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La Quinta Finding Franchising Success They were once exclusively corporate owned, but since starting franchising they've become a national player with omnipresent presence. Monday, October 26, 2009 Glenn Haussman

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Eight years ago La Quinta was just another regional hotel company. Just one amongst a bevy of local players, each dominating one particular area, but was mostly unknown by the typical lodging consumer in other parts of the country.

Then the company radically altered its course, opening up franchising for the first time in its history. And they’ve never looked back since. Now La Quinta is a national player in the mid-tier without F&B sector.

It’s a cornerstone strategy that has allowed the company to proliferate growing radically in just a few years. In fact, they’ve thrived while brands such as Susse Chalet, Macintosh Inns and others have withered. Now the Blackstone owned brand is a mainstream player with a loyal customer base that’s appealing to both consumers and developers alike.

Part of the reason is the company’s laser focus on new construction and the company’s desire to continually make changes to enhance the look and feel of the brand. Since the Blackstone purchase in 2006 the company has gone from 424 hotels with 48,000 rooms to 744 open properties as of last month with 77,000 rooms.

But it’s a stay fresh appeal that is making the difference with consumers and franchisees.

 “We embrace and look for change because we want to perpetually improve,” said Wayne Goldberg, President & CEO of LQ Management. “We always want to get better and as long as you are working to get better you’ll continue to improve. We love change and it keeps us fresh.”

Take the design and décor package, for instance. There are eight different choices available franchisees that all emote the feeling of being in a La Quinta but gives owners and operators a chance to blend the hotel with their region or the property’s personality.

But its critical to the brand that new construction be the growth vehicle. To that end the company is at about 94 percent new build for its property selection. In fact, the rate of conversion properties has consistently dropped and according to Raj Trivedi, Executive Vice President and Chief Development Officer with La Quinta, almost all properties debuting this year are new build while 81 percent were in 2008. “We are going to have the majority new construction going forward,” said Trivedi.

To make sure new construction is desirable the company offers two prototypes, an urban and traditional version that each has a lot of flexibility in how they can be laid out, but Goldberg said both have an emphasis on delivering the maximum number of square feet that can produce revenue. 

“These prototypes allow franchisees to build modern hotels with modern looks. We looked at efficiency and eliminated areas that were non-revenue producing and in the process added two rooms to the prototype. So it gets more revenue per square foot of construction,” said Trivedi.

Currently there are more than 250 projects in the pipeline, 35 percent of which are under construction, an impressive feat considering the financing of most hotel projects have been scuttled during the last year.

Goldberg said that 80 percent of hotels now carry the Inn and Suites moniker. “The brand has clearly evolved,” he said.

The company is also growing rapidly outside the U.S. There are currently 22 properties in Mexico and another 10-15 will debut by the end of this year, Goldberg said. La Quinta is also getting a foothold in markets like Panama, Costa Rica, Columbia and Brazil. “We are focusing on long term international growth,” said Goldberg, who noted they’d be eschewing master franchising agreements in the process. “Master franchise agreements lend themselves to be potentially restrictive.”

But while La Quinta has its roots in company owned properties it sees itself almost exclusively franchising in the future. One exception was a recently opened property in downtown Chicago, but even with the occasional development deal Goldberg said the company “doesn’t have a real big appetite for developing from the ground up.”

Trivedi said the company will remain focused on a fee based business as well as increasing guest satisfaction scores and giving franchisees tools to increase market share.

The company is also training its owners and their staff to be prepared for when the good times return while also providing strategies for them to continue to fill rooms at a reasonable price until then.

“We are poised for tremendous growth not only in units but margins and profits as good times begin again because we are prepared for it. We expect to continue to grow at a better pace than our competition,” said Goldberg.