Quality Inns International Inc. of Silver Spring said yesterday it has formed a joint venture with Mexico's second largest bank to create a chain of 40 moderately-priced hotels throughout Mexico.
The first 10 Quality Inns of Mexico will be opened within two years by acquiring existing facilities and the whole chain will be built over a 10-year period, said Joseph W. McCarthy, Quality Inns president.
Quality Inns will own 49 percent - the maximum foreign investment permitted - of a management company that will run the hotels.
The majority stockholder will be Banco National de Mexico, a Mexico City financial institution with assets of $4.5 billion. Banco National and other Mexican investors will own the hotel properties.
Banco National is a partner with Western International Hotels in a similiar hotel management company which runs the Camino Real chain of luxury hotels.
The projected 40-unit hotel chain will represent a $100-million-dollar investment, said James Rempe, Quality Inn's vice president for finance. Quality Inns will get 49 percent of the profits of the management company, but he said he could not estimate the impact the venture will have on the sales and profits of the Silver Spring company.
McCarthy said the Mexican venture is "the largest such project in our 37-year history" and the first Mexican operation of Quality Inns. The chain has 300 hotels and motels in the United States, Canada and Europe.
He said the 40-Mexican hotels would help the chain meet its goal of 500 units by 1932.
After it successful luxury hotel partnership with Western International, Banco National began a year ago to seek a partner to help develop "the three-star market" said Robert McGrail, Quality Inn's vice president for marketing.
He said the first hotels that will be acquired for the new chain have already been selected in Mexico City and other major markets.