Marriott International has acquired its 31st brand – the 152-hotel (17,356 rooms ) midscale City Express brand from Mexico’s Hoteles City Express, S.A.B. de C.V. for US$100 million, giving the global giant another franchise brand and broader exposure in Mexico and three additional Latin American countries.
Marriott will also acquire the franchise rights to five under-construction projects in the pipeline, representing an additional 676 rooms. It also expects to adapt the brand name to City Express by Marriott.
Marriott is acquiring Hoteles City’s brand portfolio (City Express, City Express Plus, City Express Suites, City Express Junior, and City Centro), associated trademarks, domains and related intellectual property, the City Premios loyalty program, and other assets and liabilities related to the brand. Stabilized franchise fees are anticipated to be approximately US$10 million for the existing portfolio.
“For Marriott, increasing scale and distribution (i.e., more dots on the map) and adding chain scale diversification are motivating factors,” wrote R.W. Baird analyst Michael Bellisaro. “City Express expects to deleverage its balance sheet, achieve cost efficiencies, grow revenues (i.e., new markets and new customer segments), and benefit from Marriott’s economies of scale. Together, the two sides initially will focus on growing the brand in the Caribbean and Latin America (how much new build versus conversion growth?) as well as growing other Marriott select-service brands in the region.”
Hoteles City Express is a Mexico-based company founded in 2002 by Luis Barrios. The company’s brand portfolio includes mid-scale urban, suburban, and extended-stay offerings across 75 cities in Mexico, as well as in Costa Rica, Colombia, and Chile.
The transaction is expected to make Marriott the largest hotel company in the Caribbean and Latin America (“CALA”), increasing its presence in the region by 45%, to 486 properties across 37 countries.
“This transaction with Hoteles City Express is a strategic win for Marriott and our customers, associates and owners and franchisees,” said Anthony Capuano, Chief Executive Officer, Marriott International.