Corporate Presentation Hoteles City Express April 2019 1
Agenda Mexico’s Hospitality Market Update Hoteles City Express Today Expansion, Financial and Operating Results Fibra STAY Portfolio 2
Mexico’s Hospitality Market Update 3
Tourism Contributes with 9% of Mexico’s GDP Tourism GDP and Total GDP Historical Evolution Annual Growth (%) Total GDP Tourism GDP 5.3 5.2 4.0 3.9 3.9 3.8 3.3 3.3 3.2 3.3 3.0 2.7 2.7 2.5 2.3 2.1 2.1 2.0 1.2 1.2 1.1 1.1 1.0 0.6 -3.1 -6.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Tourism Expenditure as Percentage of Total GDP % of Total GDP 8.7% 8.6% 8.6% 8.6% 8.5% 8.5% 8.5% 8.5% 8.4% 8.4% 8.4% 8.3% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 4 Source: Elaboration and seasonality adjustments by Banco de México with respect to data from the Tourism Ministry of the Federal Government and Airports and Auxiliary Services.
Tourism Strength Derived From Both Domestic Momentum and International Visitors International Tourist Arrivals and Currency Surplus 39.3 41.0 24.0 35.1 22.0 36.0 31.2 20.0 28.6 31.0 18.0 26 16.0 26.0 21.6 20.7 20.8 20.8 20.5 14.0 19.9 19.3 21.0 12.0 16.0 10.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2015 2016 2017 Tourists (Millions of Visitors) (left) Currency Received (USD Billion) (right) Tourism Expenditure by Origin Hotel Occupancy Index Base 2008 (2008 = 100) 2017 160 North Center North International Tourists Center 13% 140 Domestic Tourism +8.9% 120 87% 100 80 60 2008 2009 2010 2011 2012 2013 2014 2015 2016 5
Hospitality Industry with Consolidation Opportunities Due to Fragmentation Breakdown of Independent and Chained Hotels Hotel Rooms per Thousand Inhabitants 2017 (% of Rooms) Independent Chained 16 12 12 100 100 100 11 9 19 25 8 7 7 66 6 4 4 82 75 3 3 3 34 USA Canada Spain Australia New Zealand UK Germany France Italy Puerto Rico Costa Rica Turkey Thailand México United States Brasil Mexico Hotel Rooms in Mexico by Number of Stars Hotel Supply Growth Thousand rooms 5 Stars 2 to 4 Stars 1 Star or less 2017 Mainly independent., family operated, non- standardized hotels subject to substitution 199,438 199,335 +2.5% 758 737 716 692 158,613 672 661 651 638 624 136,537 75,212 2009 2010 2011 2012 2013 2014 2015 2016 2017 5 Stars 4 Stars 3 Stars 2 Stars Others 48% of Total Rooms in Mexico Source: INEGI, Ministry of Tourism, Ministry of Communications and Transportation, JLL, PwC, Euromonitor. 6
Hospitality Market Players in Mexico Hotel Asset Owners Size of logo represents OTAs the importance on each category Brand Leasers Sharing Economy Hotel Developers Hotel Operators 7
Hoteles City Express Today
We Are the Fastest Growing Hotel Chain in Mexico… Historical Chain Growth Installed Rooms 18,792 Fastest developer in the region with 1 hotel 16,789 opening every 5.8 weeks on average 15,228 13,702 +24.2% 10,929 11,944 9,326 8,092 6,973 5,562 4,991 3,836 2,850 2,173 1,542 1,061 586 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Number of Hotels 5 10 15 20 26 35 45 50 62 71 82 96 106 123 135 148 165 Opening first Launch of Launch of Launch of First international Launch of Equity Initial Public hotel in San Jose, Follow-On Offering Costa Rica 9
With One Brand and Five Successful Products to Serve our Market Segment Description • Flagship Brand • City Express • Budget segment • Extended stay • City Express • Essential product located in brand brand product within city amenities Premium locations • Same quality • Apartment-style downtowns with • Economy segment within smaller layout Premium decor rooms 23 m 2 (248 ft 2 ) 17 m 2 (183 ft 2 ) 30 m 2 (323 ft 2 ) 23 m 2 (248 ft 2 ) Average Room Size 23 m2 (248 ft2) Average Daily Rate MXN $1,000 – MXN $ 1,800 – MXN $600 – $1,200 MXN $500 – $750 MXN $750 – $1,700 (ADR) $1,500 $3,000 Rooms per Hotel 100 – 150 70 – 150 105 – 134 26 – 120 35 – 80 # of Hotels (1) 91 23 23 12 2 # of Rooms (1) 10,581 3,087 2,572 721 147 Market Segments Target ADR (MXN) Room Distribution by Brand 4% > $1,700 15% $800 - $1,700 62% 18% $500 - $800 10 (1) As of April 2019
…And Significant Diversification Across Geographies and Countries 11
Reflected in the Build Up of the Largest Branded Inventory in Mexico Number of Hotels by Chain in Mexico As of April 2019 177 151 112 62 50 46 44 40 35 34 30 21 HCE Marriott Starwo Number of Hotels by Brand in Mexico As of April 2019 116 72 62 55 50 33 32 29 29 23 17 17 17 15 14 14 14 13 12 12 11 7 Select Service Limited Service 12 Source: Information prepared by the Company based on publicly available information including prospectuses, quarterly reports, websites and press releases
…And Favoured by Exposure to Different Economic Activities, Brands and Ownership Structures Geographic Coverage by Country Presence in Mexico by Economic Activity As of April 2019 As of April 2019, % of Total Portfolio based on Number of Hotels 4% 4% 1% 2% 1% 9% Services Manufacture Mexico 34% Energy Corridor Costa Rica 11% Finished Goods Manufacturing Colombia Agroindustry and Exports Mining and Transformation Chile 96% 15% International 23% Hotel Portfolio by Brand Hotel Portfolio by Ownership As of January 2019, # of Hotels and % of Total Portfolio As of April 2019, # of Hotels and % of total Portfolio 12 2 40 8% 58 23 Owned 26% 15% 38% Co-Owned Leased 23 60% 15% 9% Franchise and 91 14 Management 26% Consolidated 74% 39 13
Coupled With an Innovative and Disruptive Room Operation and Distribution Platform Room Nights Sold by Channel Innovative technological 2018 platform receiving more Hotel 20% than 80% of reservations 27% Walk Ins through own channels. Call Center 8% Optimized Yield City @ccess 8% Management System 18% Digital Platforms & Website executed in real time OTAs & GDSs 20% focused on maximizing Room Nights Sold by Guest Type RevPAR. 2018 City Premios – Loyalty 10% program with over 786,000 active members Domestic Guests accountable for 20% of total International Guests occupied room nights. More than 8,000 corporate 90% agreements that account for approximately 40% of total Room Nights Sold by Travel Purpose occupied room nights. 2018 Solid commercial 13% agreements and Business partnerships that turn into Leisure sales. 33 14 87%
Interlinked Within a Matrix Organization Enhancing Operation on All Fronts … Bulletproof operation system due to matrix structures defined Matrix Organization by Business Process by business processes Personnel empowerment that Call City OTAs & Segment / Hotel Website allows a quick, efficient and Center Access GDS Channel guest-oriented decisión making Groups Closeness to the guest as an Wholesale “ inverted pyramid ” Segment Leaders Channel sales optimization Business maximizing rates and encouraging profitable Leisure commercial drive Guest Others Branch Directors Close-to-Guest Personnel Operations Marketing IT Digital Executive Management Management 15
…And Supported by Best in Class Corporate Governance and Sustainability Practices Strong Institutional Sponsors that Fueled Growth Commited and Capable Board of Directors Board Committees Corporate Practices Audit (100% Planning & (100% Independent ) Independent) Finance Practices aligned to protect monirity interests Cero corruption tolerance. Board of Directors Corporate Governance Manuals and Policies effectively implemented: https://goo.gl/vFvNOV Mainly independent Board of Directors – 10 out of 11 members Procurement & Compensation Nominations are independent Construction Sustainability Strategy that Generates Results Portfolio of Certifications Strategic Pillars and Initiatives Sustainability policy and committee effectively implemented. Entrepreneurship program, Economic committed to growing employment opportunities Top environmental practices and international certifications for hotels. Resource optimization and Environmental minimization of Carbon Footprint Catalyst of positive social, economic iniciatives and environmental impacts in all our locations. Labor Inclusion and’ welfare Social programs for employees Deeply committed with UN’s 2030 Goalds for Sustainable Download our 2018 Sustainability Report Development. http://cityexpress.com/ sustainability 16
Expansion, Financial and Operating Results
Hotel Development and Inventory Expansion Hotel Openings In the Last 24 Months Ce Mérida CeP Puerto Cj SLP Z. Ind Cj Puebla Ang. Ce Altamira CeP Medellín (Expansion) Vallarta May 2017 July 2017 July 2017 Sept. 2017 July 2017 July 2017 Ce Ce Ce Mty. Cj Tuxtepec Ce Tijuana Otay Cj León CC CC Oaxaca CeP León CC Lindavista Sept. 2017 Dec. 2017 Dec 2017 Dec. 2017 Dec 2017 Dec. 2017 CS Cancún CeP Cancún CeP Interlomas Ce Tepic Ce Atlixco Ce Comitán Aeropuerto Aeropuerto Nov. 2018 Jan. 2018 March 2018 June 2018 Oct. 2018 Oct. 2018 18
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