Marriott International (Nasdaq: MAR) announced today that it has entered into an agreement with Hoteles City Express, SAB de CV (BMV: HCITY) to acquire the prestigious portfolio of City Express brands, marking Marriott’s entry into the limited service segment with his 31st mark.
This portfolio is currently made up of 152 hotels, including 17,356 rooms in 75 cities in Mexico and three additional countries in Latin America. Upon closing of the transaction, the brand and hotel portfolio will become part of the Marriott franchise system. The company will also acquire franchise rights to five construction projects under development, representing an additional 676 rooms. Marriott looks forward to updating the brand name with its exclusive “by Marriott” endorsement.
Under the terms of this agreement, Marriott will pay $100 million for City Hotels’ portfolio of brands (City Express, City Express Plus, City Express Suites, City Express Junior and City Centro), associated brands, domains and intellectual property. as well as the City Premios loyalty program, and other assets and liabilities related to the brand. The franchise stabilization fee is anticipated to be approximately $10 million for the existing portfolio.
As the largest hotel company in the world, Marriott has a proven track record of growing regional brands by leveraging its global development engine, as well as its extensive earnings programs and systems, such as the award-winning Marriott Bonvoy loyalty platform and its innovative digital travel programs, including Marriott.com and the Marriott Bonvoy mobile app. This 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 percent to 486 properties in 37 countries. Given the high-growth nature of the limited service segment, the company sees a significant opportunity to further expand the City Express by Marriott brand in the CALA region,
“This transaction with City Express Hotels is a strategic victory for Marriott and our customers, associates, owners and franchisees,” said Anthony Capuano, CEO of Marriott International. “We are excited to enter a new category of accommodation – the popular limited service segment, where we see significant potential. With City Express by Marriott, we will provide our customers with more choice with a new, affordable and accessible offering, increasing opportunities for owners and franchisees, as well as associates.”
Hoteles City Express is a Mexico-based company founded in 2002 by Luis Barrios. The company’s portfolio of brands offers clients a range of affordable mid-scale properties including urban, escape and extended-stay offerings in Mexico, Costa Rica, Colombia and Chile. With exceptional brand recognition among travelers in the region, the brand has been awarded the prestigious designation of “Marca Notoria” in Mexico for its leadership in the hotel sector and strong brand recognition.
“When we started thinking about City Express, we were convinced that a modern, efficient and affordable brand would be very attractive to the local traveler. After our first 20 years, we are very excited and honored to work alongside Marriott, a company we have always admired, to take the brand to the next level,” said Luis Barrios, General Manager of Hoteles City. “After having the opportunity to work with the Marriott team, we confirmed that we share common cultural values and a very similar approach to hospitality.”
“Our goal is to be where our guests want us to be, with the right property in the right location at the right price,” said Brian King, President, Caribbean and Latin America, Marriott International. “This transaction with Hoteles City Express will expand our ability to do exactly that, initially in the CALA region, with opportunities around the world. We look forward to welcoming City Express customers and continuing the tradition of high-quality hotels and authentic hospitality established by Luis Barrios and his team.”
Closing of this transaction is subject to various customary closing conditions, including COFECE approval. Marriott expects the transaction to close between the end of 2022 and the first half of 2023.