Corporate Presentation October 2015 Disclaimer This presentation - - PowerPoint PPT Presentation

Corporate Presentation

October 2015

This presentation has been prepared with information about Hotels City Express, S.A.B. de C.V. ("HCITY" or the "Company"). The presentation is not intended to be exhaustive and does not necessarily include all the information the receiver should want to be informed of the Company. The forward-looking statements contained in this presentation are based on the current assumptions and outlook of the Company’s management. Actual results, performance and events may differ significantly from those expressed or implied in these forward-looking statements as a result of several factors such as the general and economic conditions in Mexico and abroad, interest and exchange rates, future renegotiations, pre-payments of liabilities or loans denominated in foreign currency, changes in laws and regulations, and general competitive factors (regionally, nationally or internationally). All communications, inquiries and requests for information related to these materials should be directed to the contacts listed below.

Disclaimer

2 Abelardo Loscos Corporate Finance and Investor Relations Director Tel: +5255 5249-8056 aloscos@hotelescity.com

12,431 10,929 9,326 8,092 6,973 5,562 4,991 3,836 2,850 2,173 1,542 1,061 586 2014 2015E 2011 2012 2013 2009 2008 2006 2007 2010 2003 2004 2005 3

We are the Leading & Fastest Growing Hospitality Platform in Mexico

# of Rooms (1)

5 10 15 20 26 35 45 50 62 71 Hotels(2)

Opening of first Launch of Launch of First international hotel opened in San Jose, Costa Rica

(1) Number of hotels and rooms at the end of the period.

IPO

Business Platform that Provides a Unique Exposure to Hospitality in Mexico Accelerated Growth in the Economy & Budget Lodging Segments Through New-Hotel Development

 The largest limited service hotel chain in Mexico  Fully integrated platform spanning the complete

hospitality value chain with best-in-class development and distribution capabilities

 Three distinct lodging formats designed to serve

the domestic business traveler and capture middle class expansion in Mexico

 Diversified geographic footprint geared towards

expected GDP growth in Mexico

 Consistent track record of financial performance

82 96

 Significant embedded growth in recently built

inventory

 Organic expansion potential in our target markets

due to lower density of hotels per capita, ADRs and occupancy rates

 State-of-the-art distribution systems at the

forefront of industry trends

Follow On

110

Launch of

4

Business Model Tailored to Best Serve Our Target Segments

…to Primarily Target Value Conscious Domestic Business Travelers

Hotel Industry Market Segments

Our Portfolio of Three Targeted Limited Service Hotel Brands...

Hoteles City Express Brand Portfolio Target Segment Description

• Flagship

brand

• Essential

amenities

• Economy

segment

• City

express product located in premium locations

• Budget

segment brand

• Same

quality but smaller rooms

• Extended-

stay brand

• Apartment
• style

layout

• Economy

segment Average Room Size 23 m2 (248 ft2) 23 m2 (248 ft2) 17 m2 (183 ft2) 30 m2 (323 ft2) Average Daily Rate (ADR) (MXN) $ 600 – 1,200 $ 1,000 – 1,500 $ 500 – 750 $ 750 – 1,700 Rooms per Hotel 100 – 150 70 - 150 105 – 134 26 – 120 # of Hotels(1) 71 (71%) 9 (9%) 13 (13%) 7 (7%) # of Rooms(1) 8,227 (73%) 1,181 (10%) 1,484 (13%) 421 (4%)

(1) As of September, 2015

…Offers a Differentiated Value Proposition Within our Segment… Quality Value Convenience Consistency Geographic Coverage Safety

Market Segment Target ADR (MXN) > $1,500 $700 – 1,500 $500 – 700

5

Largest Hotel Chain in our Target Segment

Source: Information prepared by the Company based on publicly available information including, prospectuses, quarterly reports, websites and press releases.

As of September 2015 As of September 2015

Number of Hotels by Chain in Mexico Number of Hotels by Brand in Mexico

31 35 93 98 36 11 24 26 31 35 35 41 41 98 129 133 Limited Service Hotels

Select Service Limited Service

4 5 6 7 7 11 11 13 36 78 5 6 7 8 10 11 11 12 15 16 47 50 62

Strategically Planned Geographic Footprint and Deployment of Capital Aligned with the Key Drivers of Economic Activity

Hotels in Operation 2015 Development Pipeline

Strategically Planned Footprint Provides Diversified Exposure to Mexico’s Main Business, Industrial and Commercial Hubs and Corridors… … with a Balanced Leverage to the Main Drivers of Economic Activity A

• Recently enacted Energy Reform
• Opening of oil and gas sector to

private participants B

• Growth of Mexico’s manufacturing

sector driven by competitive and logistic advantages of the Country

• Recently announced investments

by automotive industry, aviation industry and infrastructure C

• Economic recovery of the United

States, Mexico’s main business partner

• Resurgence of maquila industry
• Decreasing levels of violence in

northern Mexico D

• Recently enacted structural

reforms in the mining sector E

• Resuming government spending in

transportation infrastructure

6

Energy, Petrochemical and Export Corridor Maquila Export and Logistics Corridor NAFTA Agricultural Export Corridor NAFTA Industrial, Manufacturing, Logistics and Export Corridors Mining Corridor

7

Geographic Coverage and Portfolio Mix by Industry and Sector

Geographic Coverage by Country Presence in Mexico by Economic Activity

As of September 2015 As of September 2015, % of Total Portfolio based on number of hotels Colombia Costa Rica México 1% 98% 1%

Hotel Portfolio by Ownership Hotel Portfolio by Brand

As of September 2015, # Hotels and % of Total Portfolio

Energy & Petrochemical Activities 35% - 40% Manufacturing 10% - 15% 10% - 15% Mining and Transformation Agriculture & Exports 12% - 17% Commercial, Financial and Tourism Services 15% - 20% 71 71% 9% 13% 7% 7 13 9 40 Consolidated 77% 25 12 23

As of September 2015, # Hotels and % of Total Portfolio

Owned Co-Owned Franchise and Management Leased 39% 25% 12% 24%

Macroeconomic & Industry Fundamentals

Ce Plus Patio Universidad México D.F.

9

Macroeconomic Fundamentals Pointing to a Gradual Economic Growth

Annual GDP Growth: México and the U.S. Components of Investment Growth Evolution of Mexican GDP Contribution to GDP Growth Retail Sales and Private Consumption

Source: BBVA Research, Santander Economic Analysis, SECTUR and INEGI. % % Percentage points Year over Year Change (%)

Global Economic Activity Indicator (IGAE)

Year over Year Change (%) Year over Year Change (%)

10

Tourism Sector With Growth in Recent Years

Airlines Passenger Traffic Growth International Tourists Arrivals Room Supply Growth Tourism GDP Growth

Tourism GDP Total GDP %

Domestic Tourism Consumption Growth

92 97 102 107 112 117 2008 2009 2010 2011 2012 2013 2014

Domestic Tourism Private Consumption Total GDP Evolution Index 2008 = 100

• 10
• 5

5 10 2008 2009 2010 2011 2012 2013 2014

28 33 2012 30 2013 +7% 2014 2010 26 24 2011 (Million Passengers) CAGR 2012 +2% 651 2013 661 2010 2011 672 638 2014 692 Thousand Rooms

Source: HSBC Economic Analysis, Santander Economic Analysis, SECTUR and INEGI.

Foreign Exchange Entries

Thousands USD Million

CAGR +27.1% +3.3% 2012 2014 2011 13.9 12.9 16.4 2013 11.8 13.5 2009 2008 2010 11.7 12.0 CAGR 22.5 2008 22.9 29.2 +4.1% 2009 23.4 2010 2011 23.2 2012 24.1 2013 2014 23.2 CAGR

11

Fragmented Industry that Presents Consolidation Opportunities

Hotel Supply – Fragmented and Dominated by Independent, Non-Standardized Hotels Hotel Demand – Driven by our Target Customers

Source: INEGI, Ministry of Tourism, Ministry of Communications and Transportation, JLL, PwC, Euromonitor.

Hotel Rooms in Mexico by Quality – Breakdown by Number of Stars

2014

Breakdown of Independent and Chained Hotels

26 70 78 74 30 22 100 100 100 2014 (% of Rooms) Brazil United States Mexico Independent Chained

Occupied Room Nights by Nationality of Guests

2014 (% of Occupied Room Nights) 85 44 67 15 56 33 100 100 100 1 - 4 Stars 5 Stars All Hotels Domestic International

Tourism Spending in Mexico

2014 International Tourists Domestic Tourists (Million Passengers) 24.4 25.5 28.1 30.5 2010 2011 2012 2013 2014 Low Cost Carriers Legacy Carriers Target segment 12% 88%

Domestic Airline Passengers

Mainly independent, family operated, non standardized hotels subject to substitution 182,160 142,533 121,426 64,087 182,145 5 Stars 4 Stars 3 Stars 2 Stars Others 46% of Total Rooms in Mexico 32.8

Business Model that Boosts Value Creation with Each New Hotel

Ce Chetumal, Quintana Roo

13

Our Fully Integrated Business Model Provides Broad Exposure to Hospitality in Mexico

FIBRAS

Fully integrated platform provides flexibility and control over investment cost, growth, marketing and customer experience Development

• 20,000+ rooms developed

by the Hoteles City Express team

• Systematic and

streamlined design and development – Low, predictable costs – Benefit from scale in development

• Strong ROIC track record
• Control over “going in” cap

rates Hotel Ownership Marketing and Distribution

• Strong brand recognition
• Own distribution

channels account for vast majority of reservations

• City Premios guest loyalty

program

• Corporate and local

agreements

• Targeted and cost-efficient

marketing

• At the forefront of digital

and social media distribution Hotel Management & Franchising

• 40 owned hotels (1)
• 25 co-owned hotels (1)
• 12 leased hotels (1)
• Primary focus on
• wnership and co-
• wnership of hotels

– 50%+ ownership in co-

• wned hotels

– Business partners contribute land and/or equity and local market insight

• Best-in-class operating

margins

• Standardized room layouts,

furnishings and processes

• Brand licensing to third-

party hotel owners under management contracts

Independent Hotels

(1) As of September 2015; excludes managed and franchised hotels.

International Chains

Leading Hotel Development Capabilities at the Core of Our Strengths

Streamlined and Replicable Development Processes

• “Out of the ground” new hotel development in as little as 6 months

Construction Begins Month 3 – 5 Month 5 – 7 Month 2 – 4 Month 4 – 6 Month 6 – 9: Opening

Difficult to Replicate Hotel Development Capabilities

Proven In- House Hotel Development Expertise

• More hotel and room openings since 2003 than

any other hotel chain in Mexico − One new hotel opened every 6.4 weeks on average since our first opening in 2003

• Capacity to develop up to 18-20 hotels per year
• On-budget international development experience

Predictable Costs and Time

• f Delivery
• Economies of scale in construction contracting

and purchasing furnishings and fixtures

• Competitive and highly transparent bidding

process with high-quality contractors

• Track record of meeting budgeted times and costs

International Standards

• All properties built to comply with highest safety,

fire and environmental standards

• Key differentiating factor from independent, non-

branded hotels predominant in our target segment Scalable Infrastructure

• Standardized and streamlined processes allow

us to scale hotel development capacity − Processes scalable to new markets / geographies Maintenance, Renovations and Improvements

• Based on strict guidelines that enable cost

control and consistent quality − Terms in contracts of managed hotels ensure periodic renovations based on our guidelines

14

Development Pipeline for 2015

15

Hotels in Operation 2015 Development Pipeline

Hotel Portfolio by Brand

Pro-forma as of End of 2015 Pipeline, % of total rooms

Hotel Portfolio by Investment Scheme

Pro-forma as End of 2015 Pipeline, % of total rooms

67% 9% 8% 16%

Ce Plus Ce CS Cj

Leased Managed & Franchised Owned Co-owned

79 11 19 9 31 12 27 47

39% 28% 10% 23%

Consolidated 72%

32

Footprint Provides Diversified Exposure to Mexico’s Main Business, Industrial and Commercial Hubs and Corridors

Energy, Petrochemical and Export Corridor Maquila Export and Logistics Corridor NAFTA Agricultural Export Corridor NAFTA Industrial, Manufacturing, Logistics and Export Corridors Mining Corridor

55.0% 19.0% 5.0% 4.0% 13.0% 3.0%

Proprietary Marketing and Distribution Platforms at the Forefront of Evolving Consumer Behavior and Industry Trends

Multi-channel Proprietary CRS

• Multi-channel reservation platform:
• State-of-the-art digital media platform:

3Q15 Room Nights Sold by Channel Walk-ins and direct bookings Call Center Internet website City @ccess

• nline system

OTAs CRS

84% of

reservations made through

• wn channels(1)

44% through

• ur CRS

24% through

electronic channels

(1) Includes walk-ins and reservations made directly at the hotel.

16

Market Intelligence

• 150+ regional, national and international in-

house hotel market studies

Leading Marketing and Distribution Platforms in Mexico

Sales and Marketing Levers

Marketing Programs

• City Premio loyalty program, accounting for

~20% of our reservations during 2014

• Active marketing on social media:

Central Reservation System (“CRS”)

• Own system that manages room night

sales, corporate agreements, third-party vendors and e-commerce − Efficient inventory, ADR and yield management Corporate Sales

• 26 sales executives across Mexico and an
• ffice in Miami for international sales
• 7,500+ corporate and local agreements,

accounting for ~60% of our occupied room nights during 2014 Corporate Alliances

• Airlines:

PR and Publicity

• Diversified media advertising

− Internet, pay TV, in-flight magazines, radio GDSs

Operation and Financial Perfomance

Ce Plus Patio Universidad, México D.F.

18 Thousand Rooms

Installed and Occupied Room Nights Average Daily Rate (“ADR”) and Effective Rate (“RevPAR”)

MXN

(1) Adjusted EBITDA calculated as operating income + depreciation + amortization + expenses associated with the opening of new hotels.

Growth in Key Operating and Financial Indicators

MXN Millions

Total Revenues Adjusted EBITDA(1)

MXN Millions

18.1% 16.8%

2014 2,120 3,586 2013 1,675 3,040 2012 1,531 2,693 2011 1,223 2,230 2010 1,091 1,925 Occupied Installed

+14.4% +18.8%

3Q15 664 1,039 3Q14 559 908 9M14 1,536 2,637

+14.8% +20.8%

9M15 1,855 3,026 762 733 467 427 +4.0% 9M15 9M14 +9.4% 765 738 490 454 +3.8% 3Q15 3Q14 +7.7% 737 722 683 668 654 436 398 388 366 371 2010 3.0% 2014 2013 2012 2011 4.1%

56.7% 54.8% 56.8% 55.1% 59.1% 58.2% 61.3% 61.6% 64.0%

%

Occupancy Rate

1,412 1,104 932 715 603 2010 23.7% 2013 2014 2011 2012 369 3Q14 449 +21.8% 3Q15 1,018 9M15 +22.9% 9M14 1,252 2010 2013 2012 358 280 190 2011 2014 471 28.2% 175

+20.7%

3Q14 158 3Q15 131

+24.6%

426 9M15 9M14 342

28.9% 26.5% 30.0% 32.4% 33.3% 33.6% 34.0% 35.5% 35.2%

%

Margin over Total Revenues RevPAR ADR

54.8 56.8 55.1 59.1 61.3 59.4 59.8 58.0 62.6 66.4 50 54 58 62 66 70 2011 2012 2013 2014 9M15 Cadena Total Hoteles Establecidos

19

(1)

Significant Embedded Growth In Recently Built Inventory

Occupancy

%

Number of Hotels in Operation

# of Hotels in Operation at the End of Each Period

Average Daily Rate (“ADR”)

MXN

Revenue per Available Room (“RevPAR”)

MXN

(1) Defined as hotels with at least 36 months in operation at a defined period.

668 683 722 737 762 682 691 714 720 750 650 675 700 725 750 775 2011 2012 2013 2014 9M15 Total Chain Established Hotels +1.5%

(1)

+508 bps 366 388 398 436 467 405 413 414 451 498 350 375 400 425 450 475 500 2011 2012 2013 2014 9M15 Total Chain Established Hotels

(1)

+6.0% % of Non Established Hotels

(1)

48% 44% 37% 39% 35% 35 45 50 62 58 67 24 27 26 32 34 32 33 26 9M15 2014 2013 82 9M14 2010 50 2012 71 2011 62 96 100 90 Established Hotels Non-Established Hotels 36% 33%

70% 77% 4% 4% 26% 19% 100% 100% Assets Liabilities + Shareholders' Equity

Solid Capital Structure Geared to Support Growth

20

Total Debt Outstanding: MXN 1,924.1 Million1

Balance Sheet Structure

Cash and Equivalents Hotel Assets Recoverable Taxes and Other Current Assets Financial Debt Other Liabilities Shareholders’ Equity

Financial Debt Maturity Schedule

As of September 30, 2015. % of total Debt Outstanding

Access to Diversified Financing Sources

Bank Debt by Counterparty as of September 30, 2015 As of September 30, 2015

• 1. Does not include MXN 9.7 million of interest to be paid in the next 12 months

MXN 10,107.7 Millones MXN 10,107.7 Millones 7 5 6 8 36 10 8 9 4 2015 2016 2017 2018 2019 2020 2021 2022 2023 11% 17% 10% 8% 33% 22% IFC / DEG Banamex Corpbanca Otros HSBC Bancomext

Corporate Governance to Support and Lead Growth

Ce Plus & CS Santa Fe México D.F.

Long Standing Commitment to Maintaining Corporate Governance Best Practices and Social Responsibility

Board of Directors Audit (100% Independent) Corporate Practices (100% Independent) Planning & Finance Procurement & Construction Compensation Nominations

Solid Institutional Sponsorship with a Broadly Diversified Investor Base Institutionalized Governance Aligned with Best Practices

Board Committees

Commitment to the Environment

EDGE Certification (IFC) – First certified building worldwide – 9 hotels certified + 9 in process of certification Biosphere Responsible Tourism (UNESCO) – First hotel chain worldwide in process

• f certification

– 39 certified hotels + all hotels expected to be certified by 2016 It is in our DNA. Why?

• 1. Because we care
• 2. Because our guests

and partners care

• 3. Because we strictly

comply with regulations

• 4. Because it makes

business sense – 30% and 40% reductions in energy and water use, respectively, at our EDGE-certified hotels LEED Certification (USGBC) – First hotel in Latin America – 6 certified hotels + 8 in process of certification

22

Social Responsibility and Sustainability

We collaborate with different

• rganizations focused on

promoting social awareness and nature preservation We support initiatives aimed at creating long-term value within

• ur communities through

education and entrepreneurship − Mainly independent Board of Directors (7 out of 9 Board members are independent)

7% 89% 4% IFC Affiliates Free float Management