REPORT FROM THE U.S.—The Blackstone Group’s purchase of the Motel 6 and Studio 6 brands will most likely accelerate capital-expenditure requirements for franchisees, but owners flying the Motel 6 flag don’t necessarily see that as a bad thing.
At least two Motel 6 franchisees are looking forward to speeding up renovation requirements and will be looking to Blackstone to invest capital in the corporate-owned assets as well.
“The good thing is all the corporate-owned properties will be rehabbed. It will have a bigger impact,” said Harshad Patel, who owns and operates 35 Motel 6 locations across the United States. “That’s what we, as franchisees, are looking forward to.”
“(Franchisees are) going to want to keep up,” added Jim Sortino, who owns and operates two Motel 6 hotels—one in Milan, Ohio, and one in Huron, Ohio—as well as other economy and midscale brands.
Both franchisees said they are excited about the fresh start Blackstone will give the Motel 6 brand. Sortino said he likes Blackstone because the company both owns and operates, meaning “they have skin in the game.”
Harshad was skeptical when the deal was first announced. He’s been an Accor franchisee for 17 years and the Accor team “was part of my family,” He said. However, after learning more about Blackstone as an owner-operator, mostly through family members and colleagues who own and operate other Blackstone-owned franchises, Harshad is excited for Motel 6’s future.
Blackstone also owns the LaQuinta Inns and Suites brand, Hilton Worldwide and Extended Stay America, among others.
Both Harshad and Sortino said they hope the Motel 6 executive management team stays on with Blackstone.
“Accor has an open-door policy. When we had meetings or needed answers to questions we didn’t have to wait to hear back,” Sortino said. “I think Blackstone operates the same way. My friends have some LaQuintas, and they’ve been very pleased with Blackstone. It sounds like they’re on the same caliber.”
Harshad said he’s also heard from LaQuinta franchisees that Blackstone is engaged with their partners.
“They’re as good or better than Accor is. That’s basically what it all boils down to,” he said.
The first newly built Motel 6 “Phoenix” prototype, featuring new interior and exterior design, opened in October 2009. With new construction stalled during the downturn, Accor began requiring owners to install features of the Phoenix prototype when property-improvement plans were due or when owners converted to Motel 6 from outside brands.
Harshad said he’s completed Phoenix upgrades at some of his properties and plans to upgrade the rest soon. Sortino said one of his properties received the full Phoenix renovation while the other received a “midscale Phoenix” upgrade.
Both franchisees said the upgrades impacted hotel performance positively.
“I’ve seen major impacts on the occupancy, (average daily rate) and (revenue per available room), the whole nine yards. It has provided a big impact,” Harshad said. “New Phoenixes will take us to a new level.”
“We’ve seen a better efficiency in how we’re cleaning our rooms,” Sortino added. “Now you’re using a hardwood floor so you’re seeing time savings. The customer had given good feedback, and repeat business has gone up tremendously.”
ADR “has jumped $5 or $10,” Harshad said. “Once we have the new Phoenix in the entire system, it will be very good overall. I would rank Motel 6 right up there (with other brands) in terms of bottom line.
Changes at the top?
Jim Amorosia was appointed CEO of the Motel 6 and Studio 6 brands following Olivier Poirot's decision to leave the company in October 2011. Amorosia has been with the Motel 6 brand for 27 years, most recently serving as COO of the two brands since 2004. When Poirot left, Amorosia became the first American to lead an Accor brand.
After Poirot’s departure and a subsequent announcement from Accor that the focus will turn to expanding the Ibis brand, some questions were raised about the future of Motel 6 and Studio 6. Amorosia was quick to point out his continued commitment.
“We’re absolutely committed to the growth of the brand,” he told HotelNewsNow.com in September 2011. “I’m certainly committed to the plans and the expectations of me from Accor.”
Amorosia said last week during the NYU International Hospitality Industry Investment Conference that the Motel 6 management team will stay in place at least through the close of the deal. It’s more than likely, he said, that Blackstone will keep him and his colleagues on board to lead the team, saying “there is no one with more expertise with the Motel 6 philosophy than the current team in place, including myself with 27 years with the brand.”
But whether Blackstone sees some synergies with its other hotel brands and opportunities to reduce labor costs remains to be seen. The Studio 6 brand will align closely with the Extended Stay America brand and, while Amorosia said the brands will be in different stand-alone pools and will be managed separately, Harshad said he wonders if the two brands could merge.
“I’m looking forward to doing business with Blackstone—not only my current locations but I want to add locations,” he said. “They are a good company to do it with. The brand will have an overall better impression with consumers because Blackstone is going to put some (capital expenditure) money into the properties.”