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FibraHotel Poised To Benefit from Growing Investor Interest in Mexico as a Destination


Apr 13, 2023
Mexico City-based real estate investment trust FibraHotel owns the Live Aqua San Miguel de Allende in the central Mexican state of Guanajuato. (FibraHotel)

MEXICO CITY — FibraHotel Chief Investment Officer Guillermo Bravo said now is a great time to be investing in Mexico’s hotel industry.

As a leader of one of the country’s two hotel-focused real estate investment trusts — called FIBRAs — Bravo said the stars are aligning for an all-time great period of growth across the country, with continued strong leisure demand and a dramatic boost in business travel spurred on by the country’s burgeoning manufacturing sector.

“It’s a great day,” he said. “It’s a great place to be.”

Bravo said 2022 was a record year for profitability at his company, due to the combination of surging leisure demand, particularly in the country’s resort markets, along with cost containment lessons learned during the depths of the COVID-19 pandemic.

He said he expects a similar spike in business travel as more companies look to “nearshore” their supply chain and move manufacturing from Asian countries to Mexico, and thus the country’s hospitality industry will continue to have “positive dynamics going forward.”

Guillermo Bravo is chief investment officer at Mexico-based FibraHotel. (FibraHotel)

As of March, FibraHotel had a portfolio of 86 hotels with 12,558 rooms, recording occupancy of 59.9% in 2022 with average daily rate of 1,325 Mexican pesos ($73.33) and revenue per available room of 794 pesos ($43.94).

Bravo said his company is looking to invest in ways that capitalize on both leisure and business demand.

“What we’re looking at is investing in beach [destinations] in Mexico … Los Cabos all the way up to La Paz, Riviera Nayarit from Vallarta all the way to north of Punta de Mita and more in Cancun,” he said. “But we’re seeing opportunities in the cities, where it’s been difficult to get financing, which has keep supply low. I think that has brought discipline to the market, and there’s been interesting trends with nearshoring and with investment coming to Mexico.”

About two-thirds of the company’s hotels are business oriented, he said, with the remaining third more focused on leisure travel. His goal is to get that closer to a 50-50 split.

Bravo said the overall strength of Mexico’s hotel industry has driven more interest in investing in FIBRAs among large-scale international investment groups, which has been a major hurdle for years. He pointed to Marriott International’s pending $100 million acquisition of Mexican hotel brand City Express as a sign of growing international interest in Mexico.

He said as more investors grow comfortable with Mexico as a destination for their capital, his company should be the natural beneficiary of that.

“Our thesis is that if you want to invest in lodging in Mexico, we should be the top platform where you can invest and can have a diversified, well-managed portfolio,” he said.

He said to take that investor interest to the next level, companies like his will have to continue to grow more sophisticated in terms of environmental, social and governance efforts, which has been a large focus for FibraHotel.

He said financing has been hard to come by in Mexico recently, but it remains available for the right projects from the right sponsor, which has made investment in the country’s hotel industry more thoughtful and sophisticated.

“It’s providing some discipline to what projects can be done, and they’re taking more of a look into the underlying asset and the business,” he said. “But again, if you have the thesis, there’s still money in the market. You just have to think the right way and get the right returns and make sure everything works out.”

Bravo said in addition to having a diversified portfolio, his company is chasing excellence on the operational side, and he said a bigger component of that is finding new and better ways to take care of employees so more are seeking careers in hospitality — which he believes remains a big medium- to long-term hurdle the industry must clear.

“Nobody treats their employees the way they should,” he said. “There’s always opportunities to be better. We try to do better things, but the reality is it’s not only us but the independent hotels.”

He said in Mexico “it’s still a very attractive career path,” but companies and leaders must continue to strive to provide better opportunities.

“We have to be better at providing them better salaries, better benefits, better everything,” he said.

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