Expansion Beyond Business Destinations

Q: Hoteles City Express is generally associated with business tourism. What opportunities do you see in other niches?

A: Hoteles City Express targets all types of tourism at the same time. It started with a focus on business travel because we saw an opportunity in this niche. When we founded the company in early 2000, we bet on NAFTA, believing the treaty would generate industrial and commercial activity that would have an impact on different regions of the country. We were not wrong. The treaty generated investment and employment and became a significant currency generator, which meant an increase in employment, better wages, more consumption and, therefore, social improvements.
We expected economic growth in different regions, particularly in all the commercial, business and investment routes that would be impacted by NAFTA. However, due to the natural evolution of markets, these routes also generated greater demand in different niches such as pleasure, business, religious, group and medical tourism. None of these niches provide economic viability per se; what makes them profitable is their combination. In this sense, Hoteles City Express is immersed in all these areas but despite our diversification, the business niche remains our main segment. 

Q: One of the main features of Hoteles City Express is its ability to build hotels quickly. How do you mitigate associated risks?

A: Hoteles City Express owes its current position to its people. In addition, we have defined a precise strategy focused on a specific segment of the Mexican market. We analyze destinations and their expected growth. If we conclude the city is bound to experience economic expansion, then having a City hotel in that city becomes a must.
This vision has allowed us to maintain our growth rate, thanks also in part to the fact that we pay attention to the necessities, which means having a very robust and focused team with experience and many capabilities. The second element that allowed this growth was to have a team of investors that embraced the project. Another contributor to our success is the market opportunity for a product like Hoteles City Express.

Q: How has Hoteles City Express attracted the support of institutional investors for the development of its hotels?

A: Fortunately, Hoteles City Express’ growth has never been hindered by lack of capital. We have been able to convince investors thanks to the viability of the project and the expected economic returns. Investors have a very clear formula: risk and return; the greater the risk, the greater the economic return. 
In the beginning, the only thing investors had was trust in us and in our project. When Hoteles City Express became a public company, we had been operating for 11 years with proven results, so the market trusted us and decided to invest. Before that, between 2002 and 2009, we held four capital-raising rounds. 

Q: Where does Hoteles City Express plan to focus its growth strategy in the coming years, in addition to the previous focus on business routes?

A: More than the routes themselves, we focused on the opportunities these locations offered. Today, we have hotels in 30 states and in 70 cities. We are in three cities in Colombia and are present in Costa Rica. We will continue expanding where we see growth potential, either in the cities we are already in or in those where we do not have presence. 
We need to be aware of where investment will catalyze regional growth. For instance, the newly named strategic economic zones are a good starting point for the future. The hotel sector is part of the development of the national infrastructure. You cannot make a Nissan plant in Aguascalientes without having hotels in the region. For these types of projects to be successful you need hotel rooms, as well as highways and airports. It is infrastructure. We will be where we detect an increase in growth and investment.