Marriott International has reached an agreement with Hoteles City Express S.A.B. de C.V. to acquire the City Express brand portfolio, marking Marriott’s entry into the affordable midscale segment with its 31st brand.
The portfolio is currently comprised of 152 hotels, including 17,356 rooms across 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 Marriott’s franchise system. Marriott will also acquire the franchise rights to five under-construction projects in the pipeline, representing an additional 676 rooms and expects to update the brand name with its signature “by Marriott” endorsement.
Under the terms of the agreement, Marriott will pay $100 million for 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 $10 million for the existing portfolio.
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. Given the high-growth nature of the affordable midscale segment, the company sees a meaningful opportunity to further expand the City Express by Marriott brand in the CALA region, as well as in other locations.
“This transaction with Hoteles City Express is a strategic win for Marriott and our customers, associates and owners and franchisees,” said Anthony Capuano, CEO, Marriott International. “We’re excited to enter a new lodging category—the popular affordable midscale segment where we see significant potential. With City Express by Marriott, we will be providing our customers with more choice through a new, approachable, moderate-priced offering, increasing opportunity 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 brand portfolio provides customers with a range of midscale properties that include urban, suburban and extended-stay offerings in Mexico, Costa Rica, Colombia and Chile.
“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,” said Barrios, CEO, Hoteles City. “After our first 20 years, we are very excited and honored to work alongside Marriott, a company we’ve always admired, to take the brand to the next level. After having the opportunity to work with the Marriott team, we confirmed that we share common cultural values and a similar approach to hospitality.”
“Our goal is to be everywhere our guests want us to be, with the right property in the right location and at the right price point,” 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 CALA, with opportunity around the world.”
The closing of the transaction is subject to various customary conditions, including the approval by Comisión Federal de Competencia Económica (COFECE), Mexico’s Federal Economic Competition Commission. Marriott expects the transaction could close between the end of this year and the first half of 2023.