La Quinta seeks to elevate brand up the chain scale

La Quinta is "cautiously optimistic" about repositioning the brand as upper-midscale, according to president and CEO Keith Cline.

DALLAS - The theme of La Quinta’s 2017 conference, held this week at the Hilton Anatole, is “Elevate,” and much of the conversation during the event’s first day revolved around how the company is planning to elevate its positioning from the midscale segment to upper-midscale. 

Repositioning the brand will involve major renovations to some of its hotels, EVP and COO John Cantele told the crowd. “It’s necessary and it’s time we make this change,” he said. Over the past two years, 111 franchised hotels have undergone renovations. “This is, to me, one of the examples of contribution we see from franchise partners,” Cantele said. Another 50 corporate hotels are currently slated for renovations, including 36 currently underway and another 14 scheduled for May.  

While not all of the nearly 900 hotels in the company's portfolio will require renovations, all will need some TLC, Cantele continued. “They can improve or elevate for the greater good of the brand.” By the end of 2017, the “elevate” strategy will have impacted 20 percent of the company’s portfolio by either removing or improving hotels through renovations or repositioning, La Quinta President & CEO Keith Cline said.

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The company, Cline said, is “cautiously optimistic” about the strategy. Its operations team is working with the sales-and-marketing team to make sure the hotels are positioned right and are driving rate and occupancy. “That delivers returns on capital investment,” he said. The timing of the renovations will be sequenced to minimize displacement and maximize readiness for peak demand periods, and the second quarter of 2017 will see the most renovations begin. 

Big Changes, Small Changes

“Our plan is to elevate every hotel at some level,” Cantele said. To that end, the company will be upgrading the in-room amenities in guestrooms and in the lobbies, with everything from branded toiletries to Royal Cup coffee to scrambled eggs at breakfast. “It’s another signal to travelers that La Quinta is serious about our repositioning strategy,” he said. 

Effectively, these small improvements will make sure that the company is bringing recently renovated hotels along for the longer ride, Cantele said. The strategy began months ago, and net promoter scores at participating hotels increased in 2016. “These results demonstrate that many challenges can be mitigated at least by GMs focused on business,” he said. “The hard work is paying off, and guests have taken notice.” 

Tough Choices

Raj Trivedi, EVP and chief development officer, said that La Quinta would not “shy away from making tough decisions when it comes to protecting our brand’s best interest.” Last year, La Quinta sold 19 owned hotels and exited 25 franchised properties as part of its key strategic priority to drive consistency of product. “We must remain committed to protect our brand’s best interest,” Trivedi said. 

Jeff Palla, SVP of franchise operations at La Quinta, agreed, and said that all of the enhancements should be in place by the end of 2018. “We need to all be on the same page with our product,” he said. “We must drive consistency in product.”

Looking Ahead 

La Quinta has 888 hotels open with a further 248 in the pipeline, 90 percent of which are new-construction, and 11 percent of which are international. The pipeline is the strongest it’s been since 2008 and represents approximately 23,100 additional rooms. Deals have been signed to open hotels in Baltimore, Memphis, Boston, several in New York City (including Times Square and Queens), Miami, Chicago, three in Seattle and one in Anchorage, Alaska. 

Internationally, the company has 22 hotels in the pipeline for Mexico, and has signed deals to open hotels in Santiago, Chile, and in Nicaragua. 

“In spite of challenges, La Quinta has grown the number of units in the brand every year since the start of the franchise program,” Trivedi said, noting that for 15 out of the past 16 years, the company has grown its market share of franchised hotels.

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