Luis Barrios, CEO of Hoteles City Express, explains that the company plans to open 400 to 800 new rooms next year according to demand, when in years like 2018 it reached more than 1,500.
“The moment the [caída en la] demand in general becomes catastrophic, it made no sense to continue growing ”, explains the manager to Expansion. “Less at a time when you were not going to generate cash flow, because sales were going to practically go to zero. The first thing you had to see is how do I survive. That was the goal ”.
During the pandemic, the company opened four complexes in markets such as Sonora and San Luis Potosí. So far, the development plan includes reaching 163 hotels –that is, 10 more than it currently has– in an indefinite period, in Jalisco –where four new complexes are contemplated–, Yucatán, Quintana Roo and Mexico City. .
The importance of maintaining rates
To maintain the generation of resources, Hoteles City Express has put some assets up for sale, such as three plots of land that represent approximately 100 million pesos (mp), and recently carried out a capital increase for 290 million pesos. However, to recover and continue with a profitable operation, Barrios believes that maintaining rates has also been key.
“You can stimulate demand if you lower the price, but it was not our philosophy,” he explains. “We kept it because the product is worth it, and because we assume that whoever travels during these processes is because they have to,” he says.
Although from 2019 to 2020 the average daily rate (or ADR, for its acronym in English) decreased by 4%, at the end of the third quarter of this year it was already 7% above the end of 2019, reaching 1,044 pesos.
It has contributed to this that the chain began to focus more and more on the leisure segment, says the manager, because before the pandemic this unit represented around 15% of its guests and, in the absence of the business travel segment – which concentrated the rest – it reached 30%.
Although corporate travel could still take time to return to pre-pandemic levels – some experts estimate that it will take at least until 2023, and even longer – the manager was optimistic that other segments could fill that gap.
However, there are factors that could influence this dynamism, such as the lack of a tourism promotion that, despite falling on companies, is not enough to fill gaps like the one left by the Council for Tourism Promotion of Mexico (CPTM).
“There has been no support, everything has fallen to private initiative and to the luck that the other countries closed throughout this time of pandemic. So, for the United States market, we were the best option, ”says Barrios. “Right now it is coming uncovered from the other countries, the competition for North American tourists is back again and we are going to see how the market is reshaped. We do it with our own resources but we do not reach those amounts ”, he adds, referring to the CPTM.