Marriott International said on Wednesday it would buy the City Express hotel portfolio from Mexico-based Hoteles City Express for $100 million, as the hotel giant sought to push further into Latin America.
The deal includes 152 hotels across five brands, most prominently City Express, and will boost Marriott’s footprint in the Caribbean and Latin America by 45 percent — to 486 properties across brands.
“We’re excited to enter a new lodging category — the popular affordable midscale segment where we see significant potential,” said Anthony Capuano, CEO of Marriott International.
The deal could close between the end of 2022 and the first half of 2023.
All owned and leased hotels will sign long-term franchise agreements with Marriott, while franchise agreements for co-invested, franchised and operated properties will be assigned to Marriott, with the option to sign a new contract. Marriott estimated franchise fees at about $10 million.
Most of the portfolio is in Mexico, but some hotels are in Costa Rica, Colombia, and Chile.
“At around $6,000 per room, this is a decent price,” said analysts at Bernstein in a report. “This makes Marriott the clear number one in Latin America (overtaking Accor).”
The lodging giant said it saw an opportunity to expand the brand, first in Central America and then in Latin America and possibly worldwide. It plans to add the “by Marriott” tag to the City Express brand as an endorsement.
“However, Hilton and IHG created their Americas focussed mid scale brands (Tru and Avid) organically and were able to grow them rapidly with entirely 3rd party capital and entirely new builds (no conversions),” Bernstein said. “Some of Marriott’s acquired hotels will be 20 years old. The [City Express] pipeline is just 5% of current supply.”
It was a day of validation for Luis Barrios, who founded Hoteles City Express in 2002.