DALLAS—G6 Hospitality’s quest to grow its two brands means expanding into Latin America and tweaking one of the most iconic brand names in the hotel business.
The Dallas-based company is venturing into Latin America with Hotel 6—an offshoot of its Motel 6 brand. It also plans to introduce Estudio 6 to complement its Studio 6 extended-stay product. Mexico will come first in the expansion plan, then the rest of Latin America and the Caribbean, according to company executives.
“We have, for both Motel 6 and Studio 6, always believed there was tremendous opportunity for heading south,” said CEO Jim Amorosia, during an interview with Hotel News Now.
“There is a lot of brand awareness in Mexico for the Motel 6 brand,” said Guillermo Estrada, director of international business development for G6, during a separate interview with HNN. “The idea is to get into Mexico and grow the brand from there.”
In conjunction with the announcement, G6 also signed an area development agreement with Latina Promohoteles, a subsidiary of Mexican commercial property developer Promodesa Comercial. Latina Promohoteles plans to open up to 55 new-construction Hotel 6/Estudio 6 properties by the end of 2020 in major cities across Mexico.
“We are thrilled to partner with G6 Hospitality and introduce such iconic American brands and lodging options in Mexico,” said Juan Carlos González, VP of Latina Promohoteles, in a news release. “Lodging is a new focus area for our business, and we see great potential for translating the success of brands like Motel 6 and Studio 6 in the U.S. to the unique needs of Latin American travelers.”
Colombia, Chile, Peru, Ecuador and Nicaragua are primary targets for expansion once Mexico is in place, according to Estrada.
Amorosia said former owner Accor was focused on growing its other brands in the region, so when Blackstone acquired G6 two years ago, it opened new possibilities.
“Under the previous ownership it wasn’t shared because they had other brands they wanted to capitalize on,” Amorosia said. “We did our due diligence, particularly in Mexico, and discovered quickly it would make sense to expand there.”
The logo will remain the same as the Motel 6 logo with the exception of the word “Hotel” replacing the word “Motel,” according to the CEO.
“What’s driving it is the recognition of the 6,” Amorosia said. “Is it a Kobe steak? No. But we advertise to satisfy a consistent appetite. Our goal is always to be the McDonald’s of the hotel industry.”
Motel 6’s popular “We’ll leave the light on for you” marketing campaign will not be traveling south because “leaving the light on” for someone can have negative connotations, Amorosia said.
Construction on the first property in Mexico will begin early next year and open later in 2015.* A conversion project is in the works for the same time frame.
G6 had 1,080 Motel 6 properties (102,123 rooms) and 76 Studio 6 (8,280 rooms) open as of mid-2014.*
The product will be similar
The company will chase new-build and conversion opportunities throughout the region, and the product’s physical attributes won’t exactly mirror the traditional Motel 6 or Studio 6 prototypes, Amorosia said.
“New-builds in Mexico … we’ll be building more up than out,” Amorosia said. “The typical Hotel 6 in Mexico and Central America will more than likely be six to eight stories. But the room bay will be identical to the room bay in the U.S.”
“The new prototypes will be flexible on room count and building up,” Estrada said.
The room décor throughout the region will be the Motel 6 brand’s Phoenix room prototype. The public space will be slightly bigger, Amorosia said.
“Hotel 6 and Studio 6 will relate better to the Mexican and Latin American culture,” Estrada said. “The core business will still be the same. The product—the bedding, the colors, the service—will be the same.”
The biggest difference between the Hotel 6 and Motel 6 brands will be in the food-and-beverage arena. While Motel 6’s traditional breakfast is a grab-and-go pastry-and-coffee offering, Hotel 6 will have a more complete breakfast offering and potentially an F&B component in the afternoon. The offerings won’t be an a-la-carte menu but a handful of stable items available every day, according to the CEO.
But developers and travelers shouldn’t expect deep F&B offerings.
“Limited-service not only serves a purpose, but it requires discipline,” Amorosia said. “In the Hotel 6 situation, guests have told us what they want and to build it into their expectation of price. We don’t want to have costs that take away that value proposition.”
A value-oriented product is the key
Amorosia said G6’s research into the buying habits of Mexican travelers indicates the Hotel 6 translation to Spanish signifies a value perspective to them.
“It makes much better sense for us to present our value offering as a hotel offering,” Amorosia said.
Estrada said consumers in Latin America are becoming more brand savvy and now can relate to the expectations and services being offered by brands.
Amorosia said that to start the program the company will focus on Mexico’s northern sector, major markets such as Mexico City and Monterrey, and the resort regions.
“The entire country is ripe for the economy sector,” he said. “The market is wide open.”
“Every region offers you a different opportunity,” Estrada said. “The north of Mexico gives you an opportunity for full awareness because there’s a lot of transient business to Texas and California from there.”
G6 will grow in Latin America through a pure franchising model, Amorosia said.
“The amount of developers who called us has been a pleasant surprise,” he said. “That gave us the confidence to have 30 open in Mexico by the end of 2017.”
“We’re more interested in having a solid business relationship that is based on having the right expectations than trying to build numbers based on pure growth,” Estrada said.
Conversions will be based on the opportunity, with guests’ welfare the top priority, Amorosia said.
“I believe categorically that the customer is looking for a tremendous economy product in gateway cities, urban markets,” Amorosia said. “It’s not only doable, but more importantly it’s profitable for the owners.”
Opportunity remains elsewhere
G6 has more than 1,200 hotels open in the U.S. and Canada, including 537 that it owns.*
“Our product in the U.S. can easily reach 2,000 hotels,” Amorosia said. “Blackstone looks at us as a category killer.”
The U.S. growth strategy is to own metropolitan and suburban interstate interchange with multiple properties that can drive demand, Amorosia said.
“I have yet to find major cities where we have saturated demand,” he said.
Clarification (10 December 2014): Information has been updated from figures provided by the company.