The world’s No. 1 hotel group is adding the CitizenM brand to its already extensive portfolio and strengthening its position in the leading lifestyle niche. The 36 establishments themselves remain the property of CitizenM and under the management of its teams.
‘Big is beautiful’ is the leitmotif of the world’s Top 20 hotel companies, which are constantly expanding, both by vocation and necessity, to avoid losing a place in the rankings.
This race for growth, which is justified by the need to hold its own against the distribution giants and by the desire to pool risks and costs, takes place both geographically, by acquiring a local leader – typically the takeover of South Africa’s Protea in 2014 – or in a market segment – the most recent example being the partnership with Sojern, a specialist in hotel serviced flats.
Virtually all the leading groups have identified the potential and revenue generated by “experience”, which enables them to offer and sell richer services. These lifestyle brands are the new stars of the portfolio, such as Mama Shelter or 25Hours at Accor, LRX or Curio at Hilton, Kimpton at IHG and now CitizenM, which has joined Marriott International.
355 million for ownership of the brand alone
The world No. 1 will pay $355 million to CitizenM, a company jointly owned by the APG pension fund, the Singaporean sovereign wealth fund GIC and the family of founder Rattan Chadha. This sum corresponds to the acquisition of the brand and associated intellectual property, but does not include the premises, which remain the property of CitizenM, or the management contracts handled by the CitizenM team, led by Lennert de Jong, its CEO.
Once the brand has been transferred to Marriott’s inventory and the BonVoy loyalty programme, the 36 current establishments (8,544 rooms), spread over more than 20 cities in the United States, Europe and Asia-Pacific, and the three hotels under construction (600 rooms), will sign long-term franchise agreements with Marriott.
Marriott has thus secured franchise fees of around $30m a year, justifying its investment. Good fortune” clauses after 4 years of operation could lead Marriott to pay up to $110 million if sales performance exceeds a contractually agreed threshold.
Twice winner of the Hospitality Awards
Founded in Amsterdam in 2008 by Rattan Chada, an Indian businessman with a successful career in ready-to-wear clothing, under the Mexx International brand, citizenM has become an exemplary model of efficient, connected, digitalised, designed and industrialised hotels in the “limited service” business segment.
Its city-centre and airport locations have made it the darling of independent, geeky business travellers, and of young people attracted by its very affordable rates and its friendly atmosphere, a key element of its identity.
A two-time winner of the Hospitality Awards for Brand Concept and for its original human resources policy, CitizenM has continued to expand in terms of premises and funds, concentrating until it has reached saturation point in a key metropolis: 5 hotels in Paris, 4 in London, 3 in Amsterdam, 3 in Miami… So many clusters to pool local support functions and increase productivity.
Anthony Capuano, CEO of the Marriott group, did not want to let himself be overtaken by his direct competitors, who are forcing their way into the lifestyle market, and is bringing his global distribution to a group that is still in its adolescence.
“I am convinced that this relationship will considerably strengthen the global reach and impact of the citizenM brand. Marriott shares our values and culture, and I am confident in their deep commitment to preserving the DNA of our brand,” said Rattan Chadha.
