City Express by Marriott in the U.S.: How the Entry Works for an Owner, What a Conversion Costs and How It Is Financed

City Express by Marriott is Marriott's midscale conversion brand, brought to the United States in March 2025 from Mexico. For a U.S. hotel owner it works like this: you convert an existing limited-service hotel, usually an aging flag or an independent, under a 20-year franchise agreement. You pay a $75,000 application fee, buy the initial FF&E and supplies package through Marriott, and pay a single bundled fee of 10.5% of gross room sales. Marriott's franchise disclosure document dated March 31, 2026 puts the conversion cost at $2,760,810 to $4,901,610 for a 100-room, 33,000-square-foot hotel, or $27,600 to $49,000 per key. It gives no estimate for a new build because it expects most City Express hotels to be conversions or repurposed commercial buildings.

The rollout is real but early. The first U.S. City Express opened in Duluth, Georgia in March 2025, Marriott reported 100 signed agreements in the U.S. and Canada by December 2025, and the second-quarter 2026 release counts 28 open hotels with 2,460 rooms in the two countries. Owners finance a conversion with an SBA 7(a) loan up to $5 million, a Bridge direct PIP loan from $500,000 to $15 million, a C-PACE assessment on the mechanical scope, or a bank term loan. On a $3.9 million purchase plus a $1.4 million conversion, the worked example below carries a $4.86 million 7(a) with $540,000 of equity.

Key takeaways

• City Express is Marriott's midscale conversion flag; the FDD expects most U.S. hotels to be conversions.
• Conversion cost: $2.76M to $4.90M for 100 rooms, $27,600 to $49,000 per key, per the March 2026 FDD.
• Fees per the 2026 FDD: $75,000 application, $12,000 PIP fee, 10.5% bundled fee including a 1.5% marketing fund, 20-year term.
• 28 open in the U.S. and Canada at June 30, 2026; 100 agreements signed by December 2025.
• SBA eligible (code S8680, March 2026); a 7(a) up to $5M fits most purchase-plus-conversion deals.

What is City Express by Marriott, and how did it enter the U.S.?

Marriott acquired the City Express brand portfolio in Mexico in 2023 and positioned it as its first midscale flag in the Americas. The first U.S. City Express by Marriott opened in Duluth, Georgia, an 83-room hotel bookable from March 2025, with more than 45 signed agreements at launch. By December 2025 Marriott reported 100 signed agreements in the U.S. and Canada, six openings in 2025 and four more slated, with named projects in Kissimmee (197 rooms), Dulles (90, a conversion), Amarillo (73), Sandusky (50) and Carson City (86). Marriott's 10-K counts 11 U.S. and Canada hotels with 1,129 rooms at year-end 2025, and the second-quarter 2026 release 28 hotels with 2,460 rooms, against 183 hotels and 20,795 rooms worldwide, most of them in Mexico.

The positioning in the FDD is explicit: a midscale hotel, with Marriott anticipating that "most City Express by Marriott hotels will be existing hotels that convert or commercial buildings that are repurposed." For an owner that means the brand competes for the same buildings as Spark by Hilton, Garner by IHG and the Choice midscale conversions, with Marriott Bonvoy distribution as the draw.

What does a City Express conversion cost?

From the City Express by Marriott 2026 FDD, Item 7, for converting an existing 100-room, 33,000-square-foot hotel. The table shows the main Item 7 lines; the full estimate also carries training, insurance and additional funds, and it excludes the purchase price, real estate costs and a contingency of at least 10% of hard costs.

The line a lender notices is the last one: $974,800 to $1,729,800 of the budget goes to Marriott or its affiliates, because the initial FF&E and operating supplies package must be bought through Marriott Design & Construction at a 5% procurement fee. That is 35% of the conversion budget on a fixed vendor, which a lender treats as a cost certainty rather than a negotiating item. Marriott gives no new-build or adaptive-reuse estimate.

What are the City Express fees?

A $75,000 application fee ($100,000 for an existing hotel already in the system), a $12,000 PIP fee, and a bundled fee of 10.5% of gross room sales that includes a 1.5% marketing fund, on a 20-year term from opening authorization that is not renewable. The 10.5% bundle is the highest headline rate in Marriott's U.S. system; StudioRes pays 9% headline, and the select-service brands land at about 10% to 12% only once program services and loyalty charges are added on top of their headline rates. It is the price of Bonvoy distribution on a conversion that would otherwise carry a 9% Choice or Wyndham stack.

Which hotels convert to City Express, and why?

Three profiles are signing. Owners of aging economy and midscale flags (Days Inn, Quality Inn, Baymont, Red Roof) whose agreements are ending and who want a top-tier loyalty program without a $150,000-per-key rebuild. Independents in secondary markets that can clear Marriott's conversion standards for $30,000 to $50,000 per key. And office or commercial buildings in walkable downtowns, where Marriott's adaptive-reuse appetite is the only major-brand route into the midscale tier. The Dulles conversion and the 197-room Kissimmee project are the two public examples of the range.

The owner's math is the RevPAR lift against the fee. Say your 100-room hotel moves from $55 of RevPAR on a legacy economy flag to $75 on City Express. Room revenue rises by about $730,000, from $2.0 million to $2.74 million. Franchise fees rise by about $107,000, because 10.5% of $2.74 million is $287,000 against 9% of $2.0 million, or $181,000. After the fee and about 38% flow-through, the incremental NOI is roughly $280,000 a year. That roughly matches the debt service on the low end of the conversion budget, about $295,000 a year on $2.76 million at 9.75% over 25 years, and falls well short of the $524,000 a year on the high end. The lift alone does not carry the conversion debt; the hotel's existing NOI has to carry the rest.

Is City Express SBA eligible?

Yes. City Express by Marriott was added to the SBA Franchise Directory on March 27, 2026 as code S8680, with the standard condition that any third-party manager be unaffiliated with Marriott and no extended-stay transient test. A 7(a) loan up to $5 million can fund the purchase, the conversion, the FF&E package and working capital in one loan. The rate is variable and capped at 10.00%, which is prime plus 3.00 points. Equity is 10% on a change of ownership, and amortization runs 25 years when the real estate fully secures the loan. Every owner must be a U.S. citizen or national under the March 1, 2026 rule, and since July 2026 a 7(a) can sit beside a $5 million 504 for $10 million of combined debt. The rules and brand table are in the SBA Franchise Directory check for hotel brands.

How do owners finance a City Express conversion?

Marriott itself does not finance City Express conversions. Item 10 says it provides a contingent guaranty or mezzanine loan only in very limited circumstances, and no key money program is disclosed. The PIP routes above are compared line by line in hotel PIP financing options.

Bridge closed more than $500 million of hotel loans in 2025. It lends directly on PIP and conversion loans from $500,000 to $15 million, and on acquisitions of $10 million and up it structures the loan and runs the process through closing for a 0.50% fee.

Worked example: buying and converting a 100-room hotel to City Express

An owner-operator buys a 100-room unflagged hotel for $3.9 million and converts it at $1.4 million (mid-range of Item 7, including the $75,000 application fee), with $100,000 of closing costs and working capital: $5.4 million in total.

Annual debt service is about $520,000 ($4.86 million at 9.75% over 25 years). Pre-conversion the hotel earns $55 of RevPAR, $2.0 million of revenue and about $600,000 of NOI, a 1.15x cover. The lender underwrites on projections because the real estate secures the loan, and the SOP requires 1.25x within two years. Post-conversion at $75 of RevPAR, this hotel's revenue is $2.74 million, the 10.5% fee $287,000, and NOI about $880,000, a 1.69x cover. The conversion lifts the hotel's value at a 9% cap rate from about $6.7 million to $9.8 million against $1.4 million spent, which is the City Express case in one line. For an owner who already holds the hotel with a bank mortgage, the same $1.4 million comes from a Bridge direct conversion loan or a 7(a) stacked on the existing debt, with a C-PACE assessment on the $300,000 to $500,000 of mechanical scope.

When is City Express the wrong brand?

• Avoid it if the building cannot meet the standards for under $50,000 per key. Above that, a Spark, Garner or Choice conversion at a lower fee, or a new build, may pencil better.
• Avoid it if the market's midscale RevPAR is under about $65. The 10.5% fee needs the Bonvoy lift to pay for itself.
• Avoid budgeting the FF&E package as negotiable. It is a mandatory purchase through Marriott at a 5% procurement fee.
• Avoid a new-build pro forma. Marriott gives no estimate and expects conversions; a lender will not underwrite one on this FDD.
• Avoid SBA if any owner is a lawful permanent resident. Use a bank or debt fund route.