Monterrey, capital and largest city in the state of Nuevo Leon, is a hub for Mexican and international businesses in the steel, cement, glass, auto parts, brewing and other industries. With 1.3 million people, Monterrey is the third largest metropolitan area in Mexico and the second wealthiest.
Among the companies headquartered in Monterrey is Fibra Inns, a major real estate investment trust focusing on the hotel industry and business-oriented hotels in particular. The REIT owns 35 properties with 5,707 guestrooms and has two projects under development.
While the company has properties across Mexico, it has made significant investments in Monterrey. In 2014, the REIT purchased the 229-room Sheraton Ambassador Monterrey for $13.5 million. Also in 2014, Fibra Inn bought a 219-room Crowne Plaza Hotel at the Monterrey airport. The company paid about $20 million for the hotel and spent an additional $2 million on guestroom renovations.
In 2014, the REIT opened the 198-room Holiday Inn Monterrey Valle in the San Pedro Garza Garcia district and near several major national and international corporate offices. The hotel is the 10th property in the in the Monterrey area in InterContinental Hotels Group’s brand family.
Last month, Fibra broke ground on a $2.9-million, 48-room Fiesta Inn Lofts extended-stay hotel in the city’s La Fe neighborhood. The property, which opens in the third quarter of 2016, sits on the same parcel of land as the company’s Fiesta Inn.
Fibra Inn has shown strong performance at its four properties in Monterrey and the rest of its Mexican portfolio. During the third quarter, occupancy rose 2.7 percent to 60.6 percent, while average daily rate increased 13.3 percent and revenue per available room rose 16 percent.
Mexico’s beach resorts dominate the country’s hotel inventory. Quintana Roo, which includes Cancun, Playa del Carmen and Tulum, accounts for more than 15 percent of the country’s nearly 375,000 hotel rooms. By contrast, Nuevo Leon has just 2.6 percent of the total supply.
According to Lodging Econometrics, the construction pipeline in Monterrey comprises seven hotels with 862 rooms. Rooms under development represent 7.1 percent of the city’s total supply.
Three new properties with 350 rooms opened in 2015. Two more hotels open in 2016, one in 2017 and one more in 2018 and beyond.
In late 2014, Operadora Arpa opened the first La Quinta Inns & Suites in Monterrey. The 156-room property is in the city’s northern area near the University of Nuevo Leon.
In August, a joint venture between two local companies opened a 134-room Hilton Garden Inn at the Monterrey airport. Grupo Hotelero Santa Fe operates the property, which is the brand’s second unit in Nuevo Leon.
A broader look
At last spring’s MexHic 2015 conference, speakers from HVS said the Mexican economy is relatively healthy, despite its high dependence on oil and negative press associated with issues of security. This prosperity is reflected in the performance of the Mexican hotel industry, which in general has outperformed Brazil, China, India, Russia, Central America and the Caribbean.
In addition to several REITs such as Fibra Inn, the country’s hotel industry is attracting investor interest from institutional private equity funds and other sources. As a result, room supply in the country has increased by 60 percent since 2000.
Mexico has 179 hotels with 29,313 rooms in the development pipeline. That represents about 8 percent of the country’s current hotel inventory. While hotel development is evident throughout the country, Mexico City leads with 15 hotels and 1,969 rooms under development. Next are Puebla with 10 properties and 1,209 rooms and Guadalajara with nine hotels under development.
Pictured: In August, a joint venture between two local companies opened the second Hilton Garden Inn in Monterrey, a 134-room property near the airport.