La Quinta Cover Story Feb. 2012


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This is an in-depth look at what makes La Quinta such a successful company.

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La Quinta Cover Story Feb. 2012

  1. 1. Cover Story On The Bright SideLa Quinta executives open up about the history of the limited service brand,how the company defines its culture and why the guest always comes first All photos by David McGhee unless otherwise noted La Quinta President & CEO Wayne Goldberg and Chief Development Officer Rajiv TrivediT he site of this year’s La Quinta By Jonathan Springston, have to grow through franchising,” Inns & Suites annual conference Trivedi said during an interview in AAHOA Lodging Business is New Orleans and it is there, January from the La Quinta head-nearly 12 years ago, where two of the quarters in Irving, Texas. “We madecompany’s top executives met for the President of Operations and Rajiv a commitment to choose the rightfirst time, marking an important turn- Trivedi as Vice President of Franchise partners, to choose the right location,ing point for the brand. Operations. to choose the right property, and to Prior to 2000, La Quinta had Goldberg, who spent 21 years create consistency for the brand andcarved out a niche in the Sun Belt helping to build a franchising model the product.”catering to cost-conscious business for Red Roof with Cash, had been on “We launched the franchisetravelers. When Francis “Butch” Cash the job at La Quinta for two weeks program at Red Roof and we made abecame CEO in April 2000, he wanted in 2000 and was in New Orleans lot of mistakes,” Goldberg said. “Weto take La Quinta national using a when he met Trivedi, who honed his made a conscious decision to do thefranchising model to greatly expand franchising chops with Cendant and same thing here but better. We werethe company’s portfolio. had been on the job at La Quinta for going to learn from our mistakes and To bring the vision to reality, one week. not repeat them. When Raj came in,Cash made two key hires, bringing “[Cash] realized that for a brand he was able to help us not make thosein Wayne Goldberg as Group Vice to grow and remain competitive, you same mistakes, whether it be qual-FEBRUARY 2012 AAHOA Lodging Business 29
  2. 2. Cover Storyity, dealing with partners we never customer is their franchisee. To me, to our competitors, we did very wellshould never have been dealing with that’s backward. To me, the number and we’re very pleased.”– we very consciously said ‘we are one customer is the guest and any- “We saw unit growth, new con-going to do this better’ and I think we body that loses sight of that I think tracts signed, pipeline growth forhave.” focuses on the wrong things.” sure,” he added. “Guest satisfaction When Goldberg and Trivedi “Having such an open relation- remains strong and consistent. Wearrived at La Quinta, the company ship with our partners makes us bet- improved in almost every measureowned only 270 properties, faced ter,” Trivedi added. “They become a in 2011, even in a relatively weakconsiderable debt and was in general better believer in the program you are economy.”disarray. As Goldberg rose to presi- launching. It creates a much better Goldberg is concerned that no onedent and CEO in 2005 and Trivedi to environment for a guest.” is responding swiftly enough to theExecutive Vice President of Franchis- robust demand growth the industrying and Chief Development Officer, Strong Growth in 2011 has experienced over the last twoso too, did La Quinta grow. Travelers are rewarding La Quinta for years. Along with other talented execu- their careful focus on the guest expe- “When you have demand grow-tives and staff, they helped steer La rience. Despite a sluggish economy, ing, it’s reasonable to expect thatQuinta through the acquisition and Goldberg said La Quinta projected you get 1 percent or 2 percent ratesubsequent sale of Baymont proper- to complete 2011 with strong growth growth. In the first part of 2011, weties as well as the Blackstone Group across the major indicators. didn’t see that,” he said. “We plannedacquisition in 2006 while carefully “We saw significant RevPAR to see it and we had to ratchet backexpanding the portfolio with a com- growth. We’re going to have because we didn’t see it. We feltbination of corporate-owned and relatively strong EBITDA growth,” pricing should have moved sooner.franchised properties with a philoso- he said. “In the grand scheme of 2012 is set up well for modest ratephy rooted in AAHOA’s 12 Points of things, we saw some development growth.”Fair Franchising. activity slow down but in relation Goldberg feels momentum built “AAHOA has been a great partnerand instrumental in our success. AA-HOA is our key group of franchiseesand we have learned a lot fromthem,” Trivedi said. “Our franchisingmodel was based heavily on the 12Points of Fair Franchising. It keepsus honest and gives us the realitycheck every year to make sure we arepaying attention to the needs of theindustry.” Today, La Quinta is one of thelargest operators of limited-servicehotels in the United States. The com-pany operates and provides franchiseservices to more than 800 hotels in 46states, Canada and Mexico under theLa Quinta Inns and La Quinta Inns& Suites brands, with hotels in thepipeline for Latin America. While corporate-owned prop-erties are operated by La Quinta’soperations team, led by COO AngeloLombardi, and franchised propertiesare usually operated by an independ-ent management company or otherqualified manager, Goldberg viewsall properties as part of the same LaQuinta family working toward thesame goals. “We don’t view our franchisees asour customers. They are our partners Goldberg on Trivedi: “When Raj came in, he was able to help us not make those same mistakes, whether it be[and] it’s a long term marriage,” he quality, dealing with partners we never should neversaid. “There’s one guest and we share have been dealing with – we very consciously said ‘wethat guest. Most of our competitors, are going to do this better’ and I think we have.”they will tell you their number one30 AAHOA Lodging Business FEBRUARY 2012
  3. 3. Cover Story over the course of 2010 and 2011 “The results of bode well for the industry in Here For You are 2012. highly successful,” “We’re going to open Trivedi said. “It’s not a program but a more hotels this year. I know lifestyle. Here For we’re going to sign additional You is going to be contracts this year,” he said. one of our biggest “We’re investing in company- programs.” owned assets to renovate more hotels. More marketing dollars, more information systems dollars. That sets us up to perform better, even with a sluggish economy.” Trivedi noted franchised proper- ties outperformed their competitive set over the last two years, enjoying a 3 percent share growth in 2011 and a healthy RevPAR increase. “We had one of the least amount of properties going back to the bank. We have franchisees that were in some financial trouble but we did a good job of working out a payment plan. We are one of the few brands that have seen posi- tive growth in the units over the last two years,” he said. “Franchisees are quite pleased with the support and flexibil- ity. Our strategy for the brand and our partners is our biggest strength.” Clue Scanning Here For You During the 2011 conference, La Quinta introduced a number of new initiatives, including the branded customer concept called “Here For You.” “We’re not building a culture. We’re defining one that already existed,” Goldberg said. “When we started this, we didn’t have senior level meetings to decide what our culture was going to be. We went out and asked everyone for feed- back on what we view our values to be. All we’ve done is define the values people say existed.” When Goldberg hands out his business card, he also hands out a two-sided plastic card that contains how guests want to feelFEBRUARY 2012 AAHOA Lodging Business 31
  4. 4. Cover Story(Assured, Settled In and Optimistic)on one side and the La Quinta compa-ny values (People, Passion, Integrity,Excellence, and Unique) on the other. “It’s a work in progress,” Gold-berg said of Here For You. “We’renever satisfied. No matter how goodwe do something today, we want tofind a way to do it better tomorrow.” Trivedi said La Quinta is in theprocess of collecting surveys fromevery La Quinta employee, whetherthey work in housekeeping or theymanage the hotel, to gauge how HereFor You is progressing. “The results of Here For You arehighly successful,” he said. “It’s nota program but a lifestyle. Here ForYou is going to be one of our biggestprograms.” A key component of Here ForYou is Clue Scanning, which helps LaQuinta employees see their proper-ties from the guests’ perspective. During a visit to the La Quinta Inn& Suites Dallas Love Field, Goldbergand Trivedi put Clue Scanning intoaction, pointing out to General Man-ager Jesse Verghese small corrections,like ensuring cables are completelytucked behind a wall-mountedHDTV. “What Clue Scanning has done is “People need to seeit has created a greater awareness,” the lighter side of youTrivedi said. “You are watching what because that makesyou do and how you do it because them comfortableyou are observing others behavior.” around you,” Trivedi said. “People can see After last year’s conference, La the accessibility andQuinta held 158 Here For You train- the human side of you.”ing sessions across the country andworld. Clue Scanning went over quite very rewarding.” really becomes the culture of who wewell. Clue Scanning has inspired new are as a brand,” Evancho said. This “greater awareness” about ideas from everyone. Lombardi intro-the guest experience has paid divi- duced single-cup coffee makers in all The HDTV Projectdends for La Quinta, resulting in so corporate-owned properties and new The introduction of high-definitionmuch positive feedback from guests pillows for all La Quinta properties TVs at La Quinta properties is a pointthat the company had to assign some- through his personal observations. of pride for many executives as itone from the guest services division “At the end of 2011, I challenged served as the biggest product focusto handle it all. our executive committee to each visit of 2011. The brand has a partnership “Our guest satisfaction scores did two corporate hotels and two fran- with Samsung on plug and play TVsgo up. The real way to measure that is chise hotels,” Goldberg said. “I told that come equipped with the abilitythrough compliments that are unsolic- them to come back and report against to broadcast HD signals.ited,” Oliver Evancho, Vice President, our values as you see it from our em- During the visit to the Dallas LoveFranchising & Development Admin- ployees [and] benchmark where we Field property, Goldberg grins as heistration, said. “ I attended 28 training are as an organization. We don’t want plays with a new set, showing offsessions and every one was fun for me. them to be words. We want them to different backgrounds guests can setTo tell [employees] to become a guest, be real.” while they work or rest.what do you see, hear, feel, smell – it “What we’re going to show at this “Look at the picture! This is whatwas enlightening for me but to see the year’s conference is as a brand, we I really want you to see!” Goldberglight bulb go off for your maintenance have the responsibility to ensure Clue points out the Samsung sets havestaff, your housekeeping staff – it was Scanning isn’t a buzzword, that it ports on the side of the TV, making it32 AAHOA Lodging Business FEBRUARY 2012
  5. 5. Cover Storyeasy for guests to use. sive liquidated damages. “The first thought was to im- “It’s not about giving the guest all “About two years ago, cable plement this by the end of 2012,”the technology,” Goldberg said. “It’s companies started locking people Trivedi said. “We had a prolongedabout giving the guest the ability to into certain agreements. It sounded debate where [the Brand Council]use the technology they are traveling great at the time but the companies said ‘we can’t do that’. We needed towith.” understood their technology was not understand the facts about contracts, The $50 million project called moving as fast as satellite or HD,” liquidated damages and time offor rooms at every corporate-owned Evancho said. “They were trying to contracts.”property to have these Samsung TVs wrap people into long-term contracts. “We want people to be able to doby mid-2011 with a minimum of 30 We didn’t understand that until we it and not do it like we do it if there isavailable HD channels. went out there to hear it.” a better way,” Goldberg said. “MostWhat we’re going Goldberg on guest satisfaction: “To me, theto show at this number one customer is the guest and anybody that losesyear’s conference is sight of that I think focuses on the wrong things.”as a brand, we havethe responsibilityto ensure ClueScanning isn’t abuzzword, thatit really becomesthe culture ofwho we are as abrand “We want to make surethat minimum HD channelconsistency stays through-out the brand and that plugand play is available,”Trivedi said. “If they havea TV that doesn’t supply amodel, then we’re goingto have franchisees in-stall a panel that allowsthem to do plug and playwith their existing TVs.” After the TV announce-ment at last year’s confer-ence, the La Quinta Brand Councilraised a number of concerns abouthow the project would proceed atfranchised properties. Among otherissues, the Brand Council pointed outhow many franchisees are tied intolong-term contracts that to getout of would require expen-FEBRUARY 2012 AAHOA Lodging Business 33
  6. 6. Cover Story “It’s not about giving the guest all Vice President, Development, said. the technology,” Goldberg said of the The Brand Council also offers HDTV Project. “It’s about giving the suggestions for new initiatives. guest the ability to use the technology “A lot of initiatives we’re rolling they are traveling with.” out were brought to our attention by the Brand Council, like Here For You and the breakfast program,” Wilner said. Testing Projects in Corporate-Owned Properties New initiatives like the HDTV project often start in La Quinta’s corporate- owned properties for testing and tweaking before moving on to fran- chised properties. “Angelo and the entire operations team will deploy in a batch of prop- erties and see if there is a ROI and determine what the EBITDA is,” Ev- ancho said. “When we decide we’re going to do it, we’ll do it to every one of our properties before we make it a brand standard.” “The purpose of launching at a corporate hotel is very simple: any new program you launch, you always have certain adjustments you have to make, iron out certain kinks,” Trivedi said. “We want to make sure when we launch a program to our franchise community, it is not only tested but it is vetted, it is proven.” “Some other companies out there that are franchised only roll out something that isn’t tested,” Craig Brantl, Director of Franchise Services, said. “Our owners appreciate testing it on our end.” A Family Affair Thorough product testing and openof our franchise partners already “We are not expecting them to dialogue between management andhave flat screen TVs. They already forgo the contract they are currently franchisees create an environmenthave some HD content delivered. So under,” Trivedi added. “We would where franchisees feel like an impor-we’re working to see what that will rather they work with the companies tant part of something special.look like across the whole system.” they already have contracts with and During Goldberg and Trivedi’s After conversations with the make the adjustments to meet the visit to the Dallas Love Field prop-Brand Council, La Quinta decided to new standards.” erty, Verghese and other employeesprovide greater flexibility on imple- The debate over the HDTV project warmly greeted the executives andmenting the project. serves as the perfect example of the appeared excited to show off the new “What we don’t want to do is put function the Brand Council serves hotel.a date by which they have to have it and the friendly working relationship Verghese beams with pride ascompleted and them have a current it has with La Quinta executives. Goldberg and Trivedi point out thecontract that they then have to pay “By no means do we dictate deci- different features of the property theyliquidated damages,” Goldberg said. sions to them and then they just sit most enjoy. Goldberg notes the floors“We’re working to make sure we’re there and roll over. If we are moving in the main entrance and bathroom ap-not forcing them to do something in a direction, we bring it to their pear to be wood but are actually madethat costs them excessive amounts of attention and get their thoughts and of vinyl. Trivedi points out the uniquemoney to get out of agreements that suggestions. If they don’t like it, integrated bed scarfs and the decora-are already in place.” they’ll tell us,” David Wilner, Senior tive trim work in the bathrooms.34 AAHOA Lodging Business FEBRUARY 2012
  7. 7. Cover Story Goldberg discusses La Quinta comfortable around you. People can room features he enjoys see the accessibility and the human side of you,” Trivedi said. “Ulti- mately in our business, it boils down to relationships and someone who believes in and trusts you.” La Quinta executives feel creating this comfort level makes property visits and the annual conference feel more like family reunions. “It’s amazing how many of our franchise partners that enter our(Photo by Jonathan Springston) brand are amazed by the accessibility of all our executives,” Wilner said. “We have franchisees who come in here unannounced. The door’s always open and they can discuss problems or just talk.” Through mentorship programs and networking, La Quinta tries to introduce franchisees to one another Throughout the tour, both men partners see it. The staff sees it when so they might help each other solve ask Verghese questions while sharing we arrive. They see we’re not under common problems and to further stories and laughter. somebody’s thumb.” build a sense of community. “It’s very easy to become pas- Evancho noted Trivedi always “Our visits are not a threat to sionate about what you do when holds meetings with other execu- [franchisees]. Our visits are to tell you see you are a partner with the tives and staff to determine how to you the truth,” Trivedi said. “It is franchisees. We’re not telling them to keep site visits light while also being not they who should be worried. It do something. We’re guiding them helpful. is us that should be worried to make and they’re there for us as well,” “People need to see the lighter sure that they are successful in every Evancho said. “We have fun and our side of you because that makes them aspect at all times.” Goldberg and Trivedi point out a small correction at the La Quinta Inn & Suites Dallas Love Field(Photo by Jonathan Springston) FEBRUARY 2012 AAHOA Lodging Business 35