Interview: Extended Stay America CEO Jim Donald

Extended Stay America just completed a watershed year in its post-bankruptcy turnaround, with the completion in November of a $565 million initial public offering. Work continues on portfolio-wide investment and renovation to which the brand already credits a significant uptick in rates, revenues and guest satisfaction ratings. Extended Stay America CEO Jim Donald recently spoke with Business Travel News lodging editor Michael B. Baker about the progress in renovations and the response he's seen from the corporate travel community.

Where are you in the renovations process?

We're still in the middle of phase six. I toured about 10 properties yesterday that are about halfway through. By March, we will complete 90 platinum renovations. It's exterior paint and a full-room renovation, including carpeting, vinyl. We refresh the hard goods: new mattresses, bedspreads, lights, flatscreen TVs, interior paint. It's the whole package. When we complete this phase, we'll have over 52 percent of our properties platinum-renovated over the last two years. The results we're seeing are fantastic, both from a return and from a guest perception and also from an [owner and employee] reality. Any time you renovate, you get a lift in enthusiasm and esprit de corps. The corporations that have signed up are very enthusiastic about where we sit today. We're seeing new corporate guests come on board as well as continuing to grow our business with the existing ones.

What's the next step?

With phase seven, we're looking at approximately 60 properties. Phase eight, in 2015, will be roughly around 40 properties, which puts us over 65 percent of our base renovations. That can change one way or the other, but as we look at a road map of the next couple of years, that's what we’re looking at.

What impact have you seen with guests?

We have internal measurements of service scores by third-party providers. We have freshness scores. We have the TripAdvisor reports, and the growth on TripAdvisor has been fantastic. We have a whole dashboard of internally measured metrics that indicate to us that we are doing the right thing here and seeing that lift both physically, with rate and revenue, and what I see as a satisfaction and engagement rate.

You said a few years ago that you were not looking to grow ESA's portfolio. Is that still the case?

We have a couple years ahead of us of just harvesting our own family farm, with regard to our current properties. Based upon the inventory growth over the next two or three years and what the industry pundits are calling for, we know there's a potential out there for either new growth—ground up—or a potential acquisition here and there. It's something that we talk about in my weekly staff meetings, but it's not something we're jumping on right now.

Are you still growing your sales staff?

It's pretty much flattened out now because we have the right organization in place, and we're happy with what we see. We're all in sales. I was just on a plane from Seattle to Charlotte and got waylaid in Billings, Montana, so I was selling rooms to the entire plane as we landed in Charlotte at 1 a.m. When we take on that mindset, it goes to the property level as well, that they're all in sales.

What's your outlook for 2014?

As I read and listen to what other CEOs are saying and what the analysts in the hotel industry are saying, they're calling for a 5 to 6 percent [increase in revenue per available room], and I'm comfortable with that number. We still are creating a lot of our own tailwind and will continue to do so as we continue to improve with our renovations and our service levels, both from the corporate client perspective as well as the individual guests that come into our properties.