We are a Mexico-based company founded in 2002 by Mr Luis Barrios (Former CEO & CFO of Grupo POSADAS). We own, operate and franchise hotels. Hoteles City Express activities are divided into two business segments: Hotel operations and Administration. The Hotel operations division includes management and rental of own hotels, as well as brand franchising. The Administration division provides administration services for hotel owners. We operate over 150 hotels under various hotel formats and several brand names, such as City Express (our flagship brand), City Express Plus ( our high-end brand), City Express Suites (our Extended Stat brand), City Express Junior (our Budget Segment brand) and City Centro (Leisure brand). We are focused on Mexico and we have presence in Colombia, Chile, and Costa Rica.
From Idea to Execution
Our Marketing and Communication Strategy Ensures that we Remain Relevant in Every Step of the Traveler Journey
Solid business idea coupled with an opportunity to attack a neglected and fragmented market (located at the broadest part of the population pyramid)
The vertical integration from development up until operation and administration allows us to have the most solid distribution within our market niche, keep our portfolio updated, and offer a high quality service
Team with extensive experience in the real estate and hotel sector
Strong sustainability and corporate governance practices
Independent decision committees, policies, and manuals effectively implemented (10 out of 11 directors are independent)
Practices aligned to protect minority interests
97% of the total shares float on the market. The company was practically born as a public enterprise
Our sustainability strategy considers three main pillars: i) conservation of the environment, ii) creation of economic value, and iii) contribution to social well-being
Actions of each of the Impacto City’s pillars are carried out in accordance with the United Nations Sustainable Development Goals.
Access to capital markets and support from institutions that encouraged the continued growth of the company.
Morgan Stanley Real Estate Fund (US $ 50mm) - 2007
IFC (US $ 70 mm) - 2009
IPO (US $ 125 mm) - 2013
Follow On (US $ 125mm) – 2014
What Differentiates Hotels City Express from the rest?
Unparallel brand recognition as the leading bang for your buck hotel chain for the national traveler in Mexico
Strong Integration of our Operations and Marketing, which allows us to have a clear look at consumer behavior, quick response to their needs, faster communication, and coordination with our distribution network, leading to top quality properties and high-quality service given our single manager structure
Rapid and efficient deployment of capital into new projects (without depending on funding from third parties), supported by our market intelligence and IT areas, as well as by our innovative and disruptive technology platforms and low development cost capabilities
Proprietary technology allows us to have a faster reaction to market dynamics at a lower cost, resulting in a more flexible and efficient operation
Deep knowledge of the Mexican market and our target customer
Wide distribution capacity and geographic coverage through several company-owned channels which reduces the payment of third-party fees
“Cultura City” is based on a thorough planning discipline based on 9 basic principles, a flat organizational matrix, and personnel empowerment
Quick reaction capacity through our advertising budget, which is aligned with the day-to-day needs for each of our hotels and the company
Industry consolidation opportunities. Mexico’s hospitality industry is not very institutional and highly fragmented
75% of the total rooms are independent and 25% correspond to hotel chains
Market is highly dependent on OTAs (fee payments for around 30% of the rate)
Independent hotels do not have distribution channels
Inefficiency in terms of Real Estate (Difficulty for hotel Reits to buy this type of assets)
The primary guest of Hoteles City Express is the business traveler (Road Warrior) who seeks affordable accommodations with a main focus on distribution supervision, supply chains, plant operations, warehousing, among others. About 90% of travelers are domestic and mainly land-based.
With the current structure, the Company estimates that it has the capacity to operate up to 220 hotels. The main growth strategy for Hoteles City Express is to continue scaling its integrated business platform, focusing on the construction of new hotels throughout Mexico once the economy reaches a stabilization stage. Currently, only three of the hotel chains operating in Mexico, including only one international chain, have more than 100 hotels. The growth potential of the Company and the fragmentation of the current hotel network offer significant opportunities in terms of market share and organic growth to operators with recognized products, quality brands and nationwide presence, such as the Company.
The Company seeks to maximize productivity and achieve economies of scale in its operations, from the staffing of its hotels to its supply processes, thus creating an efficient operating structure in costs and expenses that, in its opinion, has contributed to its high profitability, as evidenced by its EBITDA margin of approximately 31% as well as the average ROIC rate of over 12% for a stabilized hotel (excluding the year 2020, where the company faced different challenges derived from the COVID-19 pandemic).
Over the past 17 years, the flexibility and cost efficiency of the Company's operating structure, combined with its systematic, disciplined and agile development and vertical integration platform, has allowed it to open an average of one hotel every 5.9 weeks and to obtain an average ROIC of over 12% for its established owned and co-invested hotels in a typical year.
Thanks to the technological tools with which the Company operates its hotels, along with the high efficiency of each of the properties, the Company can operate a hotel with an average of .20 employees per room, which is well below the hotel industry average. On the other hand, the modular design and construction of each of the different hotels translates into an average cost per key of $1,200,000 M.N.
Hoteles City Express also has a strict program and guidelines when implementing remodeling of pre-existing properties, as well as to carry out maintenance improvements that are required at its properties. The Company has a Capex reserve of 4.5% of revenues for major maintenance and 4.5% of revenues for minor maintenance. Refurbishments are performed on average every 10 years. The determination of candidate hotels to be remodeled is done annually and the hotels are analyzed according to: age of the hotel, accumulated occupancy level, total capital and maintenance expenditures incurred, as well as the brand standard of each property.
City Express Hotels, through its Impacto City platform, contemplates a sustainable model based on 3 strategic pillars: 1) Environmental conservation, 2) Economic value and 3) Social welfare. This reflects its essence, values and philosophy. All of the company's hotels have been built and operate under international standards such as EDGE, LEED, Biosphere Responsible Tourism Certification, Safehotels Covid Clean, among others. In addition to working in compliance with the Sustainable Development Goals of the United Nations (UN), we report under the Global Reporting Initiative (GRI) standards and under the Sustainability Accounting Standards Board (SASB) methodology. For more information visit the sustainability page: https://www.cityexpress.com/sostenibilidad.
The Company receives more than 80% of its reservations through its own channels, which significantly reduces payments/commissions to third parties, increasing the Company's profitability. There are four main channels through which the Company receives reservations: (i) direct sales to customers, including through the 24-hour City Express telephone reservation center, its website, social networks, applications for mobile devices and from guests who arrive at the hotels without having made a reservation; (ii) independent agents, including travel agents, internet portals (Online Travel Agencies), travel consortiums and globalizers (Global Distribution Systems), and digital hotel distribution platforms; (iii) corporate accounts through which companies commit a high volume of hotel nights per year in exchange for a negotiated daily rate; and (iv) commercial alliances, including, for example, with airlines such as Aeromexico, Aeromar, Volaris and Avianca-Taca, through which guests can simultaneously book their flights and hotel nights.
During 2018, Hoteles City Express planned to carry out a transaction to place a portion of its Real Estate Assets in the market through a hotel FIBRA. However, the transaction was affected by the macroeconomic environment and as of today the vehicle is ready to be launched once market conditions permit. This transaction continues to be a strategic operation for the company and will be fundamental to reduce the company's leverage. The purpose of the transaction (in addition to what has already been mentioned) is to align the objectives of the investors with the return profile of the vehicles resulting from the operation, as well as to add transparency to the sources of value that the process of development, stabilization and hotel management bring to the invested capital.