• Thu. Jun 20th, 2024

Marriott Primed To Expand City Express in South America


Apr 14, 2023
Marriott's acquisition of City Express Hotels is nearly complete, and the company plans to expand the brand across Latin America. Shown is the City Express Plus Guadalajara Providencia in Mexico. (City Express)


CARTAGENA, Colombia — Marriott International is poised to start expanding the City Express brand as soon as final regulatory conditions are met.
The $100 million deal inked in October to acquire the Mexico-based City Express brand portfolio from Hoteles City Express significantly expanded Marriott’s footprint in the Caribbean and Latin America, and that’s just the first step for expansion in the region, said Bojan Kumer, regional vice president of hotel development for Marriott.

“In Mexico, currently there are about 150 City Express hotels and there’s plenty of opportunity there, but the main market for us with City Express will be South America,” led by Brazil, he said.

“When you consider what Accor has accomplished with Ibis in Brazil, it’s astonishing. This is definitely a market we’re going after,” Kumer said.

Beyond Brazil, Marriott is targeting further City Express expansion in Argentina, Colombia, Peru and Chile, as well as in small countries such as Bolivia and Paraguay.

Conversion will be the primary growth model, especially in Brazil, both from hotels with existing contracts that are expiring and conversions from independent hotels.

The Hoteles City Express’ brand portfolio at the time of the acquisition announcement included 17,356 rooms across 75 cities in Mexico and three other Latin American countries. As part of the deal, Marriott will also acquire the franchising rights to five projects with 676 rooms in the pipeline that are currently under construction.

The deal is for the City Express, City Express Plus, City Express Suites, City Express Junior and City Centro brands — and does not include any real estate. Marriott intends to update the brands with its signature “by Marriott” endorsement. The deal also includes the City Premios loyalty program.

Kumer said many in the region refer to City Express’ brands as “budget,” but the company considers the collection as midscale. He said the different sub-brands under City Express will offer a variety of options, but most growth will come from the core City Express brand in major cities. Secondary or tertiary cities likely could support the City Express Junior brand, which he called “more of a budget brand.”

Kumer also shared details about Apartments by Marriott Bonvoy, which the company launched in November as upper-upscale/luxury apartment-style hotels designed for long business trips and vacation stays.

The brand is the first apartment brand from Marriott in the U.S. and Canada, but Marriott Executive Apartments have been in Latin America, Asia, Europe, the Middle East and Africa for years.

“There’s been so much demand for branded residences,” Kumer said. “People are looking for more space, larger accommodations and longer stays — maybe doing business and meetings on Thursday and Friday, then bringing the family.”

The trend is prevalent across the Caribbean and Mexico as well, Kumer said.

As this type of blended travel demand grew, Marriott recognized even higher demand for the type of larger suite-style accommodations that branded residences offer, Kumer said. The company also realized guests would pay premiums for those apartments when owners offered them as part of the hotel inventory.

“We looked at the bookings and realized we didn’t have enough suite product, because the branded residences would go first, doing better than the typical hotel rooms,” he said. “We started thinking about how we could launch a product that would be more like an apartment.”

Apartments by Marriott Bonvoy operates on what Kumer calls “a hotel business model.”

“It runs as a hotel, however it doesn’t offer [food and beverage], so it’s very lean in terms of operations,” he said. “There’s check-in; there’s a housekeeping department.”

Buildings are owned and run like hotels, not in the individual unit ownership model of a residence or condominium, though the model could take different forms, especially in South America, where owners face different financing challenges. In that case, Kumer said, a developer might develop a building and own 100 apartments branded as Apartments by Marriott Bonvoy, then sell additional apartment units that the owners then put into the Apartments rental program.

Cities and even some resort destinations are Marriott’s targets in Latin America for the Apartments brand, Kumer said. The deals make sense for investors in a region where structuring deals is a little more complicated and developing multiunit apartment-style projects might provide a more stable exit down the road.

Kumer said Marriott has fielded a lot of interest in the Apartments product in the Caribbean, particularly in Dominican Republic and Puerto Rico. He said Brazil and Mexico likely will be development targets as well.

Marriott’s approach to meeting demand for all-inclusive resorts in the Caribbean and Mexico has been to add an inclusive element to its existing brands, “trying to keep the spirit of what the brand is like in its European-plan form and then expanding it for all-inclusive,” Kumer said.

The company has expanded its Westin brand into several all-inclusive resorts, and inked a deal last fall for a new-construction W All-Inclusive Punta Cana in Uvero Alto, Dominican Republic.

Under its All-Inclusive by Marriott Bonvoy, Marriott has 31 all-inclusive resorts open now, several of which are a product of the company’s 2019 acquisition of Elegant Hotels Group and its agreement with Sunwing Travel Group’s Blue Diamond Resorts.

Overall, Kumer said Marriott’s intentions with all-inclusive resorts are to stick to higher-end properties.

“When we started studying the market, we definitely saw that entering with upper-upscale and luxury was the way to go, rather than competing with the value proposition that’s been here for decades in the Caribbean,” he said. “People know what to expect when they see Ritz-Carlton or W.”

While high-end all-inclusive is relatively new to Latin America, Kumer said the concept is successful and earns a lot of demand. The next iteration will be “going even smaller and more exclusive, more luxurious,” he said, citing how the company is adapting its Ritz-Carlton brand to all inclusive.

“Think especially of North American travelers, who have two to three weeks of vacation. They want to stay with familiar brands but they also want the luxury experience and a hassle-free experience,” he said.

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