Known for its iconic economy lodging brands, Motel 6 and Studio 6, G6 Hospitality is on track to open 150 properties in 2015. The company also boasts a healthy pipeline that is set to be twice the size of 2014, according to President and CEO Jim Amorosia. “I’m bullish on what we’re going to be able to do in the next few years,” he said during a break at the Lodging Conference in Phoenix earlier this month. Here’s what Amorosia shared about G6’s franchise growth, international expansion, new initiatives, and more.
What has contributed to the growth of G6 Hospitality? We are having a significantly better track record with multi-unit developers, which is something we had set as a goal for ourselves about 24 months ago. We wanted to develop further into the multi-unit owners who are either in the economy or the middle market segment and are looking to branch out. We’ve been able to get quite a few agreements with some of the various players, both from a conversions standpoint and some that have additional land usage from a construction standpoint, specifically for Studio 6. The Studio 6 new construction is going extremely well. It’s happening in Canada, the United States, as well as in Latin America. That is super critical for us because Studio 6 was never the size it should have been—it’s still not, but it’s getting closer. We’ll probably break 100 next year. On the Motel 6 side, it’s been predominately conversions and they are happening in two structures. One is ongoing standalone conversions with existing partners, and then secondarily, there have been some small group tranche sales of other brands.
How has the structure of the company transformed since Blackstone acquired it in 2012? When Blackstone bought us, they gave me two primary responsibilities. One was to renovate the system, of which by the end of this year we’ll be more than 70 percent complete on the owned estate, with a goal of completing by the end of next year. Secondarily, I was tasked with growing the system aggressively both domestically and internationally. In order to be successful at those things, it made sense to take a step back and make changes internally. So we had to restructure the organization to become dual headed to both support the owned estate, which is 530 hotels, and support the franchise estate, which will be 800 hotels by the end of this year. This enabled the development team to be fully dedicated to growing the brand. Once we did that, we recognized we needed a standalone group for analysis and forecasting. We also took the consulting and management side and moved it to the owned estate operating side. So we split the organization apart in respect to development, we combined it from a support standpoint, and we filled in expertise where necessary to make it work.
How is G6’s owned estate performing, especially with all the renovations? The owned estate will grow almost 10 percent again this year, on top of 10 percent last year, on top of 8 percent the year prior. We’re seeing continued lift both from a renovation standpoint and a product standpoint in terms of locations. As our franchise partners have committed to renovate their product with us in markets, they’re seeing basically the same lift we are, which is adding that much more impetus to the ones who haven’t renovated yet to get on the bandwagon as quick as possible. We’re providing our expertise as consultants to help direct their projects. We don’t want to be responsible for them, it’s their money, but we want to help them be successful, so we’re pointing out our best practices.
What growth opportunities are you seeing outside the United States? We’ve signed development agreements with Mexican, Ecuadorian, and Bolivian developers, and we’ll do the same in Brazil and Chile. And probably within the year, we’ll have somewhere between two and five developers in India, which will be our first foray into Asia. Directly related to that is our relationship with existing developers: Asian Indians who are able to help us understand not only the culture and the dynamics and demographics but also the geographic splits within the country. In Brazil, we’ll probably have an agreement early to late first semester next year, and India probably late first semester, early second semester next year.
Why did Latin America make sense for G6 to grow internationally? Our employee structure and a significant portion of our user structure is Hispanic, so we saw a direct link. We have a significant amount of our inventory on broader states that are connected either directly to Mexico or via travel to Central or South America.
What differentiates Estudio 6 and Hotel 6 properties in Latin America from the company’s domestic hotels? We realized the design didn’t have to be dramatically different, except for two key things. Just like in Europe, in Latin America you will more than likely offer some form of breakfast. It could be very limited, such as grab-and-go, or it could be fairly extensive, meaning it would include some hot food items, depending on the market. Secondarily, they are more like the lifestyle brands of the domestic U.S., so you need slightly more common space for people to gather. So the lobbies are probably between two and two-and-a-half times the size of a typical domestic Motel 6, which includes the eating area for whatever service you’re going to offer in the morning. There is very little different about the room itself.
What other countries are showing strong potential? Canada continues to be a solid performer for us. Our development partner Realstar will have either four or five projects this year, both new construction and conversion. A lot of their growth over the last couple of years has been in the energy markets of British Columbia, Alberta, and Saskatchewan. That’s still going on, but we’re also seeing more in the middle provinces. One of our conversions was in Toronto, a Studio 6, which is doing gangbusters. We’re pleased with the progress we continue to see with Realstar. We still believe Canada could ultimately be upward of 70 locations as time goes forward.
What new projects is G6 launching? We’re launching our national ad campaign in the middle November, which will run well into 2016. The other thing we’re launching is a state-of-the-art revenue management optimization solution that will be fully functional on all digital platforms. Users will be able to manage their entire inventory whether they’re onsite or from the comfort of their couch. They can look at their position and availability, and they can react to it instantaneously. Any time a change is input, whether it’s a change in price or room type, it instantaneously goes out to all communication devices, so everyone is on parity on a regular basis. We’re testing on the owned estate right now, and it will be fully functional for the franchise community in 2016.
