“There’s an emerging middle class, the economy is getting stronger and there typically are local investors with the resources to finance these projects, which are exclusively franchises,” said Phil Cordell, Hilton Worldwide’s global head for focused service and Hampton By Hilton brand management.
“The midmarket brands’ value proposition is a good fit for destinations like these,” Cordell said. “It’s a strategy we’ve pursued in other emerging parts of the world, including Eastern Europe.”
Accordingly, Hampton made its debut in Mexico City with the Hampton Inn & Suites Mexico City – Centro Historico in 2009. Hampton has other hotels in Mexico in Saltillo, Monterrey and Guadalajara, among other cities, with more in the pipeline.
In fact, Hilton Worldwide’s development pipeline in Mexico is the largest of any hotel franchise company, according to data provided by Lodging Econometrics. Hilton has 26 properties on the drawing board for Mexico, 17 of which are slated to be Hamptons. But the Mexico City property was still a milestone, considering it is the country’s capital and most visible market.
For local consumers not familiar with the Hampton name, the “by Hilton” sub-brand is important because it reminds them of the more prominent full-service Hilton properties already in the market.
Spotlight on Mexico City
HVS Mexico estimates that 32 percent of Mexico City’s hotels are internationally branded, 25 percent carry regional or national brands and the remainder are unbranded independents. Among the leading regional/national players are Grupo Posadas, Grupo Real Turismo and Hoteles City. Hoteles City, for example, has 100 hotels, divided among four limited-service brands, mostly in Mexico with modest distribution in Costa Rica and Colombia. Eight of the 100 are in Mexico City.
Analysts report that in 2014 Mexico City hotel occupancy stood at 66.8 percent, a 4.7-percent increase over the previous year. Average daily rate slipped slightly, 1.2 percent, while revenue per available room rose 3.4 percent. Within Mexico, Mexico City’s occupancy rate led the country with the exception of the Yucatan Peninsula, where occupancy stood moderately higher at 68.2 percent, an 8.1 jump over the previous year. The Yucatan led the field on ADR and RevPAR as well.
Regionally, Mexico City’s occupancy beat Sao Paulo; Buenos Aires, Argentina; Bogota, Colombia; and Panama City, but trailed Rio de Janeiro and Lima, Peru. Rio led on ADR, followed by Lima and Sao Paulo.
Like other major gateways, Mexico City is comprised of distinct submarkets, including the Zona Rosa, Reforma, Polanco, the Centro Historico (home of the Hampton) and even the Benito Juarez International Airport. Each has its own profile and demand generators.
Lodging Econometrics expects three hotel openings in Mexico City (accounting for 355 rooms) this year, followed by five more openings (724 rooms) in 2016 and an additional three (577 rooms) in 2017 and beyond.
In 2013, Marriott International entered into a groundbreaking development partnership with FibraHotel, Mexico’s first and largest publicly traded real estate investment trust. The deal calls for FibraHotel to develop, build and own 20 Marriott-branded hotels by 2016. Three of the 20 are to be branded Fairfield Inn by Marriott, one of Marriott’s limited-service brands. One Fairfield will be in Mexico City. FibraHotel currently has 42 business-class properties in its portfolio.
Like Hilton, the Marriott name was already established in Mexico City, thanks to the luxury J.W. Marriott property in the Polanco district, a core full-service Marriott in the Reforma neighborhood and a Courtyard by Marriott near the airport. As with the Hampton by Hilton sub-branding, reinforcing the Fairfield-Marriott connection helps build credibility for the Fairfield brand in the market.