29520 - City Express II

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Environmental & Social Review Summary

Project Number

29520

Company Name

HOTELES CITY EXPRESS S.A.B. DE C.V.

Date ESRS Disclosed

May 6, 2010

Country

Mexico

Region

Latin America and the Caribbean

Last Updated Date

Apr 13, 2024

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 25, 2010
Signed : Jun 29, 2010
Invested : Sep 29, 2010

Sector

City and Business Hotel

Industry

Tourism, Retail and Property

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

The proposed IFC investment is an equity investment of up to $20 million to finance a portion of the 2011-2015 business expansion plan of the Company which comprises the development of approximately 50 additional new hotels (the “Project”). This capital increase will help the Company consolidate its leading position in the budget business hotel sector, accelerate existing growth plans and initiate its expansion outside of Mexico. As of March 31, 2010, the Company manages 47 hotels, representing 5,214, rooms within three different brands: (i) City express (ii) City junior; and (iii) City Suites.

Overview of IFC's Scope of Review

IFC’s review was conducted within a year of the review of IFC’s first project with Hoteles City Express (the “Company”, or “City Express”), this earlier review being available on IFC’s Disclosure Portal- Project #26214:

On this second project, IFC’s review included a comparison of the Company’s environmental and social performance with local regulation and IFC’s requirements as defined in the earlier review and Environmental and Social Action Plan. This was done by reviewing a questionnaire completed by the Company, and review of a written update prepared by the Company on its current environmental and social performance.

Other information reviewed included the expansion plans; in particular regarding land acquisition policies and replication of the existing construction model.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social review indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management Systems;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement;
- PS4: Community Health, Safety and Security;

City Express expects to develop its hotels in urban areas, close to industrial centers, and has a policy of acquiring land on a willing buyer / willing seller basis without causing displacement of communities. For this reason, no project impacts associated with the following Performance Standards are expected:
PS5: “Land Acquisition and Involuntary Resettlement”
PS6: “Biodiversity Conservation and Sustainable Natural Resource Management”
PS7: “Indigenous Peoples”
PS8: “Cultural Heritage”

This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects because has limited social and environmental impacts that may be mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

Key environmental and social issues associated with this project are corporate environmental and social management capacity; permitting and licensing of new sites; management of environmental impacts and occupational health and safety during construction; labor and working conditions; use of energy, water and resources; structural considerations in the design of the hotels; life and fire safety; solid waste management and; land acquisition.

Environmental and Social Mitigation Measures

The Company has presented information showing how its current environmental and social practices and policies, in some cases supplemented in some cases by additional measures described below ensure that the Company will comply with the environmental and social requirements upon implementation of the specific agreed measures. The social and environmental requirements are the local (Mexican or any country where hotels are built and operated) laws and regulations, IFC’s Performance Standards, and the applicable sections of IFC’s Environmental, Health and Safety guidelines. Additional actions are summarized in the attached Environmental and Social Action Plan (ESAP).

Social and Environmental Assessment and Management System

The Company has a well defined mechanism to identify potential areas/cities for new projects. It includes the assessment of the market and social and environmental aspects of potential sites. Land is acquired through willing buyer/seller transactions. Once the project is defined the Company identifies the legal requirements and obtains the applicable licenses. Depending on the area of the development different documents are required, including Environmental Impact Assessments (EIA), authorization for use of the soil and, the construction license, among others.

The Company will formalize its existing review process of screening potential Environmental and Social (E&S) impacts arising from the development of new hotels. The review will aim at timely identification and review of the potential risks, and risk control and mitigation measures. The review will include (i) potential economic and physical displacement associated with land acquisition, and compliance with IFC’s Performance Standard (PS) 5, (ii) site-specific biodiversity assessment (if applicable), (iii) potential discovery of cultural property, (iv) Structural and LF&S compliance with local and international standards (e.g. NFPA), and (v) safety during construction.

The Company has extensive experience on designing and managing the construction of the hotels, which is facilitated by the standardization of the hotels. Environmental and social aspect of development are controlled by the project manager at each development and include dust and erosion control, good housekeeping measures, proper solid waste management, and rigorous management of safety during construction. In order to ensure compliance in all sites the Company will develop an E&S policy applicable to all construction-phase contractors and will ensure that tender documents and all construction contracts include the requirement for appropriate labor and an OHS (Occupational Health and Safety) management.

The designs of the hotels are standardized and consider elements such as seismic conditions, life and fire safety, efficient use of water and energy, and waste water treatment needs. In previous projects the Company has included LEED (Leadership in Energy and Environmental Design) criteria in the design of the hotels and is planning to apply some of those elements in the new developments.

The hotels are operated by the Company, and follow local social and environmental requirements. The Company will comply with local environmental and labor laws in the sites they operate. As agreed in the previous project (project # 26214) the Company will continue making best efforts to implement an Environmental Management System consistent with ISO 14001 and OSHAS 18001 or equivalent international standards. The Company has so far nominated an E&S responsible at corporate level, initiated the implementation of the waste management program and has initiated the process of reporting energy and water consumption.

The Company has an on-line and practical induction program for all the employees; in addition the Company provides permanent training to the employees, including emergency response training.

Labor and Working Conditions

The Company will continue to apply its current Human Resources model in the new hotels. This includes a central team in headquarters and the local manager with responsibilities to manage local personnel. Although the Company operates each hotel as an independent service enterprise, consistent policies and procedures apply to all the hotels and will continue to be applied in future developments.

Terms of employment are communicated in writing upon taking up employment. Salaries, non-salary benefits, age of employment and worker’s organization follow local norms. Principles of Non-Discrimination and Equal Opportunity are applied in the Company.

The Company has relations with several unions depending on the location of the project; employees join the union when they initiate employment with the Company and are covered by the signed agreements. For new developments the Company will allow employees to join worker’s organization of their choosing.

Occupational Health and Safety (OHS) conditions during construction are supervised by the Project Manager and will be further addressed by formal requirements on the construction-phase contracts to guarantee appropriate labor and an OHS (Occupational Health and Safety) management and the implementation of the Occupational Health and Safety Management System. During the operation of the hotels hazards are limited and will be managed according to the Company’s new management system.

Pollution Prevention and Abatement

Air emission from the hotels will arise from small boilers used to provide hot water and from the electricity generators used for standby purposes only. Boilers and generators are small and below the size threshold above which IFC requires emission monitoring. Greenhouse gas emissions from this project are minimal and are derived from the use of electricity and heating of the water.

The hotels do not have kitchens, laundries, pools or additional facilities; therefore effluents are mostly sanitary waste water. The Company includes liquid effluents treatment facilities in locations where the local authorities require it. For future projects the Company will ensure that where hotel development and operation occurs in cities without municipal waste water treatment plants, appropriate water treatment systems will be included in hotel design and construction.

City Express incorporates Leadership in Energy and Environmental Design (LEED) criteria in the design to achieve energy and water efficiency. Measures implemented include low flow faucets and toilets, energy saving bulbs, efficient air conditioning systems and, double glass windows among other measures. The Company is assessing the benefits to expand LEED certification measures to more hotels.

The Company indicates the segregation of waste on site and recycling programs. Wastes generated in the hotels include paper and plastic wastes; food wastes are minimal as hotels do not have restaurants. Maintenance residues such as used lubricants, oils and paints are minimal and will be disposed in authorized municipal landfills and hazardous waste management contractors.

Community Health, Safety and Security

The Company considers structural and fire safety during the design and construction of the hotels. The Company has developed hotels in areas with elevated hurricane and seismic activity and follows appropriate technical requirements.

The fire safety systems of the hotels developed by City Express include sprinklers, smoke detectors, a central alarm system and compartmentalization. Doors used in all the rooms are 30 to 90 Minute Fire-Rated Doors. The Company replicates the same fire protection system in all the hotels, a protection system design that has been verified to be in compliance with the Spanish legislation regarding fire safety (Real decreto 314/2006: código técnico de la edificación, including “seguridad en caso de Incendio”). The Company has maintenance contracts to verify operations of the systems and has emergency plans in place. It has been agreed in the previous IFC’s engagement with the Company, that the Company will reinforce emergency response training. The Company will continue to develop its properties in compliance with all relevant local and an international standard for Life and Fire Safety including structural safety considerations, and will conduct a post-construction audit of each completed property to confirm that construction was in compliance with such standards and to confirm the correct installation and functioning of all fire protection equipment.

The Company has basic monitoring and management programs to assure potable water and safety of hot water systems. A systematic monitoring system will be implemented by the company.

Land Acquisition

All the land acquired by the Company has been done through market transactions in willing to sell-willing to buy basis and is expected to continue to do so. There isn’t a formal screening previous to land acquisition; therefore, the Company will develop it as described in the risk assessment section of this document.

Stakeholder Engagement

The Company’s hotels are located in commercial and industrial areas, previous to construction, the Company communicates with the relevant local and national authorities. The Company is not required and currently do not disclose publicly information regarding the new constructions. However, the Company indicates in its webpage when a new hotel is planned or will be opening. The Company will disclose locally the intention to build a hotel previous to initiate the construction. In the operating hotels local managers communicates with local authorities and solve inquiries from the local community if needed.

Information is available in the Company’s website: www.hotelescity.com, Selected City Express hotels across México and in the main offices of the Company:

Roberto Palacios, Chief Financial Officer
Santiago Parra, Corporate Finance Director
Hoteles City Express
Montes Urales 715-2o piso
Col. Lomas de Chapultepec
Mexico DF 11000
Telephone: +52 55 5249 8050
Fax Number +52 55 5249 8098
Website: www.hotelescity.com

The Company will make adequate public disclosure of this transaction in the Mexican business and trade press.

Client Documentation

File Name	Actions
EAP City Express II May 06 2010 final.pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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Environmental & Social Review Summary

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Environmental and Social Mitigation Measures

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