Marriott InternationalChief Financial Officer Leeny Oberg CitizenM has sought to address concerns about possible changes to the distinctive identity of CitizenM following Marriott’s $355 million acquisition Announcement Monday Oberg stressed the intention of the hospitality group to maintain the brand’s operational independence.
Oberg stated, “We have shown through our acquisitions that we can take a brand we buy, grow its reputation and integrate it into our system.”
Marriott has given CitizenM’s existing leadership team a wide range of control over the hotel’s operations. This is a unique twist in acquiring a brand. Marriott has a franchise agreement that allows the hotels to be operated primarily by their current owners.
Oberg explained that the real estate management and ownership remained with the seller. In this case, the team would continue to run the hotels rather than joining Marriott.
Oberg stated that Marriott plans to maintain the brand’s operational flare, technology-driven experience for guests, and emphasis on art and style in its lobby, while integrating CitizenM with Marriott’s global growth engine and loyalty program.
Protecting CitizenM’s brand DNA
Marriott’s Chief Financial Officer said that CitizenM’s focus on art, design and efficient space use will remain a key feature of the brand.
Oberg stated that the design philosophy is a key component in the overall brand feel. “We expect to continue to maintain and invest in that design philosophy.”
CitizenM has been testing new loyalty approaches. Instead of relying on only points, they offer a subscription that includes discounted rates and access to co-working spaces.
Oberg said that Marriott does not expect to change CitizenM’s model of loyalty immediately, but is interested in exploring how the innovative elements it has developed could impact Bonvoy’s strategy.
Oberg said, “We want to use the innovative DNA of CitizenM as a basis for how we view Bonvoy in general.”
CitizenM will also preserve its proprietary technology platform that controls elements such as in-room tablet computers and check-in kiosks.
Oberg added, “We are confident that these hotels will be able enter the system and maintain the great in-room experience.”
She cited Marriott’s full acquisition of AC Hotels in 2019, a Spanish hotel brand, as an example. The company has grown AC Hotels from a handful of properties to 244 hotels, There are approximately 150 pipelines.
Balance growth with Moxy and other brands
CitizenM is the latest lifestyle brand to join Marriott’s growing portfolio. The new brand shares the most similarities with Moxy. Both brands have tiny guest rooms and lobby areas that aim to attract hipsters.
Oberg says that while both brands, CitizenM and Moxy, target urban markets and young travelers alike they cater to different needs of customers and real estate investors. This will allow them to thrive without competing with each other.
Oberg explained that “the Moxy focus has a more playful feel, a distinct public space identity, and rooms designed differently.”
She added: “CitizenM is clearly known for its strong, authentic service, the tech-savvy hotel’s experience, as well as a focus in art and design, and highly efficient space use.”
What’s Next?
Oberg emphasized that while adding CitizenM properties to the existing portfolio is valuable, future expansion offers a greater opportunity.
“We are thinking about the potential for future growth. “While we are excited to add these hotels to CitizenM, the chance to grow CitizenM internationally is even more exciting,” said she.
Marriott is seeing a strong global demand for luxury and lifestyle hotels that are affordable. Oberg thinks CitizenM’s unique model will help it accelerate its global growth under Marriott.
Oberg stated that strategic acquisitions such as CitizenM compliment Marriott’s organic brand building strategy.
Analyst’s Views
Global Equity Research and Brokerage Firm: A Note Bernstein highlighted CitizenM’s strong guest satisfaction scores—averaging “4.5 out of 5” despite its pricing between the “upper upscale” and “upscale” tiers.
Analysts see this brand as being above Moxy and commanding higher prices because of its slightly more formal and higher-end aesthetic that appeals to corporate travelers.
Bernstein analysts noted that CitizenM’s established presence in major U.S. and European cities reduces the risks compared to building a new micro-urban brand from scratch—an approach that has challenged rivals like Hilton with its slower-growing Motto brand.
CitizenM Investors Staying involved
CitizenM, founded in 2008 by Rattan Chadha and entrepreneur, built its reputation with smart, tech-forward, hotels that cater to frequent, design conscious travelers.
Singaporean sovereign wealth fund GIC took a 25% stake in the company in 2019 in a deal that valued the company then at €2 billion (about $2.3 billion) including debt, with the other main stakeholders, namely, Dutch pension provider APG and founder Rattan Chadha’s investment firm.
Analysts from Bernstein described Marriott’s acquisition price as “compelling”, for a lifestyle product, and valued CitizenM less than 12x the annual fees.
