Aimbridge Hospitality and Grupo Hotelero Prisma were weeks away from closing a deal to turn Mexico’s largest third-party hotel operator into a division under Aimbridge when the COVID-19 pandemic sidelined the deal for months.

A deal in the works for three years, even before the Aimbridge and Interstate Hotels & Resorts merger, had to be put on hold over the uncertainty of the future of the hotel industry.

But now the deal is back on and expected to close over the next four to six weeks.

“It took a little bit of time, but I'll tell you, being a guy that was a co-founder of the company 18 years ago, this is one of the most exciting transactions that I think I will have announced in the history of Aimbridge,” said Dave Johnson, executive chairman at Aimbridge.

Plano, Texas-based Aimbridge is the largest third-party hotel operator in the world and has a strong international footprint in Europe and the Caribbean, but had no presence in Mexico, or any of Latin America. Monterrey, Mexico-based Prisma was looking to affiliate with another company, preferably one based in the U.S.

In a phone interview, Johnson outlined how the Aimbridge-Prisma deal came to be despite the pandemic.

Johnson said Aimbridge has had several opportunities to grow organically in Mexico, but it hasn’t felt like the right move strategically to go in with one or two hotels, not knowing the country.

“We’re kind of smart enough to know what we know and what we don’t know,” he said. “We don’t know how to operate hotels in Mexico.”

In researching the Mexican hotel industry to find the best operating partner, Aimbridge’s team learned about Prisma, Johnson said, calling the company a best-in-class operator in Mexico. It has a strong relationship with Fibra Inn, an internally managed Mexican hotel trust similar to U.S. hotel real estate investment trusts, and has a long track record of operating in Mexico.

Prisma’s interest in a U.S. affiliation came to light, and the wheels started moving. The Aimbridge and Prisma teams met in Monterrey and Dallas, and they hit it off.

“We actually became good friends with these guys,” Johnson said. “We’re excited to be partners, and we think it’s a very complementary skill set. Their DNA and culture fit ours.”

The deal was about 45 days from closing when the pandemic hit in March 2020, Johnson said. Both sides agreed it was best to hold off on moving forward because no one could predict what would come next.

One of the challenges was trying to do a valuation on any business in the travel industry in 2020, he said. Aimbridge was having difficulty valuing its own business.

By the third quarter of last year, there was more clarity on the situation, and in the fall, Prisma’s team reached out to restart negotiations.

For about 90 days, the two teams kept the conversation going, flying back and forth between Monterrey and Dallas when travel restrictions allowed. They worked out a pre-COVID-19 equity deal with some cash involved.

Both parties were encouraged that an acquisition was in the best interests of the companies and their shareholders, Johnson said. The two sides agreed in principle about 60 days ago, but the companies’ legal teams had to iron out the details of an acquisition involving two countries and different currencies.

Prisma operates a portfolio of 42 properties with more than 7,500 rooms under 19 brands, including IHG Hotels & Resorts, Marriott International and Hilton as well as some Mexican brands, such as Ex Hacienda San Xavier and Hoteles Casa Grande.

The company employs more than 1,300 in operations and corporate, sales and administrative offices. While based in Monterrey, it has a central sales office in Mexico City that provides service to more than 300 commercial accounts in 25 different industries, including finance, pharmaceuticals, information technology, and oil and gas.

Along with the portfolio of hotels, Aimbridge gains Prisma's leadership team. Leandro Castillo, who heads the operating group for Prisma, will lead Aimbridge’s Prisma Division and report directly to Aimbridge CEO Mike Deitemeyer.

The goal is to not do anything to upset the business in Mexico, Johnson said. Over the next several years, the teams will work together to determine how Prisma, through Aimbridge’s scale, can deliver more value and efficiencies to owners.

Aimbridge's partners with investments in Mexico and Latin America have been waiting for the company to expand there, Johnson said. This deal allows Aimbridge to work with them on existing assets and take on new opportunities.

Aimbridge is talking with the leadership teams at both Prisma and Fibra Inn and has plans to meet with all of them in Dallas, he said. Over the next three to four weeks, they will strategize how to best position the combined company to establish it as a top operator in Mexico and Latin America.

Johnson said he doesn’t think Aimbridge will look for further acquisition opportunities in Mexico and Latin America, calling Prisma “the crown jewel.” The growth that will come from the Aimbridge-Prisma deal will allow the company to take a dominant position in the region over the next three to five years, he said.

As for other opportunities domestically and internationally, Aimbridge is always evaluating opportunities, but the company is taking a strategic approach, he said. The Prisma deal allows Aimbridge to move into Mexico with an experienced partner instead of trying to grow an operation from square one.

Over the next 12 to 24 months, Aimbridge will err on the side of caution, he said. Any deals that come about would be with companies that complement what Aimbridge is trying to accomplish, such as expanding to new countries and markets.