Foreign Investment in Mexico’s Hotel Real Estate Booms with a Ten-time Multiple

Foreign investment in Mexico’s hotel real estate has boomed to achieve a 10-
time multiple since 2000, as reported in a joint research initiative between
Jones Lang LaSalle Hotels and Mexico’s National Trust for Tourism Development
(FONATUR). The total amount of foreign investment in Mexico totaled $640
million in 2006, representing an annual compound growth rate of 135%. This
influx has transformed the hotel market into a more transparent and liquid
investment environment, propelling further outside investment.

Spanish and American investors have dominated this level of foreign investment
– totaling 99% over the last six years; with Spanish investors at 65% ($1.2
billion), and American investors at 34% ($609 million) between 2000 and 2006. U.
S. investors that have made significant investments in Mexico include Strategic
Hotel Capital, Host Hotels and Resorts, Orient Express Hotels and Ty Warner.

Over the last six years, Cancun and the Riviera Maya have attracted the
greatest amount of foreign capital, which together captured $1 billion in
investment, or 57% of the total in Mexico. OHL, the Spanish construction giant,
for example, has made an investment of over $375 million in the development of
Mayakoba, set to become a landmark luxury master-planned community in the
Riviera Maya. Los Cabos was the second most popular destination for foreign
capital, taking in $206 million in investment, or 11% of the total. While Los
Cabos is a more active market than this indicates, local Mexican developers and
investors dominate much of this investment.

“The recent surge of foreign investment in Mexico’s lodging industry continues
to be driven by a welcoming business climate, substantial infrastructure
development, growing transparency, economic and political stability, improving
credit ratings, and a global capital market that is awash in liquidity,” said
Miguel Rivera, a senior vice president with Jones Lang LaSalle Hotels.

Jones Lang LaSalle Hotels estimates that foreign investment will be
considerably stronger over the next several years, doubling the three year
average attained between 2004 and 2006, to achieve an average of $900 million
per year by 2009.

“Most of this growth is forecast to be driven by strong foreign capital inflow
in 2008 and 2009. In 2007, foreign investment is anticipated to reach a volume
slightly higher than that of 2006, ranging between $650 and $700 million,” said
Kristina Paider, senior vice president of research and marketing for Jones Lang
LaSalle Hotels.

To receive a copy of Jones Lang LaSalle Hotels’ full research report, Focus On:
Foreign Investment in Mexico, visit the research area of www.
joneslanglasallehotels.com or www.jllhss.com