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Since 2006, La Quinta has added 399 properties to its portfolio, nearly doubling in size and exceeding the growth rate of the competition—Country Inn & Suites, Hampton Inn, and Holiday Inn Express—by a wide margin. Of course, La Quinta has a lot more growing to do to match the property base of some of its larger competitors, but by every indication the company is off to a great start.
“We are positioned very well to take advantage of this cycle,” says La Quinta’s president and CEO Wayne Goldberg. “We have to think about how we’re going to capture the next several years because they’re going to be very robust.” One way La Quinta has set up itself and its franchisees to bring in more money is by shifting its product line away from Inns and toward business traveler-friendly Inns and Suites. “When we started our franchise program in 2001 we owned 70 Inn and Suites and 230 Inns,” says Rajiv Trivedi, executive vice president and chief development officer at La Quinta. “Today there are 528 Inn and Suites and 297 Inns in the system.” And that latter number will be getting even smaller with the company recently announcing plans to sell off some of its older corporate owned properties (see “Scaling Back a Bit”).
“Now business travel is coming back and we need to capture a good portion of that market,” says Trivedi. “So our ad campaign is 100 percent targeted at business travelers—airing during sports shows, business programs, and news programs.” He adds that being in more locations also makes La Quinta attractive to business travelers since they can find them in most big cities.
A Seat at the Table
Beyond this gradual shift in La Quinta’s market position, the hotel company can point to its healthy franchisee relations and its intense emphasis on operational details as the cornerstones of its growth. “The people at La Quinta are operators first and licensees second,” says Deepesh Kholwadwala, president of hotel management firm Sun Capital and a franchisee based in Albuquerque, N.M. “While other brands are focused on top line revenue, La Quinta has experience successfully managing the expense side of the house.” He recommends La Quinta to hospitality newbies looking to open a big brand hotel because the company teaches its franchise partners to efficiently manage a property from top to bottom. “La Quinta operates 372 hotels so the management team has a lot of best practices to share, which is evident in the tools and experience that they bring to their training programs.”
Kholwadwala might be a bit biased in his opinions because he’s been a member of La Quinta’s brand council, a board of elected franchisees and corporate executives, since it launched in 2008. Still, he has a long enough history with the brand to weigh the good with the bad. “At the time I started with La Quinta they had a franchise advisory board like other hotel brands, which consisted of quarterly meetings in which corporate would just tell us what we should be doing,” says Kholwadwala. “In 2008 La Quinta switched over to the brand council model as a way to better harness the expertise of the franchisees.”
He says that most brands have an adversarial relationship between the corporate side and the franchise side. “Every decision makes you wonder about whose best interest is being addressed.” La Quinta’s brand council is designed to get the two sides working together toward a common goal. “We create better programs by involving our franchisees in their development,” says Trivedi. “These are entrepreneurs who have invested a large sum of money into their properties and they’re looking for tools that can help make them successful.” The brand council, he says, ensures that every new program is actually useful and doesn’t run roughshod over the franchisees’ interests.
“All of this works because La Quinta hasn’t gotten too big yet,” says Kholwadwala. “It’s still light on its feet when it comes to implementing new solutions.” A good example of this is the company’s new feature in its mobile app that makes booking a room as easy as making a dinner reservation. It’s called LQ Instant Hold and it allows guests to hold a room just by entering their telephone number. Once the room is held, it will stay that way for four hours, or until a guest adds the necessary credit card info to make the reservation. It’s a quick way for guests to get a room in those moments when it’s hard to dig up a credit card.
La Quinta is also the first brand to add TripAdvisor reviews on its mobile site and smartphone apps, presenting a more complete picture of each property to people on the go. Visitors to the website can also tap into Yelp reviews to see what restaurants and businesses are nearby the hotel they’re staying at.
But while the mobile stuff is cool, according to Kholwadwala, the most useful thing La Quinta rolled out this year was a standardized room cleaning procedure and training certification program. “They developed techniques on the corporate side that took their housekeeping time down from 30 minutes per room to 23 minutes,” says Kholwadwala. The new approach utilizes new chemicals and equipment—“They developed a bottle that you don’t have to squeeze the trigger to use,” says Kholwadwala—and greatly reduces the number of times that housekeepers need to go back and forth to their carts.
These techniques are now part of the La Quinta housekeeper training program. “The hospitality industry is an entry-level business,” says Rodger Forni, president of Pacific Inns and a La Quinta franchisee. “That means hotels are continually training and retraining staff. So comprehensive education and certification programs are invaluable.” Kholwadwala says that the new housekeeping procedures resulted in a reduction in payroll at his properties.
The Owner Advantage
Rodger Forni was one of La Quinta’s first franchisees and he’s been a part of the brand’s growth since 2001. Like Kholwadwala, he likes being part of the brand council because he finds that the company still operates like a hotel owner. “While most other chains have divested themselves of ownership,” says Forni, “La Quinta is still an owner and operator.” This pays off for franchisees since new programs and initiatives often start in La Quinta’s corporate owned properties, where the company spends several months testing and tweaking them before rolling them out to franchised properties. “We want to make sure when we launch a program to our franchise community, it is not only tested but it is vetted and it is proven,” says Trivedi.
Case in point, last year the company spent more than $50 million to install 50,000 new 32-inch Samsung flat-screen TVs in all 372 of its corporate-owned properties. And La Quinta went a step further to make the additional investment in the infrastructure required to deliver high-definition programming to each new TV. This immediately put it ahead of many other hotel chains that upgraded their TVs but continued to feed lower quality, standard def programming to them.
La Quinta’s solution offers 30 high-def channels, including three premium movie channels. And it does it through an interactive program guide much like what most guests already use with their TVs at home. Besides the program guide, the new Enseo set top box works over existing coaxial cabling and also allows plug-and-play connections so guests can display content from their laptops and mobile devices on the new high-def TVs in each guestroom. The entire solution is managed and controlled at a central server, which means La Quinta can deliver a consistent branding experience and marketing message across the chain and even deploy upgrades and new features remotely.
“When La Quinta came up with its high-definition TV solution we raised our hands and said that it may be great for the corporate stores, but franchise stores have pre-existing cable contracts that wouldn’t work with it,” says Kholwadwala. That’s because the corporate solution required every hotel to put a Dish Network satellite dish on their roof that would feed into a Guest-Tek rack with a separate receiver for every channel. The long-term cable contracts that most franchisees were tied into required expensive liquidated damages to get out of. After conversations with the brand council, La Quinta decided the solution needed to allow greater flexibility for franchisees. “We asked them to come up with a solution that plugged into the back of the TV and worked in a variety of environments; they came back with something that does just that—and even operates as a wireless access point,” says Kholwadwala.
The size of an iPhone, this $200 set top box screws into the back of a TV and allows franchisees to keep their existing cable contracts. La Quinta pulled off this trick by working with companies like LodgeNet, DirecTV, and Time Warner to figure out a way to feed high-definition broadcasts to the new set top boxes without using each company’s user interface, program guide, or property-level encryption system. The boxes operate without requiring more expensive Pro:Idiom TV systems to encrypt the signal throughout the hotel. And they also work an iPhone and Android remote control app that La Quinta is currently developing. “I’m hoping that La Quinta can push cable providers to subsidize this equipment,” says Kholwadwala. While the company isn’t ready to commit to this, it is looking to complete its high-definition TV and set top box rollout to franchise partners by the end of next year.
The Payoff
“This business is all about picking the right partners and generating a good ROI for them,” says Trivedi. While this sounds exactly like the kind of thing a brand’s development officer should say, Trivedi has made a pretty solid case to his franchisees so far. “As guest expectations have changed,” says Trivedi, “we’ve changed to meet them.” Over the past decade, La Quinta has had tremendous success delivering a quality product at a competitive price. And the brand has maintained that success through the shifting landscape of a troubled economy by staying focused on the fundamentals. “As owners and operators there isn’t much we can do to change the economic climate,” says Forni. “What we can do is be more careful in our expenses and focus on taking care of our customers, being friendly, and being clean.”
Midscale and select service hotels have always had to strike a careful balance between price and value, and La Quinta is no different. Trivedi notes that offering a great value generally leads to high satisfaction numbers and increasing room rates can compromise customer satisfaction. “Overall La Quinta’s guest satisfaction numbers are still at record levels. However, if you take a closer look at the numbers they also show that we’re giving up our product at a cheaper rate than we should. With the growth in demand that our industry is experiencing, the time has come to focus on rate,” says Trivedi. Then maybe all the hard work La Quinta has been doing will pay off.
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