La Quinta Inns & Suites president and CEO Wayne Goldberg recently sat down with BTN hotel editor Michael B. Baker to discuss the midprice hotel company's rapid growth, international expansion and corporate travel business.Business Travel News: Does the economy present any opportunities for you?
Wayne Goldberg: There are always opportunities in a cycle like this. I've been in this business for 30 years and through a number of these cycles. We don't view the world differently today than we did when the RevPAR was growing. We have not changed our fundamental model in which we run our business, and we don't intend to. We look every day to see that we are running efficiently and effectively, and we make sure that model will sustain us all the time. If I was forced to make decisions to change my business because of the environment, then I could argue that I was not structured correctly to begin with. Of course, that doesn't mean you don't have to react to what's going on around you. We've grown to be a large company, but we don't think and act like a large company, we think and act like a small company, and that keeps us nimble and lets us make very quick decisions. We also can be flexible, because we are singularly focused and we're a singular brand.
BTN: Have you seen much benefit from travel buyers looking to trade down to lower tiers in their hotel programs?
Goldberg: Yes. As people trade down, we need to do the right things to make certain that as things recover, they'll continue to stay with us. They recognize the value proposition that we have, and leveraging our frequency program and what we offer will help us maintain those customers as the cycles change, so these aren't customers who step down and step back up. In a lot of cases, they'll realize there's no reason to pay that $40, $50, $80 or $100 when they can get the same type of quality and don't use the facilities and amenities that they're paying for in some of these other locations anyway. I'll put our product up against anyone's product. If you're looking for a good, clean comfortable room, our value proposition is as good if not better than most.
BTN: Tell me about your recently introduced new urban prototype
(BTNonline, June 22).Goldberg: This is basically the same interior with some modifications on the square footage, but the interior footprint is very much intact. The outside of the building looks different than our last prototypes, but if you walk into this facility, all of the elements and efficiencies that we've created over the years are all still there, and we did it without shrinking the size of the existing rooms. It really is a refresh of the look, something that can be put in more of an urban location, but it doesn't have to be. It can be put anywhere. That could go in suburbia just as easily as it could go in a downtown urban environment. It's not a requirement today—we still offer our existing prototypes—but it's been very well received. We have 15 of them under construction.
BTN: With your parent company Blackstone's acquisition of Hilton, are there any opportunities for cross-pollination?
Goldberg: There is room for us to leverage our size and our scale and our buying power, and we absolutely do that. We work closely with folks at Hilton to make sure we're leveraging those opportunities, but they're not consumer-facing. Anything you put together, you have to make sure you can take apart if need be. There are opportunities in our frequency program. We don't really have a lot of aspirational travel, yet we can buy Hilton loyalty points for certain resorts, which is no different than we did with other hotel chains prior to the acquisition.
BTN: What's been your growth pattern over the past several years?
Goldberg: We've grown very quickly. If you look at where we were in 2006, we had 424 hotels, approximately 48,000 rooms, with a relatively small pipeline of developing properties. Today, we have 720-plus hotels open, 74,000 guest rooms, and 255 properties in the pipeline, 40 percent of which is under some form of development. We don't put a property in our pipeline unless the partner actually has control of the land, so our pipeline is real.
BTN: Where has this growth been geographically focused?
Goldberg: Our growth over the last four to six years has been mostly domestic, with a goal to geographically disperse our brands throughout the continental United States. We've been very successful in doing so. Considering our pipeline, we will be in 47 of the 50 states: every state except West Virginia, which we're working on, Alaska and Hawaii. We have also significantly grown our footprint in the Northeast. We did some seed corporate-owned development to create some opportunities and to show we have our skin in the game, that we believe in these markets and knew our brand would work well and resonate well in these markets where we haven't had distribution. On top of that, we've been able to layer a significant number of franchise properties in markets where we didn't have distribution seven to 10 years ago. In the last five years, we've probably opened 60 to 70 hotels between the Northeast and the Great Lakes part of the country. In the last years, we've been focusing on Mexico, Latin America and South America. We have a significant number of projects under development in Mexico, and our first hotel is open there. We just signed a 13-property deal for Panama. The first properties in Colon and Panama City will begin construction before the end of the year, and the rest will follow a time schedule through the next couple of years. We're also looking at Brazil, Costa Rica and a number of other countries.
BTN: Why are those areas the ones on which you focus?
Goldberg: We have been in the Sun Belt border states—Texas, New Mexico and California—for 35 years, so we have had a presence in those markets for so long that people coming across the border have experienced and know our brand.
The name La Quinta means "country home" or "country villa," and we're known for the name. We've had in Mexico a Spanish 800 number for more than 20 years. We've been advertising in Mexico for more than 20 years. La Quinta does have a meaning for a lot of folks we're working with. We've been there for so long, in Laredo, or Brownsville, and in California, we're literally on the border.
BTN: Is your growth mostly new construction projects or does it also include conversions?
Goldberg: Almost all of the properties we put into our system over the last several years have been new, ground-up construction. One hundred percent of our growth in Mexico, Latin America and South America has been new construction.
BTN: Will you continue to concentrate your future growth on the Americas?
Goldberg: We're open and opportunistic. We've worked on a lot of things and have walked away from a couple opportunities in India. We felt there would be better opportunities than we were presented, but we're not avoiding anything, whether it's Asia, India or Europe.
BTN: How much of your business comes from corporate travel?
Goldberg: Our business mix is about the same as it has been for many years: about 50 percent corporate and 50 percent leisure. We're select-service, so we don't have a whole lot of meeting space, though we do have a couple of hotels with significant square footage of space.
BTN: How has the economy affected this?
Goldberg: In this environment today, we've seen our leisure business hold up much better than corporate as far as growth, and that's a sign that the second half of the year will be better than the first. As we get into the next few months, we'll have peak summer demand. We'll be down, but not nearly by what we've been down earlier this year. Our weekend business has been much better and has not been down nearly as much as the rest of the week. There is some pent-up demand. We are seeing signs that if we're not at the bottom, we're trending along the bottom. The question is how long we are going to be here.