Guadalajara, Mexico, thrives as a hotel destination

The second largest metropolitan area in Mexico after Mexico City, Guadalajara is known as an industrial center, the capital of the thriving state of Jalisco in the Bajio region of Western Mexico and, last but not least, as a popular retirement destination for Americans and Canadians. Culturally, Guadalajara and all of Jalisco are famous as the home of such well-known Mexican traditions as mariachi, ranchera music and, yes, tequila.

With all this in its favor, it stands to reason that Guadalajara should be a growing hotel destination.

According to Lodging Econometrics, Guadalajara’s current hotel inventory includes 128 hotels, accounting for 14,383 rooms, with four more properties (and another 685 rooms) currently under construction. Another two hotels (306 more rooms) are expected to start construction in the next 12 months with yet another two (212 rooms) in the early planning stages.

Lodging Econometrics’ forecast for the market through 2017 and beyond is equally promising with two hotels due to open later this year, two more in 2016 and another four in 2017 and beyond.

Major brands in the market

Hilton, Westin, InterContinental and Wyndham are among the major global brands represented in the market as is Mallorca, Spain-based RIU Hotels & Resorts and Mexico’s own Fiesta Americana. Small local chains have a place in the market as well, the Hotel Portonovo Plaza being an example.

The InterContinental brand’s parent, IHG, has an especially significant amount of inventory in the market with a Crowne Plaza, Holiday Inn, Holiday Inn Select, Staybridge Suites and four Holiday Inn Express hotels operating in Guadalajara and its various sub-markets.

As in other Mexican markets, the Monterrey-based FibraHotel lodging real estate investment trust has been active building distribution in Guadalajara, most recently acquiring the 186-room limited-service Mexico Plaza Guadalajara Andares Hotel eight months ago for183 million pesos ($11.14 million USD). FibraHotel, which has 42 hotels in its overall portfolio, subsequently converted the hotel, which is located near the upscale Andares shopping mall, to a Wyndham Garden.

FibraHotel’s growing presence

FibraHotel has targeted Guadalajara previously, two years ago acquiring the Best Western Hotel Plaza Genova Guadalajara and one of the destination’s four Holiday Inn Express properties, the Holiday Inn Express UAG, located in the city’s Autonoma Universidad sub-market.

Not surprisingly, FibraHotel has franchise agreements in place with IHG to operate five brands and with Wyndham Hotel Group to operate two (Microtel Inn & Suites in addition to Wyndham Garden). In addition, it has licensing agreements with Hilton Worldwide and Starwood Hotels & Resorts Worldwide to operate specific brands. Also it’s no coincidence that each of the companies operates a well-known frequent guest program.

In making its most recent acquisition, the FibraHotel team outlined five reasons the deal made sense. First and foremost was the destination itself: Guadalajara’s position as the leading city of Western Mexico and the fact that in recent years the local economy has made some of the strongest gains of any market in the country.

Next up was the range of demand generators. On the business travel side, Guadalajara is home to numerous companies that go beyond its traditional manufacturing base to include start-up technology and electronics firms. The metropolitan Guadalajara area is ranked high on the list of Mexican cities attracting foreign investment.

Leisure travel demand generators may take a backseat to business travel, but the proximity to the hotel of the 7-year-old Andares Mall attracts large numbers of visitors. TripAdvisor ranks the mall as the city’s second most popular attraction out of 22.

The group market factors into the equation as well. The hotel is in close proximity to the Expo Guadalajara, the city’s convention center. Lastly is the matter of synergy. As FibraHotel expands in the destination, each acquisition allows it to increase its market share, while saving due to economies of scale.


Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.