Building Hotels is Only Half the Work

For any hotel developer, constructing the hotel is just half the work. The other half is ensuring the building’s profitability and in turn, the company’s growth, says Javier Arce, Chief Development Officer of hotel chain Hoteles City Express.

Arce believes there are two main factors that hinder growth. The first is land ownership and location, which plays an important role in a hotel’s profitability. The second and more difficult challenge is related to permits and regulations. “There are locations that encourage investment through the agile expedition of all needed permits but there are others where it has become more difficult. For instance, in Mexico City getting all the necessary permits can take up to six years.”

Profitability, he adds, starts with the building’s design. “Adding details increases costs, something that directly impacts the hotel’s rates and profitability. Every component of the building needs to be efficient, keeping maintenance expenses low.”

In only 15 years, the brand has evolved enough to cater to the needs and likes of business and pleasure tourists in 63 cities in Mexico and three Latin American countries, Costa Rica, Colombia and Chile, while also displaying a deep commitment to local communities and the environment.

Arce says proper growth planning and the hotel chain’s service offering have been factors for the brand’s quick development. “As a company focused on the business traveler, we wanted to grow along the most important business routes in the country. But there are certain business routes that coincide with pleasure tourism. In these cases, affordable rates, combined with our holistic service approach in terms of quality, have also made us a good option for these tourists,” says Arce.

Tourism companies often refer to the regions in which they establish operations as “routes,” which reflect the main industries that have impacted those areas.

The company’s bet on the growth of Mexican business routes started with the NAFTA route, which stretches along the country’s key highways leading to the US and used to transport imports and exports. This route paved the way for an automotive route in the Bajio region and an oil and gas route in the Mexican Gulf. The NAFTA route was later revamped with the opening of new hotels alongside the Pacific Coast that targeted the transportation of perishable goods between the US and Mexico.

“We want our clients to think that if they need to travel to any business city in Mexico they will surely find a City Express. Except to Guerrero and Morelos, we are in every state of the country. We operate 125 hotels and we are opening one almost every 6.4 weeks. This makes us the hotel chain with the strongest growth in Mexico and Latin America,” he says.

One particular aspect of the company’s business model stands out: sustainability. The company’s commitment extends beyond the environment to touch upon preservation of culture and traditions as well as active involvement with local communities. Its Biosphere Responsible Tourism Certification for the entire hotel chain is the proof, Arce says. “We have several LEED certifications as well as Excellence in Design for Greater Efficiencies (EDGE) certification, but Biosphere Responsible Tourism is the only certification that is aimed exclusively at the tourism sector. City Express is the only hotel chain that is in the process of certifying all its sites.”

Armed with rapid expansion and its inclusion in the BMV Sustainability Index, Arce is confident of City Express’ future, even with political uncertainty pouring in from north of the border. “With or without NAFTA, the US market will not disappear. Our business community needs to diversify and the creation of the new Special Economic Zones (ZEE) will boost the development of places such as Lazaro Cardenas, Manzanillo, Salina Cruz, Coatzacoalcos and Tuxpan.”

For the time being, City Express continues betting on Mexico, and on its automotive route in particularly, thanks to the establishment of Japanese and German companies in the zone. “We are a 100 percent Mexican company, founded and operated by Mexicans. We believe in the country and we will continue moving forward with Mexico. We are deeply committed,” Arce says.