managed 85 FI Torreón 1999 Mexico Leased 149 FI Torreón Galerías 2005 Mexico Managed 146 FI Tuxtla Gutiérrez 2007 Mexico Managed 120 FI Veracruz 1999 Mexico Managed 144 36

Hotel Opening Country Tipe of Contract Number of rooms FI Veracruz Malecón 2001 Mexico Managed 92 FI Villahermosa 2004 Mexico Managed 145 FI Xalapa 1993 Mexico Managed 119 One Acapulco Costera 2008 Mexico Managed 126 One Aguascalientes Ciudad Industrial 2008 Mexico Managed 126 One Aguascalientes San Marcos 2009 Mexico Managed 126 One Ciudad de México Patriotismo 2007 Mexico Ow ned 132 One Coatzacoalcos Forum 2007 Mexico Managed 126 One Monterrey Aeropuerto 2006 Mexico Managed 126 One Queretaro Plaza Galerias 2008 Mexico Ow ned 126 One Saltillo Derramadero 2009 Mexico Managed 126 One San Luis Potosí Glorieta Juárez 2008 Mexico Managed 126 One Toluca Aeropuerto 2007 Mexico Managed 126 Holiday Inn Laredo Civic Center 1988 USA Ow ned 202 Holiday Inn Mérida 1980 Mexico Managed 213 Holiday Inn Sunspree Resot South Padre Island 1992 USA Managed 227 Sheraton Fiesta Beach Resort South Padre Island 1992 USA Managed 250 CB Belo Horizonte 2003 Brazil Leased 158 CB Lagoa dos Ingleses 2002 Brazil Managed 123 CB Rio de Janeiro - Botafogo 2003 Brazil Managed 110 CB Sao Paulo-Paulista 2004 Brazil Managed 400 CB Sao Jose dos Campos 2003 Brazil Managed 157 CB Sao Paulo Faria Lima 2004 Brazil Managed 213 CB Sao Paulo Int'l Airport 2001 Brazil Ow ned 232 CB Santiago Chile 2006 Chile Leased 142 CP Buenos Aires 1998 Argentina Ow ned 173 CP Río de Janeiro - Ipanema 1998 Brazil Ow ned 222 CP Silver Buenos Aires Obelisco 2008 Argentina Leased 74 CP Sao Paulo Faria Lima 2004 Brazil Leased 131 CP Sao Paulo Int'l Airport 2001 Brazil Ow ned 153 All these properties have insurance covering property damage, common for this industry (such as fires, explosions, earthquakes and hurricanes). These insurance policies also include coverage for consequential losses. All these policies are contracted with prestigious insurance companies, authorized by the National Banking and Securities Commission. xi) Judicial, Administrative and Arbitral proceedings To December 31, 2009, the Company was a party in several judicial and administrative proceedings derived of the ordinary course of business, both as plaintiff and defendant; among them, of several tax proceedings. The most relevant proceedings refer to proceedings initiated by Mexican federal tax authorities regarding our operations in the states of Baja California Sur and Quintana Roo; the authority alleged the company s and its subsidiaries lack of payment. The total accumulated amount claimed by the authority is approximately $1,121.0 M. This amount excludes commissions, penalties and interests (updates, fines and surcharges) which may be imposed if these proceedings are decided unfavorably to the Company. The tax liens involved are guaranteed according to applicable law. Resolution of the tax proceedings have some level of uncertainty, therefore, we cannot risk predicting their resolution. To December 31, 2009, no reserve in relation to such disputes has been made since based on the opinion of the Company s tax advisors that an unfavorable outcome is less than probable, and as such the decisions of the Company s Management are based on the latter opinion. If all or a portion of these actions are decided adversely to the Company s interest, it could have a material adverse impact on our business, financial situation and operating results (see 1.c) Risk Factors). Likewise, the Company cannot certainly assure or affirm regarding the outcome of the remaining proceedings filed, the period in which they will be resolved and, in the applicable case, the eventual loss that an adverse resolution would bring to the Company and its operations. 37

xii) Representative Shares of Corporate Capital To December 31, 2009, the Company s corporate capital is made up of shares without expressing par value, as hereunder follows: Number of shares 2 0 0 9 Series "A" Series " L" Total Authorized capital 603,394,827 128,985,074 732,379,901 Less- Unsubscribed capital (135,453,063) (20,038,219) (155,491,282) Subscribed capital 467,941,764 108,946,855 576,888,619 Less- Repurchase of shares (6,845,466) (6,474,433) (13,319,899) Shares in trust (13,645,962) (1,017,600) (14,663,562) Shares in guarantee trust (49,886,206) - (49,886,206) Collateral stock shares released on December 23, 2009 (15,094,340) (15,094,340) (85,471,974) (7,492,033) (92,964,007) 382,469,790 101,454,822 483,924,612 The corporate capital is constituted by series A shares which may be subscribed by Mexican individuals or legal entities, and by foreigners through a neutral investment trust established in Nacional Financiera, S.N.C. and by series L shares with limited voting and corporate rights which may be freely subscribed and are restricted to 25% of all corporate capital. To December 31, 2009, the reserve is presented in accumulated earnings and amounts to $97.9 M (at face value) and represents 20% of the nominal corporate capital. Said reserve cannot be distributed to shareholders, except as share dividends. The shares in the guarantee trust corresponded to shares signed and paid by the trustee institution thus guaranteeing with these shares and, with an irrevocable administration and guarantee trust signed with Bancomext, the surety granted by the latter, related to the $875 M stock exchange certificate issue of 2003 and amortized in advance in February 2005. The Company s managements will define the treatment given to these shares once the aforementioned trust ends. During 2009, 15,094,340 shares were transferred to the stock brokerage contract executed with a stock brokerage house to satisfy a pledge of securities, released on December 23, 2009. During 2009, 11.7 millions of shares were transferred to the trust for assignment and sale to executives. The Extraordinary General Stockholders Meeting held in April, 2009, approved that maximum resource amount allocated to the purchase of the Company s own shares, within the Stock Market Law limitations, that is the amount of $652 M, which does not exceed the equivalent of retained earnings balance to December 31, 2009. During 2009, the share repurchase reserve was diminished to $1,270 M, crediting accumulated earnings. xiii) Dividends The periodicity, amount and form of dividend payments are proposed by the Company s Board of Directors and are put to the consideration of the ordinary annual general shareholders meeting for approval. The dividend amount depends on operating results, financial situation, capital expenses, investment projects and other factors which are important to the Board of Directors. 38

The Ordinary Annual General Shareholders Meeting held on April 5, 2010, approved a cash dividend payment in two installments for $0.45 (forty-five cents) per share; therefore, the dividend paid on April 15, 2010, in the first amortization, was $126.8 M and the complementary payment of $126.8 M shall be on or from July 15, 2010. The Ordinary General Shareholders Meeting held in April 2009, did not declare dividends. The Ordinary General Shareholders Meeting held on April 30, 2008 approved a cash dividend payment to the shareholders in two installments for $0.31 (thirty-one cents) per share; therefore, the dividend paid was $174.0 M. Said dividend was paid on June 2, 2008. The Ordinary General Shareholders Meeting held in April, 2007, approved a cash dividend payment to the shareholders for the amount of $0.27 (twenty-seven cents) per share; therefore, the dividend paid was $152.6 M. Said dividend was paid in June, 2007. In Ordinary General Shareholders Meeting held in April, 2006, a dividend for the amount of $132.4 M at face value was declared, which was paid in June, 2006. 3) FINANCIAL INFORMATION a) Selected Financial Information 39

Audited Consolidated Financials (figures in millions of pesos) For the years that ended on December 31st: 2009 2008 2007 Income Statement Data: Total revenues Ps. 7,082.9 Ps. 6,904.5 Ps. 5,974.2 Corporate expenses 89.1 97.6 90.3 Depreciation, amortization, and real estate leasing 814.9 722.3 664.8 Operating income (EBIT) 805.9 1,140.8 1,031.9 Comprehensive financing cost (income) 269.3 1,509.6 196.9 Taxes 132.2 (111.2) 159.6 Net income 262.4 (701.8) 200.6 Majority net income 266.4 (615.4) 126.1 Balance Sheet Data (End of Period): Current assets Ps. 2,463.8 Ps. 2,667.0 Ps. 2,440.8 Property, plant and equipment, net 9,083.7 9,386.7 9,266.0 Total assets 13,212.9 13,544.8 13,144.8 Current liabilities 2,415.9 2,659.0 1,934.8 Long-term debt 4,031.2 4,193.7 3,884.4 Total liabilities 8,753.8 8,793.2 7,428.7 Stockholders equity 4,433.0 4,458.8 5,292.4 Other Financial Data: EBIT / Total revenues 11.4% 16.5% 17.3% Net result / Total revenues 3.7% n.d. 3.4% EBITDA $1,242.9 $1,529.9 $1,462.9 EBITDA Margin 17.5% 22.2% 24.5% Indebtedness / EBITDA 4.0 X 3.5 X 2.9 X Current assets / Current liabilities 1.02 X 1.00 X 1.26 X Total liabilities / Equity 1.97 X 1.97 X 1.40 X b) Financial Information per Business Line, Geographic Zone and Export Sales Sales behavior during the last three years for each of the Company s business units is hereinafter explained in detail. REVENUES PER BUSINESS UNIT (Figures in millions of pesos as of December 31st, 2009) 2009 2008 2007 Revenues % Revenues % Revenues % HOTELS 3,065.2 43.3% 3,677.6 53.3% 3,522.6 59.0% MANAGEMENT 1,695.6 23.9% 1,655.4 24.0% 1,289.1 21.6% OTHER BUSINESSES 2,322.2 32.8% 1,571.5 22.8% 1,162.5 19.5% TOTAL 7,082.9 100.0% 6,904.5 100.0% 5,974.2 100.0% The next table shows the incomes for the hotels according to geographical zone in the last 3 years: 40

REVENUES BY GEOGRAPHY (Figures in millions of pesos as of December 31st, 2009) 2009 2008 2007 Revenues % Revenues % Revenues % Mexico 6,286.9 88.8% 6,145.7 89.0% 5,265.9 88.1% South America 754.9 10.7% 710.4 10.3% 654.3 11.0% USA 41.1 0.6% 48.4 0.7% 54.1 0.9% TOTAL 7,082.9 100.0% 6,904.5 100.0% 5,974.2 100.0% EXPORT REVENUES (Figures in millions of pesos as of December 31st, 2009) 2009 2008 2007 Revenues % Revenues % Revenues % Export 796.0 11.2% 758.8 11.0% 708.4 11.9% Local 6,286.9 88.8% 6,145.7 89.0% 5,265.9 88.1% TOTAL 7,082.9 100.0% 6,904.5 100.0% 5,974.2 100.0% Source: Posadas c) Relevant Loan Information Section B. Financial Situation, Liquidity and Capital Resources, found later in this report, contains a detailed discussion of the Company s total debt structure. To December 31, 2009, the Company was current with all capital and interests payments on loans contracted. In like manner, to the date of this report, the Company is current with capital and interest payments on loans and financing contracted. d) Comments and Analysis of the Management on the Operating Results and Financial Situation of the Company i) Operating Results 41

Corporate year ending December 31, 2009 Compared with corporate year ending December 31, 2008 P&L 2009 2008 (Figures in millions of pesos) $ % $ % Total revenues 7,082.9 100.0 6,904.5 100.0 2.6 Owned and leased hotels Revenues 3,065.2 100.0 3,677.6 100.0 (16.7) Direct cost 2,480.4 80.9 2,791.8 75.9 (11.2) Contribution 584.8 19.1 885.8 24.1 (34.0) Var% Management Revenues 1,695.6 100.0 1,655.4 100.0 2.4 Direct cost 1,103.5 65.1 1,105.5 66.8 (0.2) Contribution 592.1 34.9 549.9 33.2 7.7 Other businesses Revenues 2,322.2 100.0 1,571.5 100.0 47.8 Direct cost 1,789.1 77.0 1,046.5 66.6 71.0 Contribution 533.1 23.0 525.0 33.4 1.5 Corporate expenses 89.1 1.3 97.6 1.4 (8.7) Depreciation/amortization and real estate leases 814.9 11.5 722.3 10.5 12.8 EBIT 806.0 11.4 1,140.8 16.5 (29.3) EBITDA 1,243.0 17.5 1,529.9 22.2 (18.8) Total Income The Company s Total Income went from $6,904.5 M in 2008 to $7,082.9 M in 2009, mainly derived from the growth of the Vacation Club business which increased 31.6% during this period. Own and Leased Hotels Owned & Leased hotels Total Urban Coastal % Var. Real % Var. Real % Var. Real Accumulative Average number of rooms 9,554 (1.3) 8,208 (1.4) 1,346 (0.3) Available daily rate 1,112 2.0 1,038 1.7 1,686 2.2 Occupancy 53% (7.5) 55% (7.9) 44% (5.2) RevPAR 593 (10.7) 570 (11.1) 735 (8.7) Own hotels includes income and costs and expenses derived from the Company s operation of our and leased hotels. The decrease in Own Hotels income of 16.7% to $3,065.2 M in 2009 from $3,677.6 M in 2008 is mainly attributed to: (i) 1.3% reduction in the average number of rooms operated, (ii) 7.5pp decrease in occupation and (iii) 10.7% reduction in the effective rates. This reduction was mainly due to a lower number of guests visiting our Hotels as a consequence of the financial crisis and the influenza A (H1N1) epidemic impact which broke out at the end of 2009. However, operating results improved during the summer in the third quarter as a result of the implemented intense marketing and promotion campaigns. Departmental costs and expenses consist of costs related to food and beverages, room service and food and beverage personnel and other related to commissions for agencies, reservations, room amenities and laundry. Departmental costs decreased from 3.5% for $1,330.8 M in 2008 to $1,290.6 M in 2009. All possible flexibility was inserted into labor contracts in order to avoid greater costs and mitigate room occupation reduction. These costs also diminished pursuant to the lower occupation registered in these hotels during 42

2009. The departmental contribution was $1,923.0 M in 2009 representing a decrease of 16.9% in comparison to $2,346.8 M in 2008 (for further detail see the Attachment: Audited Financial Statements). General expenses for own hotels correspond to administration, sales, publicity and promotion, maintenance and energy. General expenses decreased 17.7% to $1,113.2 M in 2009 from $1,352.4 M in 2008 mainly due to the following area changes; (i) 2.5% decrease in administrative expenses, (ii) 0.1% increase in sales, publicity and promotion costs, and (iii) 11.0% decrease in maintenance and energy costs. The general expense decrease is due to the reduced number of guests received in comparison with the same period in the prior year. Other related expenses with own hotels refer to: taxes, insurance premiums and other net expenses (income). Other expenses (income) are composed by computer equipment, television and car leasing, auditing and legal expenses. In this category, gains or losses from the sale of shares is also included. The Company did not sell hotels or any other assets during 2009 or 2008. As a result of the foregoing, the contribution of own hotels decreased 34.0% to $584.8 M in 2009 from $885.8 M in the prior year (see the Attachment: Audited Financial Statements). Management Management Total Urban Coastal % Var. Real % Var. Real % Var. Real Accumulative Average number of rooms 17,036 (5.2) 14,260 (4.6) 2,776 (8.3) Available daily rate 1,065 (0.4) 985 0.6 1,573 (0.9) Occupancy 54% (6.3) 55% (6.9) 49% (4.3) RevPAR 578 (10.8) 544 (10.5) 767 (8.9) The management business includes administration of the brand and all the hotels, the loyalty program ( Ampersand ), the call center ( Konexo ) and administrative services ( Conectum ). Income increased 2.4% to $1,695.6 in 2009 from $1,655.4 M in 2008. This was achieved despite the fact that the effective rate at chain level decreased by 10.8% due to a lower occupation in comparison with the prior year, and this includes three hotels with 377 rooms which initiated operations in 2009 (even considering that the recently opened hotels operate with lower rates in comparison with the system s average rates); One Aguascalientes San Marcos (126 rooms), FI Toluca Centro (85 rooms) and One Saltillo Derramadero (126 rooms), all under operation contracts. However, the non-hotel businesses such as Ampersand, Call Center ( Konexo ) and Conectum, which also serve third parties, contributed relevantly to the 2009 sale increase. Jointly, they represented 57% of the total management business income. The direct and corporate expenses of the management business, which include corporate sales, hotel operations, human resources for the hotels, marketing, technology and operations divisions, Ampersand, Konexo and Conectum, kept in line with a marginal decrease of 0.2% in comparison to the prior year. As a result of the foregoing, earnings from our hotel management business increased by 7.7% in 2009 to a margin of 34.9%, which we consider very competitive for the industry. Other Businesses Fiesta Americana Vacation Club income during 2009 was 31.6% higher than in 2008. The vacation club business represented approximately 97% of the total Other Businesses income. This increase mainly arises from higher memberships sales of the resorts located in Acapulco and Los Cabos, and the recognition of sales carried out in 2008 but registered in 2009 according to the percentage of completion method used for accounting registries in this business. Expenses for this business line mainly include expenses relating to membership sales, financing, management and resort operation. Expenses increased 49.6% to $1,756.5 M in 2009 from $1,174.3 M in 2008. This cost increase is also associated to the income recognition mentioned above. Cancellation rates doubled for the 2008 comparable period thus, over the course of the year, we have implemented several strategies to control and reduce cancellation numbers. Some of these measures include offering specific solutions to vacation club members needs, for example, re-scheduling the payments or 43

converting dollar-denominated payments to peso-denominated payment obligations. At the end of the year, the number of members was approximately 29,000, 2.5% higher than on the same date of the previous year. Corporate expenses Corporate expenses are those relating to the Office of the Chairman, and the Office of the Chief Financial Officer, such as wages and salaries, administrative expenses and legal fees. The Company had corporate expenses of $89.1 M in 2009, an 8.7% decrease when compared to $97.6 M in 2008. The decrease is the result of several discretionary expense cost-cutting initiatives and donations to different organizations. It is important to mention that even though the number of operating hotels increased, this amount represented 1.3% of total income in 2009, a slightly lower level than the previous year. Depreciation, Amortization and Real Property Leasing The depreciation, amortization, and property leasing was $814.8 M in 2009, a 12.8 % increase compared to the 2008 percentage. This variation was due to higher depreciation and amortization of 12.3%, added to a higher hotel leasing of 13.4% as a consequence of peso depreciation against the United States dollar during the first half of the year since most leases are denominated in U.S. in dollars. Operating income As a result of the foregoing, operating income was $806.0 M in 2009, a decrease of 29.4% compared to $1,140.8 M in 2008. Comprehensive financing result Concept 2009 2008 Interests income (33,109) (6,989) Interests expense 375,331 420,311 Exchange loss (gain) 127,120 (111,918) Derivatives (200,084) 1,208,196 Total CFC 269,258 1,509,600 (Figures in thousands) Net interest expense in 2009 closed at 3.6 times, slightly lower than in 2008. Other expenses and financial products reflect certain recovery after the impact to the USD debt, partially due to Cross Currency Swaps (CCS) resulting from Mexican Peso depreciation against the U.S. Dollar in the 4T08. Regarding the five enforceable contracts to exchange the peso denominated debt at a variable interest rate to United States dollars at a fixed interest rate (CCS), to December 31, 2009 the Company had approximately US30 M for margin calls, US32 M less than at the end of 2008 principally resulting from liquidating US70 M of the notional value of the Stock Exchange Certificates positions and the 3.7% appreciation of the peso against the dollar in this period. Furthermore, the Company has at all time satisfied margin calls from swaps counterparts which, to June 28, 2010 approximately amounted to US27 M deposited in cash. Majority Net Result Net income for the 2009 corporate year is due mainly to the recovery observed in derivative financial instruments valuation, given the aforementioned Peso appreciation and recognition in 2008, according to NIFs, of the $209.5 M loss corresponding to the Grupo Mexicana investment, which was registered in the participation in earnings of associated companies account. Financial statements to December 31, 2009, 44

include the effects of tax amendments made to consolidation rules with a reclassification in accumulated results of $397 M. Subsequent Events The following hotels started operations in 2010: January 4, Hotel One Reynosa Valle Alto with 135 rooms; March 29, Hotel One Playa del Carmen, with 108 rooms, and June 1 st, Fiesta Inn Monterrey Tecnologico, with 201 rooms, all under a hotel operating and brand licensing contract. In early January, 2010, the bond issue of 9.25% Senior Notes 2015 for a US200 M principal amount at five years with a 9.25% annual coupon rate. In this regards, Ruben Camiro, the Company s Vice-President of Finance stated: We are very satisfied with the results of this placement. Our order book surpassed the offered amount by several times, and more than 60 high-quality American, European, and Asian investors participated. The net funds obtained from this issue were used to make pre-payments of indebtedness with maturity dates in 2010, 2011, and 2012. To the date of this report, approximately 93% of the debt to be amortized in advance has already been paid. In the period from January to June, 2009, $420 M has been amortized corresponding to the following financing: (i) two quarterly amortizations of the Syndicated Loan; (ii) the POSADAS-03 Stock Exchange Certificates issue for $250 M; (iii) two quarterly loan amortizations with California Commerce Bank, and (iv) $18 M corresponding to a short-term credit line. After this issue and pre-payments, the debt mix is the following: 1% of short-term debt; 83% in US dollars (net debt); 83% in at fixed rate; 7% of debt guaranteed with real property assets and the Issuer s perspective has been improved to Stable from Negative by Fitch Ratings, Standard and Poor s and Moodys. In 1999 the Company signed a sale option with IFC in which the IFC had the option to sell to the Company the total shares that IFC keeps from Sudamerica en Fiesta, S.A. (SFI) (subsidiary company), which to December 31, 2009 represented 12.07% of the total corporate capital of SFI. To December 31, 2009, the approximated price of said option was of US11 M. On the date of this report, IFC had executed the sale option regarding the total shares kept in SFI s corporate capital. Thus, the Company became the direct and indirect holder of the 100% of SFI. On January 8, 2010, the Company made a partial EUR1 M payment, and on March 15, 2010 made the EUR4 M complementary payment of the EUR5 M convertible debt with DEG, which is mentioned in Note 11 f to the Audited Financial Statements, as such extinguishing all debts with said institution. 45

Corporate Year ending December 31, 2008 Compared to the Corporate Year ending December 31, 2007 P&L 2008 2007 (Figures in millions of pesos) $ % $ % Total revenues 6,904.5 100.0 5,974.2 100.0 15.6 Owned and leased hotels Revenues 3,677.6 100.0 3,522.6 100.0 4.4 Direct cost 2,791.8 75.9 2,625.5 74.5 6.3 Contribution 885.8 24.1 897.2 25.5 (1.3) Var% Management Revenues 1,655.4 100.0 1,289.1 100.0 28.4 Direct cost 1,105.5 66.8 717.1 55.6 54.2 Contribution 549.9 33.2 572.0 44.4 (3.9) Other businesses Revenues 1,571.5 100.0 1,162.5 100.0 35.2 Direct cost 1,046.5 66.6 844.6 72.7 23.9 Contribution 525.0 33.4 317.9 27.3 65.2 Corporate expenses 97.6 1.4 90.3 1.5 8.1 Depreciation/amortization and real estate leases 722.3 10.5 664.8 11.1 8.7 EBIT 1,140.8 16.5 1,031.9 17.3 10.5 EBITDA 1,529.9 22.2 1,462.9 24.5 4.6 Total income The Company s total income went from $5,974.2 M in 2007 to $6, 904.5 in 2008, mainly derived from the growth of the Management business and the vacation club, which increased in 24.8% and 39.6% respectively in this period. Owned hotels Owned & Leased hotels Total Urban Coastal % Var. Real % Var. Real % Var. Real Accumulative Average number of rooms 9,606 4.3 8,259 1.0 1,347 30.6 Available daily rate 1,090 3.4 1,020 2.3 1,649 4.8 Occupancy 61% (2.3) 63% (1.2) 49% (7.6) RevPAR 665 (0.4) 642 0.3 805 (9.3) The Owned Hotels income increase of 4.4%, to $3, 677.6 M in 2008 from $3, 522.6 M in 2007 is mainly due to the increase of 4.3% in the daily average of available rooms, which went from 9, 212 in 2007 to 9, 606 in 2008, derived from the Aqua Cancun reopening, the openings of CP Silver Buenos Aires Obelisco and two One hotels. After demonstrating stable behavior throughout the year, hotel occupancy decreased in 2.3% while the effective rate diminished only 0.4%. Beach hotels showed a 7.6% decrease in occupancy, but started a recovery of 3 pp during the last 2008 quarter of the rate, which is mostly denominated in United States dollars. The departmental costs and expenses increased by 3.5% from $1,284.8 M in 2007 to $1,330.8 M in 2008. These expenses are attributable to food and beverages sales, staff wages and salaries relating to each 46

hotel, amenities for rooms and laundry services. The departmental contribution was $2,346.8 M in 2008, representing a 4.9% increase in comparison with $2,237.8 M in 2007; these costs behaved in line with the higher income registered in the period for the hotel business, whether owned or leased, as previously mentioned (for further detail see attachment: Audited Financial Statements). The general owned hotels expenses correspond to administration, sale, promotion and publicity, maintenance, and energy expenses. The general expenses increased by 10.2%, from $1,227.7 M in 2007 to $1,352.4 M in 2008 mainly due to the following increases per area: (i) 4.5% in administrative expenses, (ii) 17.5% in sale, publicity and promotion expenses, and (iii) 11.8% in maintenance and energy costs, which is not only due to the higher hotel operating number but also to the higher energy prices during 2008 when compared with the previous year. Other expenses related to the owned hotel business line consist of taxes, insurance premiums and other net expenses (income). Other expenses (income) consist primarily of computing equipment leasing, televisions, cars, auditing fees, and legal fees. This item also includes the profits or losses from sale of assets. The Company did not sell any hotels or other assets during 2008. As a result of the foregoing, contribution from owned hotels decreased by 1.3% in 2008 if compared to the previous year (see attachment: Audited Financial Statements). Management Management Total Urban Coastal % Var. Real % Var. Real % Var. Real Accumulative Average number of rooms 17,983 6.7 14,954 7.3 3,029 3.9 Available daily rate 1,069 0.9 979 2.1 1,587 (0.9) Occupancy 61% (1.6) 62% (1.5) 53% (2.7) RevPAR 647 (1.7) 608 (0.3) 841 (5.8) The hotel management business income grew 28.4% to $1,655.4 M in 2008 from $1,289.1 M in 2007. This was principally due to an increase of 6.7% in the daily available average managed rooms from 16,849 in 2007 to 17,983 in 2008. It is important to note that the effective chain-wide rate decreased by 1.7% when compared to the previous year including nine hotels that began operating in 2008 (even though recentlyopened hotels operate with lower rates than the system s average). Non-hotel business lines such as Ampersand which manages third-party loyalty programs and the call center ( Konexo ), which also provides third-parties services, relevantly contributed to the 2008 sales increase. Direct and corporate expenses related to hotel management which includes marketing, technology areas and operations surpassed the income increase. (See attachment Audited Financial Statements). Due to the foregoing, the contribution of hotel management decreased 3.8% in 2008. Other Businesses Fiesta Americana Vacation Club income was 39.6% higher in comparison to 2007. The vacation club business represented about 90% of total Other Businesses income. At the end of the year, the membership number was 27,822; 11% higher than on the same date last year. At year s end, a membership sales turndown was registered in comparison to the tendency observed in the first nine months of 2008. Corporate expenses Corporate expenses are those relating to the Office of the Chairman, and the Office of the Chief Financial Officer, such as wages and salaries, administrative expenses and legal fees. The Company had corporate expenses of $97.6 M in 2008, an 8.1% increase if compared to $90.3 M in 2007. It is important to mention that added to an increased operating hotel number, this amount represented 1.4% of 2008 income in relation to total income, a level similar to the previous year. 47

Depreciation, amortization and real estate leasing Depreciation, amortization, and property leasing was $722.3 M in 2008, an increase of 8.7 % if compared to 2007. This variation was due to lower depreciation and an amortization of 9.7% but is set off by a higher hotel leasing amount of 42.5%, which is explained as follows: (i) peso depreciation against the US dollar, since most leases are dollar-denominated, (ii) accounting for the whole year lease payment for Live Aqua Cancun, and (iii) inclusion of CP Silver Obelisco hotel in Buenos Aires, Argentina, recently opened. Operating income As a result of the aforementioned factors, the operating income was of $1,140.8 M in 2008, an increase of 10.5% if compared with $1,031.9 M in 2007. Comprehensive financing result Concept 2008 2007 Interest income (6,989) (32,093) Interest expense 420,311 388,397 Exchange loss (gain) (111,918) (15,501) Derivatives 1,208,196 0 Monetary position 0 (143,925) Total CFC 1,509,600 196,878 (Figures in thousands) Net interest hedging in 2008 closed in 3.9 times, slightly lower than in 2007. The exchange rate income in the period is mainly due to US dollar-denominated notes receivable relating to vacation club clients. Simultaneously, with the April, 2008 issue of peso indebtedness (Stock Exchange Certificates), five contracts were signed (Cross Currency Swaps) to exchange peso-denominated debt at a variable interest rate to United States dollars at a fixed interest rate. To end of 2008, the contracts presented a market depreciation value as a result of greater peso depreciation in relation to the U.S. dollar, and to a lesser extent interest rate market behavior. Market valuations amount to almost 1,200 million pesos, which implied margin calls for US$61.8 M at the end of 2008. The Company s strategic use of derivative financial instruments is not speculative and it has at all times complied with the margin calls made by its swaps counterparts. In compliance with the NIFs, as of 2008 the Monetary Position Results account (Repomo) is no longer calculated. Net Loss The 2008 corporate year net loss is mainly derived from shortfall caused by the valuation of derivative financial instruments derived from the aforementioned peso depreciation as well the recognition of depreciation of our $209.5 M investment in Grupo Mexicana, according to applicable NIFs. Significant events As part of a management liabilities plan so as to reduce the interest burden and extend loan lifespan, on April 11, 2008, the Company received approval from the holders of its dollar-denominated bonds ( Senior Notes ) due on October 4, 2011 to purchase 84.1% of these. In order to pay these bonds, the Company issued in April, 2008 in Mexico Stock Exchange Certificates worth $1,500M totally amortizable in April 2013, which pays monthly variable interest at a TIIE 28 days equivalent-rate plus 180 basis points; it increased by more than 20 million dollars, the syndicated loan (Second Amended and Restated Credit Agreement) and contracted a five year bank loan for $312 M. In July 2008, it carried out a reopening of the aforementioned Stock Exchange Certificates issuance of $750 M p under the same terms and conditions. 48

In December 2008, a two-year guaranteed loan, with a one-year grace period, was contracted with a development bank for US $27.2 M. These two transactions were implemented to increase the Company s liquidity. Subsequent events During the January to June period 2009, $420 M have been amortized corresponding to the following financings: (i) two Syndicated Loan quarterly amortizations, (ii) the $250 M, POSADAS-03 Stock Exchange Certificates issue (iii) two quarterly amortizations of the California Commerce Bank loan, and (iv) $18 M corresponding to a short-term credit line. 49

Corporate Year ending December 31, 2007 Compared to the Corporate Year ending December 31, 2006 2007 2006 P&L Var% $ % $ % (Figures in millions of pesos) Total revenues 5,974.2 100.0 5,528.2 100.0 8.1 Ow ned and leased hotels Revenues 3,522.6 100.0 3,582.3 100.0 (1.7) Direct cost 2,625.5 74.5 2,569.8 71.7 2.2 Contribution 897.2 25.5 1,012.6 28.3 (11.4) Management Revenues 1,289.1 100.0 1,040.5 100.0 23.9 Direct cost 717.1 55.6 557.9 53.6 28.5 Contribution 572.0 44.4 482.5 46.4 18.5 Other businesses Revenues 1,162.5 100.0 905.4 100.0 28.4 Direct cost 844.6 72.7 660.3 72.9 27.9 Contribution 317.9 27.3 245.1 27.1 29.7 Corporate expenses 90.3 1.5 84.0 1.5 7.5 Depreciation/amortization and real estate leases 664.8 11.1 660.5 11.9 0.6 EBIT 1,031.9 17.3 995.7 18.0 3.6 EBITDA 1,462.9 24.5 1,437.7 26.0 1.7 Total income The Company s total income went from $5,528.2 M in 2006 to $5,974.2 M in 2007, principally generated the Management business and Other Businesses, which increased 23.9% and 28.4% respectively. Owned Hotels Owned & Leased hotels Total Urban Coastal % Var. Real % Var. Real % Var. Real Accumulative Average number of rooms 9,212 (2.2) 8,181 0.9 1,031 (21.3) Available daily rate 1,054 (0.4) 997 0.4 1,572 6.0 Occupancy 63% 2.3 64% 2.2 56% (1.7) RevPAR 668 3.4 640 4.0 886 3.0 The 1.7% decrease in Owned Hotels income to $3,522.6 M in 2007 from $3,582.3 M in 2006 is mainly attributable to: (i) a 2.2% decrease in the daily available rooms average from 9,417 in 2006 to 9,212 in 2007, primarily due to conversion of the Hotel Condesa Acapulco into Villas for the vacation club. Departmental costs and expenses increased by 2.1% from $1,258.7 M in 2006 to $1,284.8 M in 2007; these costs correspond to food and beverages sales, staff wages and salaries relating to each hotel, travel 50

agency commissions, reservation booking commissions, amenities for rooms and laundry services. The departmental contribution was $2,237.8 M in 2007, representing a 3.7% decrease compared to $2,323.6 M in 2006. This was for the most part due to previously mentioned lower owned and leased hotels business income (for further details see Attachment: Audited Financial Statements). General expenditures for owned hotels correspond to management, sales, publicity and promotion, maintenance and energy costs. Overall costs were reduced by 3.6%, to $1,227.7 M in 2007 from $1,273.5 M in 2006 mostly due to decreases in the following areas: 9% in sales, publicity, and promotion expenses, and 2.8% in administrative expenses. It is important to mention that only a slight 0.5% increase was experienced in maintenance and energy costs, which was attained by the efficiencies in the maintenance area, such as in: air conditioning systems, elevator use, swimming pools, and building repairs. Other expenses related to owned hotels refer to: taxes, insurance premiums and other net expenses (income). Other expenses (income) refer to computer equipment leasing, televisions and cars, auditing and legal fees. This item also includes the profits or losses from sale of assets. The Company did not sell any hotels or other assets during 2008. As a result of the foregoing, contribution from owned hotels decreased by 11.4% in 2007 if compared to the previous year (see attachment: Audited Financial Statements). Management Management Total Urban Coastal % Var. Real % Var. Real % Var. Real Accumulative Average number of rooms 16,849 4.6 13,934 6.2 2,915 (2.4) Available daily rate 1,059 (1.3) 960 (0.1) 1,601 1.6 Occupancy 62% 0.2 64% 1.5 56% (4.2) RevPAR 658 (1.0) 609 2.3 893 (5.6) Hotel Management business income grew 23.9% to $1,289.1 M in 2007 from $1,040.5 M in 2006. This was mainly due to a 4.6% increase in daily available managed average rooms, from 16,112 in 2006 to 16,849 in 2007. It is important to mention that the effective chain-wide rate decreased by 1% if compared to the previous year including the eight hotels began operating in 2007 (even though recently-opened hotels operate with tariffs lower than the system s average). New businesses such as Ampersand, which manages third-party loyalty programs and the Call Center ( Konexo ), both belonging to the Management area, made important contributions to the 2007 sales increase and margin improvement. Direct and corporate expenses relating to the Management business include marketing, technology areas and operations increased 4.6% above the income increase as a result of lower commissions corresponding to the hotel income drop at a chain-wide level for the period observed (for further detail See Attachment Audited Financial Statements). Due to the foregoing, the contribution of the hotel management business increased 18.5% in 2007 and the operating margin decreased by 2%. Other Businesses Fiesta Americana Vacation Club income was $999.8 M in 2007 higher by 22.4% as to 2006. The vacation club business represented about 86% of the total income of Other Businesses. 29.7%. The contribution of Other Business reached $317.9 M in 2007 from $245.1 M in 2006, an increase of Corporate Expenses. Corporate expenses are the related to the Office of the Chairman and the Finance Division, such as: wages and salaries, administrative expenses and legal fees. The company had corporate expenses of $90.3 M in 2007, a 7.5% increase compared to $84.0 M in 2006. It is important to emphasize that the number of hotels 51

which began operating increased, however this amount represented in 2007 1.5% of total income, which is the same level of the previous year. Depreciation, Amortization and Real Property Leasing. The depreciation, amortization and property leasing was $664.8 M in 2007, a marginal 0.6% increase compared to 2006. This increase was mainly due to a higher hotel leasing amount of 7% attributable to all 2007 leasing of the three hotels: Fiesta Americana Santa Fe, Fiesta Inn Santa Fe and Caesar Business Santiago de Chile which opened midway 2006. Operating Income. As a result of the above factors, operating income was $1,031.9 M in 2007; a 3.5% improvement compared to $995.7 M in 2006. Integral Financing Cost. Concept 2007 2006 Interest income (32.1) (36.0) Interest expense 388.4 415.2 Exchange loss (gain) (15.5) 65.7 Monetary position (143.9) (135.7) Total CFC 196.9 309.2 Integral financing cost was reduced from $196.9 M in 2007 to $309.2 M in 2006; a 36.3% decrease mainly due to: (i) the foreign exchange gain caused by the peso s lesser 0.5% depreciation in 2007 compared to a greater 1.7% peso depreciation in 2006; and (ii) a lower interest expense determined by the international markets interest rate drop. Net Profit The Company s net profit in 2007 was $200.6 M, a 56% decrease compared to $456.2 M in 2006. This decrease is attributed to recognition of depreciation of the investment made in Grupo Mexicana de Aviacion. Subsequent Event As part of a liability management plan to reduce interest charges and extend loan lifespan, on April 11, 2008, the Company received approval from the holders of their dollar denominated bonds Senior Notes, due on October 4, 2011, to purchase 84.1% of these. In order to pay these bonds, the Company issued in April 2008 in Mexico Stock Exchange Certificates worth one thousand five hundred million pesos amortizable in April 2013, which pays monthly variable interest at a TIIE 28 days equivalent-rate plus 180 basis points. Furthermore, the Company increased by more than twenty million dollars, the syndicated loan (Second Amended & Restated Credit Agreement) and contracted a five year bank loan for thirty million dollars. ii) Financial Situation, Liquidity and Capital Resources. The Company operates in a capital intensive industry, thus, it requires significant funds to meet its capital expense needs. Historically, its capital expense needs have been provided by a combination of funds derived by internal generation, equity and debt. 52

For some years, the Company s strategy has consisted of growth through hotel management contracts, which implies minimal capital expenses and consequently low additional debt. Therefore, the Company s financial strategy has focused on short-term debt refinancing and extending average debt period, without incurring additional debt. To December 2009 and 2008, the financial debt was integrated as follows (interest rates in force on December 31, 2009): US Dollars and Euros (Thousands) 2009 2008 "Senior Notes" at a fix interest rate of 8.75% 466,743 484,441 Loans w ith mortgages at rates that range from 5.00% to 8.78% 788,635 736,737 Syndicated loan at rates of 2.08% and 2.06% 289,302 600,504 Other loans at rates of 4.93% and 6.96% 16,363 25,562 Mexican pesos (Thousands) 2009 2008 Certificates note ata rates of 6.70% to 13.18%. 2,250,000 2,500,000 Syndicated loan at rates of 6.57% to 9.33% 200,223 400,447 Loans w ith mortgages at rates that range from 9.79% to 10.84% 962,703 102,407 Other loans at rates of 10.09% 0 501,322 Less- Short-term maturities (942,757) (1,157,747) Long-term debt 4,031,212 4,193,673 To December 31, 2009, 50% of the Company s debt was at a fixed rate and the remainder at variable rate. Its debt nominal weighted rate to close of December 2009 was 5.33% in US Dollars and 7.27% in pesos. The long-term debt maturity dates to December 31, 2009 were presented as follows: Payable in: Pesos US dollars in thousands 2011 283,138 58,207 2012 285,738 1,000 2013 2,475,642 14,600 2014 and there after 10,133 1,061 3,054,651 74,868 Equivalent in thousands of pesos $ 976,561 Total in thousands of pesos $ 4,031,212 A detailed discussion of the above debt is presented hereinafter: Long-Term Debt Senior Notes On January 15, 2010, the Company issued debt securities for US200 M under the Senior Notes program due on January 15, 2015. Said securities generate a 9.25% annual interest rate with half-yearly coupons. The net capital generated by these securities is being used to pre-pay a part of the Company s debt in effect to close of 2009, and which has short and mid-term maturity dates. In October 2004, the Company issued debt securities for US 150 M under the Senior Note program with maturity date of October 4, 2011. These securities generated annual interest at an 8.75% with half-yearly coupons. The net capital obtained with this issue was approximately US144.4 M, which was used to pre-pay the Company s debt. US106 M of the debt was guaranteed and US38.4 M was not. The pre-paid debt includes 53

a US40 M debt with Banco Nacional de Mexico, S.A., US29.3M with the International Finance Corporation (IFC) and Deutsche Investitions-Und Entwicklungsgesellchaft mbh (DEG), US9.9M with Banco Nacional de Comercio Exterior, S.N.C. (Bancomext), and the remaining US65.2 M with other financial institutions. On January 21, 2005, an additional US75 M placement was made with the same program characteristics originally issued on October 4, 2004. The securities are guaranteed by the Company s main subsidiaries and impose obligations and restrictions customarily used for this type of instruments. A breakdown of the company s main financial items is presented hereunder, as well as the guarantor subsidiaries separated from the non-guarantor subsidiaries (some numbers may vary due to rounding) Financial highlights Grupo Posadas Non Guarantor (In millions of pesos and Guarantor Subsidiaries Consolidated as of December 31st, 2009) Subsidiaries Total revenues 6,002.3 1,080.6 7,082.9 Depreciation & Amortization 267.9 169.2 437.0 Real estate leases 321.7 56.1 377.8 EBIT 679.2 126.8 806.0 Net consolidated result 251.3 11.1 262.4 Total assets 9,275.4 3,937.5 13,212.9 Total liabilities 8,117.9 635.9 8,753.8 As part of a liability management plan to reduce interest charges and extend loan lifespan, on April 11, 2008, the Company received approval from the holders of their dollar denominated bonds Senior Notes, due on October 4, 2011, to purchase 84.1% of these. In order to pay these bonds, the Company issued in April 2008 in Mexico Stock Exchange Certificates worth one thousand five hundred million pesos amortizable in April 2013, which pays monthly variable interest at a TIIE 28 days equivalent-rate plus 180 basis points. Furthermore, the Company increased by more than twenty million dollars, the syndicated loan (Second Amended & Restated Credit Agreement) and contracted a five year bank loan for $312 M dollars. To December 31, 2009, the Company kept securities under the Senior Notes program for US37 M for the same term and without financial restrictions. On March 9, 2010, the remaining total of subsisting securities was liquidated with the net resources from the program Senior Notes 2015. Currently, the Company has contracted some loans which stipulate certain restrictions. The main obligations stipulated in the loan contracts are: - Indebtedness, dividend payment and distribution of its shareholding is subject to compliance with determined financial ratios. - The company or any of its subsidiaries must not invest an amount greater than ten percent of consolidated assets (net depreciation) in undeveloped land, developed land and in condominium development projects. - The company must maintain an insurance policy on all its properties, assets and businesses for losses and material damages. The main financial ratio restrictions included in the contracted loans are: Financial ratios: Restriction Current assets Greater than 0.60 Indebtedness to equity Less than 1.22 Interest coverage Greater than 2.20 Total debt to EBITDA Less than 3.75 54

To December 31, 2009, these restrictions have been fulfilled. Syndicated Loan: During November 2005, the Company concluded structuring a US50 M syndicated five-year loan (with a two-year grace period). The lead bank was ING Bank (Mexico), S.A.; other participants included Bancomext (Banco de Comercio Exterior, S.N.C.), BBVA Bancomer, S.A., Bayerische HYPO-UND Vereinsbank AG, HVB Group, Banco de Credito e Inversiones, and Miami Branch and Banco Industrial, S.A. This transaction insured funds on favorable conditions for timely payment of stock exchange certificates for $300 M and $250 M, respectively due in February and July 2006. Additionally, in November 2006, a US30 million add-on was contracted to the aforementioned syndicated loan for a total US80 million loan. The said add-on terms are the same stipulated in the original contract. The resources from these transactions were allocated to liquidate short-term credit lines. In April 2008, there was a second US21.5 M add-on. During 2009, the Company amortized US37.5 M; as of December 31, 2009, the credit line ascended to US37.5 M total. The effective rates for US dollar dispositions is LIBOR plus 1.75 percentage points; and for peso dispositions TIIE plus 1.65 percentage points. On January 29, 2010, the Company liquidated the total loan amount with the net resources of the debt instruments issued under the Senior Notes program due in 2015 ( Senior Notes 2015 ). IFC/DEG Financings The Company contracted financing for US10 M and EUR 5 M with the IFC (International Finance Corporation) and the DEG (Deutsche Investitions-Und Entwicklungsgesellchaft) respectively; both were due in December 2009 at an interest rate of Libor plus 1 percentage point and Euro Libor at 6 months plus 3 percentage points, respectively. These loans are convertible into the Company s Series L shares; therefore, the portion identified as equity is presented as contributions for future capital increases in the consolidated statements of variations in stockholder s equity. Both convertible financings extended their effective date. On November 22, 2009, the Company made a US2 M partial payment to the US10 M convertible debt with IFC. In 1999, the Company signed a sale option with IFC in which IFC has the option to sell to the Company its total shares held in South America in Fiesta, S.A. (SFI) (subsidiary company) which as of December 31, 2009 represents 12.07% of SFI s corporate capital. According to the terms of the sale option, the execution period began on July 9, 2005 and ends on December 31, 2011. As of December 31, 2009, the approximate price of said option was US11 M. On January 14, 2010, the IFC exercised its convertibility option for 5.2402% of SFI s capital for US5 M. On the date of this report, IFC had executed the sale option regarding its SFI s corporate capital total shareholding; thus, the Company became the direct and indirect holder of 100% of SFI. On January 8, 2010, the Company made a partial EUR1 M payment and on March 15, 2010, made the EUR4 M complementary payment of the EUR5 M convertible debt with DEG, as such extinguishing all debts with said institution. On May 17, 2010, IFC and the Company signed a Master Amendment and Settlement Agreement in which, amongst other things, they agreed to modify certain terms and conditions applicable to section C conversion rights under the loan. Stock Exchange Certificates In 2007, Grupo Posadas, S.A.B. de C.V. established an Unsecured Stock Exchange Certificate Program for an authorized total amount of up to $3,000M. The par value of each certificate is one hundred pesos and the issue expires in up to five years, peso denominated and with interest payable every 28 days at the rate established for each issue. On April 8, 2008, a $1,500 M certificate issue was made, and on July 14 of the same year, a second $750 M issue one was carried out under the same terms and conditions. In 2001, the Company established an Unsecured Stock Exchange Certificate Program for an authorized total amount of up to $1,000 M. The par value of each certificate is one hundred pesos and the issue expires in up to ten years, peso or Investment Unit (UDIS) denominated and with interest payable every 28 days at the rate established for each issue. On May 14, 2003, a $250 M certificate issue was made and the 55

total amount authorized was covered. On December 2, 2004, full payment of the first disposition under this program was made; said payment amounted to $200 M. Under the same program, in February and July 2006 matured stock exchange certificates were timely paid for $300 M and $250 M, respectively; one sole $250 M issue remained in effect and matured on May 6, 2009, but it was liquidated in due time and form. During 2002, Grupo Posadas established a Stock Exchange Certificate Program with 50% financial institution surety for an authorized total amount of up to $1,500 M. The par value of each certificate is one hundred pesos. During 2003, certificates were issued for an amount of $875 M, due in January 27, 2009. During February 2005, the Company anticipatorily amortized these certificates. Vacation Club Financings The Company contracted three revolving credit lines, two with Banco Mercantil del Norte, S.A. Banorte and one with Bancomext for up to an authorized total amount of US29.2 M and US91 M respectively, through various dispositions which were due each one by or before April 28, 2014; June 28, 2013 and July 25, 2014, respectively. Dispositions under these credit lines generate variable interest rates and are guaranteed by notes receivable related to the financing granted for Vacation Club sales. Vacation Club time-shares sale collection rights are formalized with notes receivable and have been allocated to different trusts. According to the contracts supporting the corresponding guarantee, the flows derived from collection rights which are transferred to said trusts guarantee payment of the Bancomext and Banorte loans. The credit lines establish mortgage guarantees on the Vacation Club s real estate. During 2009, the Company made a disposition on its credit line with Bancomext for US6.1 M. During December 2009 the Company contracted a third credit line with Banorte for an authorized amount of up to US91 M with the same contractual conditions as the two previous, which it disposed $915.1 M and US9 million. The terms of this new line demanded immediate amortization by the Company, thus, $19.3 M and US438 thousand were paid. The net resources obtained from this new line liquidated the two Banorte lines mentioned in the first paragraph of this subsection were liquidated; two credit lines remained as of December 31, 2009, one with Banorte and another with Bancomext, whose respective due dates were on or before November 28, 2014 and July 25, 2014. As of December 31, 2009 and 2008, the debt balance with Bancomext amounts to US25.5 M and US28.4 M and with Banorte US9 M and $915.8 M and $143.0 M respectively. The majority of notes receivable rights that had been allocated to a trust established out of Mexico, were re-allocated to a new trust in Mexico. To December 31, 2009 and 2008, the total notes receivable amount allocated to the trust, amounted to US205.4 and US217.5 M, respectively. Subsidiaries Bancomext Subsidiary Financing. The Company subsidiary Corporacion Hotelera de Ciudad Juarez, S.A. de C.V. contracted a mortgage loan for US4.2 M with Bancomext. Said loan expired on August 19, 2009, the interest rate is LIBOR 3 months plus 731 basis points payable every quarter. To December 31, 2009 this loan was liquidated in due time and manner. Scotiabank Inverlat Financing. In 2002, the subsidiary Promocion de Inversiones Hoteleras, S.A. de C.V., (which merged in 2008 surviving as Promotora Inmobiliaria Hotelera, S.A. de C.V.,) contracted a credit with Scotiabank Inverlat, S.A. for $250 M or its US dollar equivalent amount. This debt was restructured in November 2006 as to amount, period and rate to expire in November 2013 with a Libor plus 200 base point rate for dollar denominated debt and TIIE plus 200 basis points for peso denominated debt, in quarterly payments. The guarantees are mortgages over certain real properties which belong to other Company subsidiaries. This agreement has certain restrictions such as incurring additional debt, payment of dividends, transfer of assets or guaranteeing another transaction. The total debt amount as of December 31, 2009 is $96.8 M and US17.6 M, respectively. Banorte Financing. In 1999 the subsidiary Inmobiliaria Hotelera de Toluca, S.A. de C.V. contracted a $34.2 M loan with Banorte. The debt expired in March 2009 with a TIIE monthly interest rate plus 150 basis points, and capital every quarter. The loan was guaranteed with a mortgage on property belonging to the 56

subsidiary. This agreement bears certain restrictions such as incurring additional debt, payment of dividends in the case of additional indebtedness, transfer of any of its assets or guaranteeing other transactions. As of December 31, 2009, this credit was liquidated in due time and manner. Other Loans In April 2008, the Company contracted a loan with Banco Nacional de Mexico, S.A., Grupo Financiero Banamex member, for $312 M payable in five years with a two-year grace period with a mortgage loan formalized in 2009. The effective rate as of December 31, 2009 is TIIE plus 4.0 percentage points. On January 25, 2010 this credit was liquidated with the net capital from the Senior Notes 2015 program. In December 2005, the Company contracted a loan with California Commerce Bank (Banamex USA) for US20 M payable in five years with a two-year grace period and a mortgage loan at LIBOR rate plus 4.5 percentage points. As of December 31, 2009 and 2008 the loan balance is US17 M and US12.3 M, respectively. On January 22, 2010 this loan was liquidated with the net capital from the Senior Notes 2015 program. In December 2008, a US23.4 M disposition was made under a total US27.3 M mortgage-guaranteed loan payable in two years with a nine-month grace period with Bancomext, at LIBOR rate plus 4.6 percentage points. In January 2009 an additional US2.7 M disposition under the same credit line, on the same terms and conditions, was made. As of December 21, 2009 and 2008, the loan balance was US25.8 M and US23.4 M, respectively. On March 1, 2010 this loan was liquidated with the net capital from the Senior Notes 2015 program. In July 2009, the Company disposed of a $392 M mortgage-guaranteed loan, payable in four years with a 12-month grace period at TIIE rate plus 3.75 percentage points with Bancomext. On January 22, 2010 this loan was liquidated with the net capital from the Senior Notes 2015 program. During the fourth quarter of 2008, a $100 M disposition under a long-term credit line with Banco del Bajio, S.A. at a TIIE rate plus 2 percentage points was made. After making payments for $36 M and dispositions for $12 M in October 2009, this loan was documented for $76 M payable in 4.5 years with a 6 month grace period at a TIIE rate plus 3.75 percentage points and a mortgage guarantee. During the fourth quarter of 2008, a $89.8 disposition under a short-term credit line with Banco Santander Serfin, S.A. at a TIIE rate plus 4 percentage points was carried out. After making payments for $22,743 and dispositions for $17.5 M in October 2009, this loan was documented for $90 M payable in 3 years with a TIIE rate plus 4.85 percentage points and a mortgage guarantee. As of December 31, 2009 and 2008, the balance of this loan was $85,000 and $89.8 M, respectively. On February 2, 2010, this credit was liquidated with the net capital from the Senior Notes 2015 program. Additional Information regarding Financing To December 31, 2009, financial indebtedness that includes mortgage loan amounts to $1,751.3 M. The main guarantees correspond to real properties (hotels) whose net book value amounts $3,487.2 M as well as guarantees from certain subsidiaries. Derivative Financial Instruments The company monitors and participates in the derivative financial instruments market, using these instruments as an economic hedge of its peso debt at a variable interest rate, at a fixed dollar rate so as to maintain a debt mix mainly in dollars. As of December 31, 2009, the Company held five swap contracts (Cross Currency Swaps) with a US185 M notional amount. Each instrument is explained in detail hereunder: 57

Maturities of Collateral Type of Notional Underlying the MTM (Margin derivative Uses: in MXN 000 ref: TIIE 28 days MTM in MXN 000 Calls) 4Q09 3Q09 4Q09 3Q09 4Q09 3Q09 2010 2011 2012 2013 Interest Rate Swap Debt match 66,506 83,117 4.93 4.90 1,222 2,582 66,506 - Maturities of Collateral Type of Uses: Notional Underlying the MTM (Margin derivative in USD 000 reference: FX *MTM in MXN 000 Calls) 4Q09 3Q09 4Q09 3Q09 4Q09 3Q09 2010 2011 2012 2013 Cross Currency Debt match 79,045 79,045 13.04 13.49 275,003 321,879 275,003 - Cross Currency Debt match 5,329 6,661 13.04 13.49 16,039 23,726 16,039 - Cross Currency Debt match 65,773 65,773 13.04 13.49 257,226 297,293 257,226 - Cross Currency Debt match 5,126 6,407 13.04 13.49 13,937 20,608 13,937 - Cross Currency Debt match 29,771 29,771 13.04 13.49 98,678 116,782 28,194 28,194 28,194 14,097 - Total 185,044 187,658 660,884 780,288 58,170 28,194 28,194 546,326-391,692 Treasury. The Company s treasury is divided in 3 principal areas: Grupo Posadas Treasury (holding): manages the treasury of the 100% Posadas owned hotels. SINCA Treasury: it manages the surplus, which includes nine hotels (see Corporate Structure), in which Posadas holds a 52% share Sudamerica en Fiesta Treasury: it manages the treasury of the Company which owns the Caesar Park Hotels. Historically, the Company has sought to keep a balanced currency structure in its investments and this structure is mainly ruled by the Mexican-peso and US-dollar debt mix of each Grupo Posadas, SINCA and Sudamerica en Fiesta company holds. In Grupo Posadas, the bulk of the investments is in government, bank and private paper money market, instruments which allow the Company to keep liquid and availability to face its daily cash flow needs. On the other hand, the majority of SINCA surplus is invested in government paper money market. Capital Expenses. As of December 31, 2009, capital expenses amounted to $470 M; 13% was allocated to hotel maintenance; 25% to projects and corporate, for the most part to technology; and 67% to the Vacation Club. Currently, the Company mostly finances budgeted capital expenses by internal generation. The Company s dependence on debt to finance capital expenses has decreased as it has expanded through hotel operation or leasing contracts. iii) Internal Control Grupo Posadas and its Mexican subsidiaries follow NIF. From 2008, the operations of Mexican companies which present functional currency other than the registered currency convert their registered currency financial statement into functional currency using the following exchange rates: 1) closing exchange rate for monetary assets and liabilities, 2) historical exchange rate for non-monetary assets and liabilities and shareholders equity, and 3) the payment date s exchange rate for income, costs and expenses, except for those arising from non-monetary items which are converted to the non-monetary item s historical exchange rate. These conversion effects are recorded in the comprehensive financing result (RIF). Subsequently, in order to convert the financial statements for both Mexican and foreign companies from the functional currency to Mexican pesos, the following exchange rates are used: 1) closing exchange rate for assets and liabilities, and 2) historical exchange rate for shareholders equity, income, costs and expenses. The effects of this conversion process are recorded in the net stockholders equity of its deferred tax. Until 2007, the financial statements of foreign subsidies which were considered independent of the Company first recognized the operating country s inflationary effects and then the financial statements were converted using the closing exchange rate, and the conversion effects were recorded in the shareholders equity. Since 2002, Galaz, Yamazaki, Ruiz Urquiza, S.C. annually reports the financial statements of the Company and most of its Subsidiaries. 58

Audit Committee Between May 2009 and April 2010, the Audit Committee held five sessions in which, amongst other, the following items were discussed: 1. The main accounting policies followed by the Company were reviewed and analyzed in terms of the information received. It should be noted that during the corporate year, the Company s accounting policies were not modified, except those regarding the new NIFs applicable to the 2009 corporate year. The Company s Management, upon applying business judgment considers that the estimates and assumptions used to evaluate some of the financial statements entries and to carry out the disclosures required therein, were circumstantially appropriate, complying with the NIFs. 2. As for the Company or the legal entities it controls, no breaches of operating and accounting registration guidelines and policies were detected. 3. The Report of the Chairperson and Chief Executive Officer regarding the activities of the corporate year 2009 was received and approved. 4. The audit dated March 10, 2010, regarding the financial statements to December 31, 2009, was received and discussed; there was mentioned therein that: a) The examination was conducted according to Mexican generally accepted auditing standards. b) The audit was conducted based on selective examinations of the evidence supporting the financial statements numbers and disclosures and included evaluation of the financial information norms used; of the significant estimations made by the Management and the joint presentation of the financial statements. c) In their opinion, the consolidated financial statements of Grupo Posadas, S.A.B. de C.V. and its subsidiaries, reasonably present in every important aspect, the financial situation of Grupo Posadas, S.A.B. de C.V. and its subsidiaries as of December 31, 2009 and their operating results, variations in shareholder s equity and cash flows for the year ending on said date, according to the Mexican financial information norms. Based on the opinion of the aforementioned independent auditors and reviewed along with them, as described above, the Audit Committee shared the opinion expressed by the firm Galaz, Yamazaki, Ruiz Urquiza, S.C. (Member of Deloitte Touche Tohmatsu) on the consolidated financial statements of Grupo Posadas, S.A.B. de C.V., and subsidiaries to December 31, 2009. e) Estimates, Critical Accounting Allowances or Reserves Loyalty Program The Company has a frequent customer program denominated Fiesta Rewards (see Distribution Channels ), with which its members enjoy various benefits by accumulating points obtained for staying at the Company s hotel. Said points may be exchanged (redeemed) during a certain time for hotel stays, airplane tickets, chain-store coupons and car rentals, among others. The redemption or cashing of these points represents a cost for the Company, thus, it is necessary to establish a reserve to bear said costs. The calculation of this reserve established for future reward redemptions is based on an actuarial study and the historical behavior of valid, expired, generated and redeemed points. This trend serves as a basis to establish assumptions of future redemption trends. To December 31, 2009, the probabilistic reserve established for this program amounts to $69 M pesos. The Company deems the probability of 100% point redemption in a single year is very low. Notes receivable from Vacation Club operation The collection rights derived from Vacation Club membership sales are allocated to a trust to guarantee credit lines contracted to finance operations. The amounts received from these credit lines dispositions are presented net on notes receivable in the consolidated balance sheet. The notes receivable generated from Vacation Club time-share sales appear net in the consolidated balance sheet under the estimation for doubtful accounts. To December 31, 2009, the estimation for doubtful notes amounted to $94 M. This estimation is primarily determined based on business experience and certain assumptions related to collection trends. Conversion of subsidiaries foreign currency financial statements The financial statements of foreign subsidiaries operating independently from the Company apply the Company s same accounting policies. From 2008, the operations of Mexican companies which present functional currency other than the registered currency convert their registered currency financial statement into functional currency using the following exchange rates: 1) closing exchange rate for monetary assets and liabilities, 2) historical exchange rate for 59

non-monetary assets and liabilities and shareholders equity, and 3) the payment date s exchange rate for income, costs and expenses, except for those arising from non-monetary items which are converted to the non-monetary item s historical exchange rate. These conversion effects are recorded in the comprehensive financing result (RIF). Subsequently, in order to convert the financial statements for both Mexican and foreign companies from the functional currency to Mexican pesos, the following exchange rates are used: 1) closing exchange rate for assets and liabilities, and 2) historical exchange rate for shareholders equity, income, costs and expenses. The effects of this conversion process are recorded in the net stockholders equity of its deferred tax. Before 2007, the financial statements of foreign subsidies which were considered independent of the Company first recognized the operating country s inflationary effects and then the financial statements were converted using the closing exchange rate, and the conversion effects were recorded in the shareholders equity. The registered and functional currencies of the foreign operations are as follows: Country of origin Registered currency Functional currency Reporting currency Mexico (FAVC) Mexican peso U.S. dollar Mexican peso United States of America U.S. dollar U.S. dollar Mexican peso Brasil Brazilian real Brazilian real Mexican peso Argentina Argentine peso Argentine peso Mexican peso Chile Chilean peso Chilean peso Mexican peso Derivative financial instruments - The Company obtains financing under different conditions and it contracts interest rate and exchange derivatives to manage its exposure to interest rate and foreign currency fluctuations. The Company formally documents all hedging relationships, describing objectives and risk management strategies for derivative transactions and their accounting recognition. Derivative instrument negotiations are only made with well-known solvent institutions and limits have been established for each institution. The Company s policy is to avoid executing derivative financial instrument transactions for speculation purposes. However, the Company occasionally enters into speculation agreements, provided that the maximum exposure falls within management s established non-material limits. The majority of the derivative financial instruments dates and amounts entered into by the Company correspond to asset acquisition dates or the liability maturity date which the Company intends to cover. The Company recognizes all assets or liabilities arising from transactions with derivative financial instruments in the consolidated general balance sheet at fair value, regardless of the purpose for which they are held. Fair value is determined based on recognized market prices and, when not traded on a market, based on valuation techniques accepted by the financial community. Derivative instruments designated as hedges recognize value changes according to the type of hedge: (1) for fair value hedges, changes in both the derivative instrument and the hedged item are stated at fair value and recognized in current earnings; (2) for cash flow hedges, changes in the effective portion are temporarily recognized as a component of other comprehensive income in shareholders equity and then reclassified to current earnings when affected by the hedged item; the ineffective portion is recognized in current earnings. Since certain derivative financial instruments, although entered into for economic hedging purposes, do not meet all normative requirements and thus, for accounting purposes, have been considered as negotiation derivatives. Fluctuation in said derivatives fair value is recorded under RIF. Compound financial instruments - Compound financial instruments are contracts that include both liability and equity components; they are recognized by the Company based on the economic substance of the transaction, rather than their adopted legal form. The components that represent unavoidable payment obligations are recognized as liabilities, but are included in equity, if the contractual provisions establish an ownership relationship with the instrument s holder. Initial issuing costs incurred for compound financial instrument are proportionately assigned to liabilities and equity according to the amounts recognized in each 60

case. Of the preceding costs, costs assigned to equity reduce the share placement premiums, and those assigned to liabilities are capitalized and amortized in the term stipulated by the contract. 4) ADMINISTRATION a) External Auditors During the last eight corporate years (2002-2009) Galaz, Yamazaki, Ruiz Urquiza, S.C., a member firm of Deloitte Touche Tohmatsu, has conducted the independent audit. During the last eight corporate years, the Company s financial statements have not been subject to qualification or negative opinion by the auditors of the aforementioned firm, nor have said auditors refrained from issuing an opinion. The appointment of the independent auditor is made by the Company s Board of Directors. Since 2003, the Audit Committee s opinion has been taken into consideration, taking into account the independence, professionalism and experience of the firm appointed as independent auditor. During 2009, Galaz, Yamazaki, Ruiz Urquiza, S.C. rendered tax consulting services to the Company in addition to the auditing services provided by the selfsame firm. The amount paid by the Company for said services represented 13% of the total professional fee invoicing paid to Galaz, Yamazaki, Ruiz Urquiza, S.C., and so does not imply loss of independence. b) Related Party Transactions and Conflicts of Interest To December 2009, the Company had a minority shareholding in the hotels: Holiday Inn Merida (9.2%), Fiesta Inn Xalapa (25%) and Holiday Inn Queretaro (7.3%). Other investments: Rio Tur do Rio de Janeiro S/A (1.91%), Turis Rio Compañia de Janeiro S/A (0.49%) and Grupo Mexicana, S.A. de C.V. (30.4%). The company does not control any of the aforementioned companies. The Chairman of the Board of Directors and Chairman of Grupo Posadas, S.A.B. de C.V., who is also a member of the Board of Directors of Posadas USA, has a shareholding in an entity which controls the Holiday Inn and Sheraton Fiesta hotels located on South Padre Island in Texas, U.S.A. Likewise, the Fiesta Inn Acapulco hotel belongs to an entity in which an uncle of the Chairman of the Board of Directors and Chairman of the Company has a majority shareholding. The management contracts related to the Padre Island and Acapulco hotels are substantially similar in terms and conditions to the contracts entered into with non-related entities. On occasion personal loans have been made to Executive Committee members with the Board of Directors prior approval. c) Administrators and Shareholders According to the Company s corporate by-laws, the Company s management is the responsibility of a Board of Directors, whose members are annually elected at an Ordinary General Shareholders Meeting. The corporate by-laws provide that the Board of Directors meet at least every three months. The Company s corporate by-laws establish, amongst others, that the Issuer companies must have a minimum of 5 directors and a maximum of 21, and that at least 25% of the members must be independent. The Board of Directors appointed by the Company s Annual Ordinary Shareholders Meeting dated April 5, 2010, is formed by 14 permanent directors as listed below: 61

Members of the Board of Directors: Name Age Position Date of designation Gastón Azcárraga Andrade 54 Chairman & CEO, Grupo Posadas July 29, 1988 Enrique Azcárraga Andrade 45 CEO, EXIO, S.C. May 31, 1991 Pablo Azcárraga Andrade 51 Vice-Chairman, EVP and Chief Executive of Propietaria Posadas April 29, 1997 Fernando Chico Pardo 57 President, Promecap, S.C. July 26, 1995 Joaquín Vargas Guajardo* 55 Chairman, MVS Comunicaciones April 24, 1996 Carlos Llano Cifuentes* 77 Director of IPADE and Universidad Panamericana July 22, 1992 Antonio Madero Bracho* 72 Chairman, SANLUIS CORPORACION, S.A. de C.V. July 28, 1993 Sergio Mariscal Lozano* 51 Independent consultant April 22, 2004 José Carlos Azcárraga Andrade 44 EVP & Chief Executive of FA Vacation Club April 30, 2008 Jorge Soto y Galvez* 66 Independent consultant April 27, 2006 Silvia Sisset de Guadalupe Harp Calderoni 40 Private investor April 5, 2010 Carlos Levy Covarrubias 48 Private investor April 27, 2006 Emilio Carrillo Gamboa* 72 Independent consultant April 27, 2006 Manuel Borja Chico 44 CEO Mexicana de Aviación, S.A. de C.V. November 30, 2006 * Independent Directors Gaston Azcarraga Andrade Mr. Azcarraga is an industrial engineer with an MBA degree in Business Administration from Harvard University. Mr. Azcarraga is the Chairman and General Director of Grupo Posadas, S.A.B. de C.V., and Chairman of the Board of Directors of Grupo Mexicana de Aviacion, S.A. de C.V. Enrique Azcarraga Andrade Mr. Azcarraga is an industrial engineer with an MBA degree in Business Administration from Harvard University. He has collaborated in several Mexican companies such as Operadora de Bolsa, Grupo Posadas, DESC Sociedad de Fomento Industrial, GBM Grupo Bursatil Mexicano, and is currently the General Director of Exio, S.C., an investment consulting company. Pablo Azcarraga Andrade Mr. Azcarraga holds an Accounting degree and a Master s degree in Hotel Management with a specialty in Marketing and Finance from Cornell University in New York. From 1986 to date, he has held various positions within Grupo Posadas, such as General Director of Fiesta Americana Condesa Cancun, General Director of the Fiesta Americana Hotel Division and he is currently the Vice Chairman of the Board of Directors and of Hotelera Posadas. Fernando Chico Pardo Mr. Chico holds a degree in Business Administration and a Master s degree in Business Administration from Northwestern University. Mr. Chico has held several positions in the following companies: Bimbo, Anderson-Clayton, Bank of America, Salomon Brothers, Standard Chartered Bank, Mocatta Metals Corporation, Casa de Bolsa Acciones y Asesoria Bursatil, Inversora Bursatil, Grupo Financiero Inbursa and is currently the Chairman of Promecap, S.C. and ASUR. Mr. Chico is also an active member of the Board of Directors of: Grupo Financiero Inbursa, Condumex, Grupo Carso, Sanborns, Sears Roebuck de Mexico, United Pension Fund, Quantum Group of Funds and Papalote Museo del Niño, among others. Joaquin Vargas Guajardo Mr. Vargas is the Chairman of the Board of Directors of Corporacion Mexicana de Restaurantes, and has been a member of the Board of Directors for over 31 years. He is currently the Chairman and General Director of Grupo MVS and has been Chairman of the Consejo Directivo de la Camara Nacional de la Industria de Radio y Television, Chairman of the Asociacion Mexicana de Restaurantes and Chairman of the Asociacion de Directores de Cadenas de Restaurantes. Mr. Vargas currently participates on the board of directors of 62

Grupo Vitro, El Universal, Grupo Costamex, Medica Sur, the Mexican Stock Exchange, and Consejo Mexicano de Hombres de Negocios. Carlos Llano Cifuentes Mr. Llano is an economist from Universidad Complutense de Madrid with a Doctorate in Philosophy from the UNAM and the Universidad Santo Tomas in Rome. From 1968 through 1994, he was the Chairman and Founder of the Consejo Superior del Instituto Panamericano de Alta Direccion de Empresa (IPADE), and Founding Dean of the Universidad Panamericana from 1985 through 1994. He was a member of the Board of the Human Rights Commission in Mexico City and founder of Universidad Bonaterra in the State of Aguascalientes. He holds numerous distinctions such as: Business Merit Medal (Medalla al Merito Empresarial), Eugenio Garza Sada Award, Honorary Member of Union Social de Empresarios Mexicanos (USEM), Jaime Torres Bodet Award of Excellence. Likewise, he has individually authored over twenty-five books and co-authored six books. Mr. Carlos Llano Cifuentes passed away on May 5, 2010. Antonio Madero Bracho Mr. Madero is an engineer with a Master s degree in Business Administration (MBA) from Harvard University. He is the founder and Executive Chairman of the Board of Directors of San Luis Corporacion, a member and ex-chairman of the Consejo Mexicano de Hombres de Negocios, and a member of the board of the following institutions: Deere & Company, Goldcorp, Inc., Alfa, Grupo Industrial Saltillo, Grupo Mexico, and Museo Nacional de Arte. Mr. Madero is a former member of the board of J.P. Morgan Chase. Sergio Mariscal Lozano Mr. Mariscal holds a degree in Business Administration, an Upper Management diploma from IPADE, and the SERIES 7 from NYSE and NASDAQ. He has held various financial sector positions in the following institutions: Casa de Bolsa Banamex, Operadora de Bolsa, Inverlat, Invermexico, and ING Mexico, where he held the position of Vice-Chairman of Private Banking. From 1998 to date, Mr. Mariscal is the Private Banking Vice-Chairman for the Lehman Brothers branch in Miami. Jose Carlos Azcarraga Andrade Mr. Azcarraga is an industrial engineer with a Master s degree in Business Administration from Kellogg University. He has held various positions in the Company such as General Director of Fiesta Americana Vacation Club and Director of the Real Property Division. At present, Mr. Azcarraga is the Vice- Chairman of FA Vacation Club. Jorge Soto y Galvez Mr. Soto holds an Accounting degree from the UNAM. He joined the independent audit firm Arthur Andersen where he was responsible for the firm s most important clients, until he became part of the Executive Committee for the Mexico division and participated as a member of the Board of Directors of various Arthur Andersen s clients. At the present time, he has established his own consulting company providing services to, amongst others, HSBC bank. Silvia Sisset Harp Calderoni Ms. Harp holds an Accounting degree from the ITAM. She worked at Robert s and at Filantropia, Educacion y Cultura, A.C. Ms. Harp was the General Director of Fundacion Alfredo Harp Helu and since 2006 she holds the position of Chairwoman. At the moment, she participates on the Boards of Directors of Grupo Marti and the Fundacion Teleton Trust. Carlos Levy Covarrubias Mr. Levy holds a Bachelor s degree in Business Administration from Universidad Anahuac. In 1987, he joined Casa de Bolsa Accival and held several equity operations positions until he became Operations Director. From 1991 through 2005, Mr. Levy held various positions in Banamex-Accival Financial Group, such as the Group s Director of Asset Coordination, Deputy General Director of the Treasury, General Director of Casa de Bolsa Accival and Corporate Director of Specialized Banking and Management of Investments of Financial Group Banamex. After leaving the Financial Group, Mr. Levy founded an investment management company in which he currently participates. Likewise, he was the Chairman of the Mexican Association of Financial Intermediaries from 2003 through 2005. Emilio Carrillo Gamboa Mr. Carrillo is an Attorney-at-law, and at present is a founding partner of Bufete Carrillo Gamboa, S.C. law firm. He is the Chairman of the Board of Directors of Cementos Holcim-Apasco. In addition, Mr. Carrillo participates on the Board of Directors of Empresas ICA, S.A.B. de C.V., Grupo Modelo, S.A.B. de C.V., Grupo Nacional Provincial, Kimberly Clark de Mexico, S.A.B. de C.V., Medica Integral GNP, S.A. de C.V., Profuturo 63

GNP, S.A. de C.V., Afore, San Luis Corporacion, S.A.B. de C.V., and Grupo Mexico, S.A.B. de C.V., Southern Copper Corporation, and The Mexico Fund, Inc., among others. In 1988, Mr. Carrillo was appointed Ambassador of Mexico to Canada. Manuel Borja Chico Mr. Borja is an industrial engineer with a Master s degree in Business Administration (MBA) from The University of Texas. Mr. Borja collaborated in Grupo Posadas for more than twelve years occupying various positions, and the last position he held was Vice-Chairman of Finance. He is currently the Chief Executive Officer of Mexicana de Aviacion, S.A. de C.V., and as an independent member of Mega s board of directors. Mr. Gaston Azcarraga Andrade, Mr. Pablo Azcarraga Andrade, Mr. Enrique Azcarraga Andrade and Mr. Jose Carlos Azcarraga Andrade are brothers. Mr. Fernando Chico Pardo is uncle to Mr. Manuel Borja Chico. Furthermore, the Ordinary General Shareholders Meeting also appointed the following five alternate members of the Board of Directors: Ms. Silvia Sisset de Guadalupe Harp Calderoni, and Messrs. Javier Barrera Segura, Jorge Carvallo Couttolenc, Miguel Alejandro Garcia Jaramillo*, and Charbel Christian Francisco Harp Calderoni. Remunerations of Directors and Executive Committee Grupo Posadas Ordinary General Shareholders Meeting held in April 2009 approved an amount equal to two Centenario gold coins, prior withholding of the corresponding tax, as remuneration for the permanent directors and the secretary for corporate year 2009, until the following Annual Ordinary General Shareholders Meeting, for their attendance at Board s meetings. Alternate directors shall earn the same fees only when they attend Board meetings in substitution of the corresponding permanent directors. In keeping with the Company s corporate by-laws, an Executive Committee exists composed of a minimum of 3 and a maximum of 8 permanent members, who may have alternates and who may or may not be directors. The Executive Committee is elected by the Board of Directors and, to this date, is made up of the following executives whose current positions and years of service in the Company are specified hereinbelow: Members of the Executive Committee: Name Age Position Years with the Company Gastón Azcárraga Andrade 54 Chairman & CEO, Grupo Posadas 27 Pablo Azcárraga Andrade 51 Vice-Chairman, EVP and Chief Executive of Propietaria Posadas 26 Javier Barrera Segura 47 EVP & Chief Executive of New Ventures 22 Jorge Carvallo Couttolenc 53 EVP & Chief Executive of Hotelera Posadas 17 Rubén Camiro Vázquez 47 EVP & Chief Financial Officer 3 José Carlos Azcárraga Andrade 44 EVP & Chief Executive of FA Vacation Club 20 A brief curriculum summary of the Company s Executive Committee members and principal officers is herein included as follows: Javier Barrera Segura Mr. Barrera holds a degree in Economics, and a Master s degree in Business Administration from Tulane University. For more than 20 years, he has held important positions in the Company. Before becoming Vice Chairman of New Businesses, Mr. Barrera was responsible for designing and launching Fiesta Americana Vacation Club and he was also Marketing Director. In 1986, he was granted the National Economics Award. Ruben Camiro Vazquez Mr. Camiro holds a bachelor s degree in Actuarial Sciences, and holds a Master s degree in Business Administration from Duke University. He joined the Company after holding the position of General Director of WFI de Mexico and previously the position of Vice Chairman of Finance and Management of various companies such as Pegaso Telecomunicaciones, Bestel and Casa Autrey. 64

Jorge Carvallo Couttolenc Mr. Carvallo holds a Chemical Engineering degree and a Master s degree in Business Administration from the ITAM. In the Company, he has held various positions in the Finance and Development areas. As Vice Chairman, he has been responsible for development of the Mexican and South American expansion plan and he currently manages Propietaria Posadas. Remunerations of Executive Committee members For the year that concluded on December 31, 2009, the cash remunerations paid to Executive Committee members as a whole represented approximately 1.5% of the Company s total income. In addition, said executive group, along with another group of Company officers considered a key group by the Board of Directors, have the right to benefit from the Company s Series A share plan on the terms described in section 5 Stock Market of the present report. The Board of Directors is responsible for managing the Company. The Company s current corporate by-laws establish that the Board of Directors shall be constituted by up to 21 permanent directors, of which at least 25% shall be qualified as independent directors in compliance with the Stock Market Law and the corporate by-laws, and each one of these shall have a corresponding alternate director in the understanding that whatever the number of directors, Series L shareholders, convened in a Special Meeting, shall appoint two (2) permanent directors and their respective alternates per permanent director and their corresponding alternate for each ten percent (10%) of the corporate capital represented by Series L shares. The majority of the Board of Directors members must be Mexican and shall be appointed by Mexican shareholders. Minority shareholders holding 10% of the corporate capital are also entitled to appoint a director and their corresponding alternate. The directors shall continue in their positions, although their appointed term has concluded or if they have resigned from the position, for up to a term of thirty calendar days in the absence of their substitute s appointment or if the latter does not take possession of their position, without invoking the Article 154 provisions of the General Law of Business Corporations. Should this be the case, the Board may appoint provisional directors without shareholders meeting approval. All the current permanent and alternate members of the Board of Directors were appointed by the ordinary general shareholders meeting held in April 2010. So that a Board of Directors meeting is legally convened, in general, majority attendance of the permanent members or their respective alternates shall be required, and the resolutions of the Board of Directors shall be valid if taken by a majority vote of those present at the meeting. Should a tie exist, the Board of Directors chairman shall have the deciding vote. However, should the Board convene in order to discuss any proposal to purchase Company shares, the presence of at least 75% of the permanent directors or their respective alternates shall be required. The Company s corporate by-laws provide that the Board of Directors shall convene at least once each three months, and that the Chairman of the Board, 25% of the directors, the Secretary or the Vice- Secretary, the Chairman of the Audit Committee or the Chairman of the Corporate Practices Committee may call for a Board meeting. In compliance with the Stock Market Law, the Company s Board of Directors shall approve all the operations different from the Company s ordinary business, and which, amongst others, include: (i) the Company s general strategy, (ii) operations with related parties, except if these are immaterial to the Company due to their amount, (iii) the purchase or sale of assets with a value equal to or greater than 5% of the Company s consolidated assets, and (iv) granting guarantees or undertaking liabilities in an amount equal to or greater than 5% of the Company s consolidated assets. The Board of Directors is the Company s legal representative. The Board of Directors is responsible, amongst others, for: approving the Company s general business strategy; approving, by hearing the Audit Committee or the Corporate Practices Committee s opinion, in the applicable case: (i) the operations with related persons, subject to determined exceptions, (ii) the appointment of the General Director or the Chairman, their remunerations and removal, for justifiable cause, (iii) the Company and its subsidiaries financial statements, (iv) unusual operations and any operation or series of operations with related persons in the same corporate year which involve (a) the purchase or sale of assets in an amount equal to or greater than 5% of 65

the Company s consolidated assets, or (b) the granting of guarantees or undertaking of liabilities in an amount equal to or greater than 5% of the Company s consolidated assets, (v) the agreements executed with independent auditors, and (vi) accounting policies. establishing special committees and determining their powers and authority, in the understanding that the Board of Directors may not delegate to any of said committees the powers expressly reserved to the Company s shareholders or Board in accordance with the law; determining matters related to the change in control clause provided for in the corporate by-laws; and exercising all its general powers of attorney to fulfill the Company s corporate purpose. Duties of due diligence and loyalty The LMV (Stock Market Law) imposes duties of due diligence and loyalty on the directors. The duty of due diligence implies that the Company s directors must act in good faith and in the Company s best interest. To said purpose, the Company s directors are obligated to request from the General Director, the relevant officers and the external auditors the information which is reasonably necessary to make decisions. Directors who fail to comply with their due diligence duty shall be jointly responsible for actual and consequential damages caused to the Company or its subsidiaries. The duty of loyalty implies that the Company s directors must maintain as confidential all information they obtain due to their positions, and shall refrain from participating in the deliberation and voting on any issue in which they have any conflict of interest. The directors are disloyal to the Company if they obtain economic benefits for themselves, if they knowingly favor a determined shareholder or group of shareholders, or if they take advantage of business opportunities without exemption granted by the Board of Directors. The duty of loyalty also implies that the directors shall (i) inform the Audit Committee and/or the Corporate Practices Committee and the external auditors of all irregularities of which they know during the performance of their positions, and/or (ii) refrain from disclosing false information and from ordering or causing the omission of recording transactions which are carried out by the Company affecting any financial statement concept. Directors who breach their duty of loyalty shall be considered responsible for actual and consequential damages caused to the Company or its subsidiaries resulting from the aforementioned acts or omissions. This responsibility applies also to the actual and consequential damages caused to the Company resulting from the economic benefits obtained by the directors or third parties due to breach of their duty of loyalty. Directors may be subject to criminal penalties consisting of up to 12 years imprisonment should they act in bad faith affecting the Company, including the alteration of its financial statements and reports. A liability action for non-performance may be exercised by shareholders representing at least 5% of corporate capital, and criminal proceedings may only be exercised by the Ministry of Finance and Public Credit after prior opinion of the CNBV s. Directors shall not incur in the aforementioned responsibilities (including criminal responsibilities) if acting in good faith: (i) they fulfilled the legal requirements for the approval of matters which shall be presided over by the Board of Directors or its committee, (ii) they made decisions pursuant to the information provided by relevant officers or third parties whose capacity and credibility do not give rise to a reasonable doubt, (iii) they chose the most appropriate alternative to the best of their knowledge, or the negative patrimonial consequences were unforeseeable, and (iv) they complied with shareholders resolutions, provided that said resolutions do not contravene the applicable laws. In compliance with the LMV, for the exercise of its supervisory powers, the Board of Directors may be supported by an Audit Committee and a Corporate Practices Committee, and the Company s external auditor. The Audit Committee and the Corporate Practices Committee, jointly with the Board of Director, exercise the duties previously exercised by the Statutory Auditor in keeping with the LGSM (General Law of Business Corporations). 66

Audit Committee and Corporate Practices Committee At the present time, the Audit Committee is composed of three members: Jorge Soto y Galvez, as Chairman, Emilio Carrillo Gamboa and Joaquin Vargas Guajardo, who were appointed by the Board of Directors and by the Ordinary General Shareholders Meeting held on April 26, 2007; their appointments were confirmed by the Ordinary General Shareholders Meeting held on April 5, 2010. The Chairman of the Audit Committee is appointed by the Company s shareholders meeting and the other members by the Board of Directors. At present, the Corporate Practices Committee is composed of three members: Enrique Azcarraga Andrade, as Chairman, Jorge Soto y Galvez and Emilio Carrillo Gamboa, who were appointed by the Board of Directors and by the Ordinary General Shareholders Meeting held on April 26, 2007, and their appointments were confirmed by the Ordinary General Shareholders Meeting held on April 5, 2010. The Chairman of the Audit Committee is appointed by the Company s shareholders meeting, and the remaining members by the Board of Directors. Each committee has at least one financial expert. The Audit Committee and the Corporate Practices Committee are responsible for, amongst other matters and under their jurisdiction per the terms of the Stock Market Law, (i) supervising the duties of the external auditors and analyzing their reports, (ii) discussing and supervising the preparation of the financial statements, (iii) presenting a report on the effectiveness of the internal control systems before the board of directors, (iv) requesting reports from the members and relevant directors whenever they deem it necessary, (v) informing the board of directors of all irregularities of which they have knowledge, (vi) receiving and analyzing the comments and observations formulated by the shareholders, members of the board, relevant directors, third parties or external auditors, and carrying out the corresponding actions they consider pertinent concerning said comments, (vii) calling to shareholders meetings, (viii) evaluating the performance of the Chief Executive Officer or Chairman, (ix) preparing and presenting an annual report of their activities to the Board of Directors, (x) providing counsel to the Board of Directors, (xi) requesting and obtaining opinions from independent experts, and (xii) attending Board of Directors sessions when preparing annual reports and fulfilling all other information presentation obligations. The Chairman of the Audit Committee shall prepare an annual activity report for said committee and present it to the board of directors. Such annual report shall include, at least: (i) the status of the internal control and internal audit system and, if applicable, the descriptions of its deficiencies and deviations, as well as the aspects requiring improvements, taking into consideration the opinions, reports, communiqués and the external audit report, as well as the reports issued by independent experts; (ii) report and monitoring of prevention and correction measures implemented based on research results related to breaches of the Company s operating and accounting registration guidelines and policies; (iii) the performance assessment of the legal entity rendering external audit services; (iv) the relevant results of the review of the Company s and its subsidiaries financial statements, (v) the description and effects of accounting policies modifications; (vi) the measures adopted due to relevant observations formulated by the shareholders, members, relevant directors, employees and, in general, by any third party, regarding accounting, internal controls, and matters related to the external or internal audit; and (vii) the follow-up of agreements by the shareholders meetings and the Board of Directors. The Chairman of the Corporate Practices Committee shall prepare an annual report on the activities that correspond to said organ and present it to the board of directors. Said annual report shall comprise, at least: (i) performance of the relevant directors; (ii) transactions executed with related parties; and (iii) remunerations of the members of the board and relevant directors. d) Corporate By-laws and Other Agreements In accordance with the Company s By-laws series A shares may be subscribed by individuals or legal entities of Mexican nationality and by institutions and corporations described in the seventh clause of the corporate by-laws. Series L shares shall have limited voting rights and other corporate rights, may be freely subscribed and represent up to 25% of all corporate capital. These shares shall have the right to attend and cast one vote per one share, only and exclusively in the special shareholders meetings called to discuss the following (i) cancellation of the Series L shares in the National Securities Registry and on the national or foreign stock exchange or exchanges in which they are registered with the exception of the trading system and other markets not organized as stock exchanges, (ii) transformation of the company, and (iii) merger with another company or companies. 67

In accordance with the Company s corporate by-laws in effect, the quorum requirements for convening and validity of the resolutions adopted in the Ordinary and Extraordinary Shareholders Meeting are the following: To consider legally convened a general ordinary shareholder s meeting at first call at least 50% of the ordinary Series A shares should be represented. Through second or subsequent call, the general ordinary shareholders meeting shall be considered validly convened by any number of Series A shares represented. To consider the legal convening of a general extraordinary shareholder s meeting to discuss matters in which the shareholders of Series L do not have the right to vote, and held through first call, at least 75% of the ordinary Series A shares should be represented. Through second or subsequent call, the aforementioned general extraordinary shareholders meeting shall be considered validly convened with at least 50% of the Series A shares represented. To consider the legal convening of a general extraordinary shareholder s meeting to discuss matters in which the shareholders of Series L have the right to vote, and held at first call, at least 75% of the corporate capital should be represented. Through second or subsequent call, the referred general extraordinary shareholders meeting shall be considered validly convened with at least 50% of the corporate capital represented. Special shareholders meetings shall be subject to the same attendance quorum and voting as the general extraordinary shareholders meetings. In accordance with the Company s by-laws, the Board of Directors has, amongst others, the following powers: 1) general power of attorney for collections and lawsuits with all the general and special powers that require special clause in accordance with the Law; 2) general power of attorney to manage business and corporate assets in the broadest terms in compliance with the provisions of the respective law; 3) general power of attorney to carry out acts of ownership, pursuant to the provisions of the respective law; 4) the Board of Directors shall have the powers of general legal representative by delegation of the legal representation of the corporate principal to represent it in trials or labor procedures under the terms of the Federal Labor Law in force; 5) general power of attorney to draw, accept, endorse, negotiate, issue, guarantee, certify and in any other manner subscribe negotiable instruments on behalf and representation of the company, on the broadest terms established in General Law of Negotiable Instruments and Credit Operations; 6) powers to open and cancel bank, investments or other accounts as well as to make deposits and draw on said accounts through the person or persons designated by the Board of Directors; 7) powers to appoint and remove the chief executive officer of the company and the lower-ranking officers, as well to determine their attributions, powers, performance bonds, employment conditions and remunerations; 8) powers to grant general or special powers of attorney, as well as to substitute or delegate the powers granted to it, always reserving the right to exercise the same, and to revoke any of the powers granted, substituted or delegated. 9) The Board of Directors, through its chairperson, secretary or vice-secretary, may call General Ordinary or Extraordinary Shareholders Meeting, as well as Shareholders Special Meetings in all the cases set forth in these By-laws or when deemed convenient, and to set the date, time and agenda for said Meetings; 10) to execute the resolutions adopted by any Company s Shareholders Meeting which shall be done through its chairperson, except if that power is delegated to another board member; 11) to establish and modify the Company s or its subsidiaries employee share sales or purchase options or share subscription plans; 12) to appoint and remove Executive Committee members, as well as of other intermediate administration or operation bodies, establishing their makeup, duties and function subject to the provisions of the applicable law; and 13) to establish the Audit and Corporate Practices Committee or Committees referred to in the Stock Market Law and to appoint and remove their members, with the exception of the Chairperson, who shall be appointed by the Shareholders Meeting in compliance with the Stock Market Law provisions; 14) to present to the General Shareholders Meeting held at the close of the corporate year the following reports: the annual Audit Committee report, the annual Corporate Practices Committee report and the report of the Chief Executive Officer referred to in the Stock Market Law; as well as those other reports, opinions and documents which are required to comply with and under the terms of the Stock Market Law, the General Law of Business Corporations and other applicable laws; and 15) to know, discuss, and resolve on the matters referred to in the Second Section of the Twelfth clause of the Company s corporate by-laws in strictly adherence to the terms therein stipulated. The members of the Board of Directors of the Issuer are elected by the favorable majority vote of the Series A shareholders in circulation present in a general ordinary shareholders meeting. In like manner, the holders of the Series L shares, by resolution adopted in special meeting called for that specific reason, are entitled to appoint two permanent directors and their respective alternates. The directors appointed by holders of Series L shares shall be independent directors in compliance with Stock Market Law provisions. 68

The Issuer s by-laws establish measures preventing the purchase of shares granting control of the Issuer. In accordance with these measures, certain purchases of Series A shares or Series L representing the Issuer s corporate capital must be previously approved by the Issuer s Board of Directors or the General Extraordinary Shareholders Meeting when, amongst other things, the consequence of such acquisitions is that the shareholding of the acquiring party in question, either individually or jointly with certain persons, represents a holding equal or above ten percent of all Series A or Series L shares. For a description of the referred measures, the procedure to request authorization from the Issuer s Board of Directors and/or the General Extraordinary Shareholders Meeting, the quorum for convening and resolution, and the consequences of acquiring the shares, consultation of the complete text of the Second Section of the Twelfth clause of the Issuer s corporate by-laws of is suggested. Minority Shareholder Rights In line with the Stock Market Law, the Company s corporate by-laws stipulate the following minority shareholder rights: The right of holders of at least 10% of the shares representing the Company s corporate capital to request the chairperson of the Board of Directors or of the Audit Committee and of the Corporate Practices Committee to call a shareholders meeting in which they have the right to vote. The right of holders of at least 5% of the shares representing the Company s corporate capital to exercise a liability action against any of the directors, subject to compliance of certain legal requirements. The right of holders of at least 10% of the shares with the right to vote and represented in the respective shareholders meeting to request postponement of the vote on any matter on which they believe they lack sufficient information. The right of holders of at least 20% of the shares representing the Company s corporate capital to judicially challenge any resolution of the general meetings in which they have the right to vote. subject to compliance of certain legal requirements, The right of holders, either individually or jointly represent at least 10% of the corporate capital, to appoint at least one director and the respective alternate director in the corresponding meetings. Also, in accordance with the Stock Market Law, the Company is subject to certain corporate governance requirements, including an Audit Committee and a Corporate Practices Committee and independent members on its Board of Directors. 5) STOCK MARKET a) Stock structure The shares which represent the corporate capital of the Company are listed on the Mexican Stock Exchange Market, S.A.B. de C.V., where they have quoted since 1992. The number of shares in circulation (weighted average) to December 31, 2009 amounts to approximately 486 M. Of the number of shares of capital subscribed, approximately 81% are series A common shares with full voting rights and 19% are represented by series L shares with limited voting rights. Additionally, approximately 20,000 series A shares and 48,000 series L are quoted on the PORTAL system (Private Offerings, Resales and Trading through Automated Linkages) of the NASD (National Association of Securities Dealers) in the form of ADS (American Depositary Shares). Series A shares have shown minimum negotiability according to the BMV s rating while the Series L shares low negotiability to the BMV rating, therefore both series operate according to a BMV bid scheme. Trading in series A and series L shares has never been suspended by the regulatory authorities. As of December 31, 2009, the majority of the common shares were subject to a control trust, whose trustors and beneficiaries are, most of them, Azcarraga Andrade family members, who are holders of approximately 53% of the Series A common shares, jointly, directly and through the abovementioned trust. The trust operates through instructions of a technical committee formed by members of the Azcarraga Andrade family and presided over by Gaston Azcarraga Andrade. Of the remaining 47% of the Series A shares, approximately 11% is the patrimony of a trust originally established to guarantee with those selfsame shares determined obligations assumed by Bancomext, since it had acted as surety for the issuance of stock 69

exchange certificates for an amount of $875 M in May 2003, which were amortized in advance in February 2005. The Company s management will determine the treatment given these shares once said trust is extinguished. In like manner, approximately 3% of the Series A shares is allocated to the trust established to document and implement the Company s executive and employees share plan and the remainder is distributed amongst the investing public. Furthermore, Fernando Chico Pardo and different members of the Azcarraga Andrade family, who are members of the Company s board of directors and/or relevant directors, hold more than 1% of Issuer s corporate capital: With the exception of Gaston Azcarraga Andrade, none of his collateral blood relatives and insofar as the Company has knowledge, no other third party other than the Azcarraga Andrade family is beneficiary, directly or indirectly, of more than 5% of the Series A voting shares. Gaston Azcarraga Andrade, in his capacity as the Company s Chairman of the Board of Directors and Chief Executive Officer, exercises management power pursuant to the provisions set forth in the Stock Market Law. Shares in the trust. The Company has in trust the following shares: 13,580,362 and 965,000 of Series A and L shares respectively, in the name of Grupo Posadas, S.A.B. de C.V. to be assigned and sold to executives. There is a committee responsible for granting the right to buy and assign the number of shares to each eligible executive based on performance criteria, and the executive reserves the right to buy at the end of the term. The sale price is fixed in U.S. dollars taking into consideration the shares market value and the exchange rate in effect at the executive is assigned the shares. Because the term to make the purchase effective is three years with a two-year grace period, the financing period interest is applied. As of December 31 of 2008 and 2009, the acquisition cost of the shares comprised in the trust is $17.9 M (historical value). b) Share Behavior on the Securities Market Source: Bloomberg (The daily average volume is based on trading days) Yearly performance (Last five years) POSADAS A 2005 2006 2007 2008 2009 Price (High) 10.31 12.04 18.25 20.06 16.30 Price (Low) 8.00 10.31 12.14 14.10 10.60 Price (Closing) 10.31 12.04 18.25 14.10 16.30 Average daily volume 5.4 21.7 10.5 3.9 0.6 (thousands of shares) POSADAS L Price (High) 10.00 12.04 18.25 19.00 14.00 Price (Low) 7.50 9.00 12.04 11.00 9.00 Price (Closing) 9.50 12.04 18.25 11.00 14.00 Average daily volume 9.5 76.8 20.9 18.5 0.4 (thousands of shares) 70

Quarterly (Last two years) POSADAS A 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Price (High) 20.00 20.06 20.00 14.10 14.10 12.81 15.21 16.30 Price (Low) 18.25 20.00 16.01 14.10 14.10 10.60 10.60 15.22 Price (Closing) 20.00 20.00 16.01 14.10 14.10 10.61 15.21 16.30 Average daily volume 14.1 6.1 1.2 1.0 0.0 1.7 0.7 2.8 (thousands of shares) POSADAS L 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Price (High) 19.00 18.44 18.24 13.00 11.00 11.00 13.90 14.00 Price (Low) 18.50 18.40 15.00 11.00 11.00 9.00 10.50 12.40 Price (Closing) 18.95 18.40 15.00 11.00 11.00 10.20 13.90 14.00 Average daily volume 0.1 0.1 359.6 3.2 11.2 0.9 0.5 0.9 (thousands of shares) Monthly (Last six months) POSADAS A Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Price (High) 16.30 16.50 16.50 17.50 17.50 17.20 Price (Low) 15.22 16.50 16.50 16.71 17.50 17.10 Price (Closing) 16.30 16.50 16.50 17.50 17.50 17.20 Average daily volume 2.8 2.0 0.0 0.5 1.0 0.4 (thousands of shares) POSADAS L Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Price (High) 14.00 14.20 14.20 14.99 15.70 15.70 Price (Low) 12.80 14.20 14.20 12.93 15.00 14.95 Price (Closing) 14.00 14.20 14.20 14.93 15.70 15.10 Average daily volume 1.71 1.0 0.0 1.2 1.3 0.3 (thousands of shares) c) Market Maker The Company does not have market maker model. 71

6) PERSONS RESPONSIBLE FOR THE INFORMATION CONTAINED IN THE ANNUAL REPORT The persons indicated below presented to the CNBV and to the Stock Exchange the liability letters as part of the filing of this Annual Report wherein they state that they do not have knowledge that any material information has been omitted, distorted, or mistaken in this Report: Name Position Institution Gaston Azcarraga Andrade Chairman of the Board of Directors and Chief Executive Officer Grupo Posadas, S.A.B. de C.V. Ruben Camiro Vazquez Chief Financial Officer Grupo Posadas, S.A.B. de C.V. Olga Gutierrez Nevarez Director of Legal Affairs Grupo Posadas, S.A.B. de C.V. Fernando Loera Aguilar External Auditor Galaz, Yamazaki, Ruiz Urquiza, S.C. 72

We, the undersigned, declare under oath to tell the truth that within the scope of our duties, we prepared the information related to the issuer contained in this annual report, which to the best of our knowledge reasonably reflects its situation. Similarly, we state that we do not have knowledge that any relevant information has been omitted, falsified in this annual report, or that this report contains any information which may mislead investors. Gaston Azcarraga Andrade Chairman of the Board of Directors and Chief Executive Officer Ruben Camiro Vazquez Financial Executive Officer Olga Gutierrez Nevárez Director of Legal Affairs 73

The undersigned declares under oath to tell the truth that the consolidated financial statements of Grupo Posadas, S.A.B. de C.V. and its subsidiaries to December 31, 2009 and the year that ended on that date which are contained in the present annual report (See Attachment 7) were audited in compliance with Mexican generally accepted auditing norms. Likewise, the undersigned also states that, within the scope of the analysis carried out to audit the above-mentioned financial statements, he does not have knowledge that any relevant financial information has been omitted or falsified in this annual report or that it contains information that may mislead investors. June 30, 2010 Fernando Loera A. External Auditor Galaz, Yamazaki, Ruiz Urquiza, S.C. 74