La Quinta Inns & Suites may be sold by owner Blackstone or launch an IPO in the near term, but for Executive Vice President and Chief Development Officer Raj Trivedi, of course, it has to be business as usual for the brand now with more than 800 hotels.
In fact, during the second quarter of 2013, La Quinta Inns & Suites, Irving, Texas, signed 34 new franchise agreements with more than two-thirds of the new franchises award in the first half for new construction. Internationally, growth continued to accelerate with a hotel now under construction in Medellin, Colombia, and development underway on a hotel of more than 100 rooms in Tegucigalpa, Honduras. La Quinta is also finalizing franchise agreements for additional hotels in Colombia and Honduras, as well as Nicaragua, Guatemala and Panama.
HOTELS caught up with Trivedi in Chicago last week to talk about the state of La Quinta affairs.
HOTELS Magazine: How’s business?
Raj Trivedi: On the franchise side from a RevPAR point of view, we have reached our highest performance since we started franchising. Growth versus last year for the first half of 2013 is at about 7%, while last year we ran more than 8%.
Hotel development momentum is much better as financing is opening up and people are going through regional banks to get things done. Next week, we are doing a ground breaking in Tegucigalpa and announcing Managua, Nicaragua, where we will start construction in a few months.
We signed Rockford, Illinois, and this morning we had meeting with a metro Chicago developer and will soon announce a project near O’Hare airport.
HOTELS: What can you tell me about the sale, IPO rumors?
Trivedi: Being owned by Blackstone you always deal with speculation. The only thing I know is that future for brand is strong. We have gone through this many times, and we continue to grow. Ultimately, Blackstone will have a plan and something will happen. I can’t tell you what it will be. Since I have been with La Quinta there have been three owners, and we have built the company better. Blackstone has provided great support and allowed us to take it to superior level, and we will continue to get better.
HOTELS: Tell me more about developer’s ability to finance.
Trivedi: We are seeing regional banks coming more into play whereas national institutions are more limited. Particularly in select-service, the regional banks see it as a more palatable investment and with a better future. Developers can get 65% to 70% loan-to-value.
HOTELS: What is La Quinta doing on the product side?
Trivedi: Two things. We have enhanced our workout facility. Instead of a single bay, we now build a 500 square foot space. We have also upgraded and enhanced our sundry shop w refrigeration units so incoming guests have more options. We are changing our lobby configuration to more of a ‘big room’ space where the breakfast area is not isolated and is more inviting for 24/7 use. Also, our international prototype has a new F&B space that is more in keeping with modern construction culture. And, we are redesigning our exterior, which we hope to introduce by our next conference.
HOTELS: Where else are you seeing more development traction?
Trivedi: We are already very active in Mexico, Latin and South America. We are interested in India and China, are evaluating, but if we enter we must be well prepared to be successful. India not a situation now that is so convincing to go out and go full force. We need to better understand these markets and have a clear set of expectations before entering.
The next move is going to happen in Brazil, where we are very close. Argentina, Peru and Chile will happen, too. We already have agreements for Guatemala City and San Jose, and Panama is moving forward. In Brazil, we are finally talking to people who understand franchising. We have decided not to do a master franchise as we don’t want to lose control of our destiny and brand. We will have our own infrastructure in the market. We are in conversations with institutional investors who want to put money to work there and develop hotels with La Quinta managing the various options.
HOTELS: What is your outlook for 2014?
Trivedi: 2014 will look strong and will see financing open even greater. We will see a better surge of development in the second half of 2014. If I get my fair share we will be larger than my competitive brands, and I will be happy.
