Wyndham Hotels & Resorts executives gave an update on the integration and international growth of the La Quinta brand. Domestically, the company will dual-brand La Quinta with Hawthorn Suites.
REPORT FROM THE U.S.—Wyndham Hotels & Resorts’ 2018 acquisition of the La Quinta brand has brought new development opportunities to the surface, company executives said.
Since the acquisition closed in May 2018, Wyndham executives have assimilated La Quinta into the company’s portfolio, implementing some of the brand’s strategies into the development models of its other brands and preparing La Quinta for more global growth. Wyndham will continue to promote La Quinta’s Del Sol prototype and increase new construction, and the next big step for the brand is development of a dual-brand product with Hawthorn Suites by Wyndham.
During an executive Q&A session at Wyndham’s brand conference last month in Las Vegas, Chief Strategy and Development Officer Tom Barber said the company aims to grow new-construction development across the brand portfolio and especially through La Quinta.
“I know there are some questions about where we are in the economic cycle and so forth, but we know we need to build this capability independent of the cycle,” Barber said. “A big part of that is the acquisition of La Quinta.
“La Quinta was not a typical acquisition for us. It was an acquisition that added significant capabilities in new construction, but more specifically around development, design and construction and post-opening support. La Quinta has a great presence—90% of the pipeline is new construction—but we intend to leverage those capabilities to layer our other brands in there.”
Wyndham EVP and Chief Development Officer Chip Ohlsson said finding the synergies between Wyndham and La Quinta has made the transition smoother.
“We’ve been buying a new company on average every 18 months if you look at our history,” Ohlsson said during the executive Q&A session. “We’ve learned long ago that our way isn’t always the perfect way or the right way, so look at the best practices of the organization you’re buying and ask, ‘Can it make the overall company more efficient?’ Especially with new construction and design and development, we saw some things they were doing that were different than what we were doing with 19 other brands.”
“Financially it was an acquisition, but operationally it was a merger,” Barber added.
Domestically, Wyndham sees room to grow La Quinta in the Northeast U.S. and California, Ohlsson said. Internationally, La Quinta’s growth could be immediately seen in Latin America and even China, Barber said.
“Given the brand name, the natural extension is Latin America,” Barber said. “We have a pretty good presence there and we’ll expand there. We’ve announced a number of properties in the Dominican Republic, and those are moving along nicely and extending through Central and South America. There are opportunities in areas where you wouldn’t expect it. China’s a big opportunity—our China team thinks they can sell a lot of product—and then throughout Europe.
“When we did this acquisition, that was one of the big opportunities; we thought it was underpenetrated and (we would) be able to grow in areas outside the U.S.”
Launch of a dual brand
Part of La Quinta’s new-construction push will include new development of a La Quinta-Hawthorn Suites dual-brand property. In the second quarter, Wyndham signed seven agreements for the dual-brand prototype.
Krishna Paliwal, president of the La Quinta brand and head of architecture, design and construction, said pairing La Quinta and Hawthorn brings “quality and consistency” to the dual-brand marketplace.
“We believe La Quinta does very well in the transient market, but there are markets where there is some business which is available for extended stay, so we have created a true dual brand,” he said.
Ohlsson called the La Quinta-Hawthorn Suites product a “logical” joining of the two brands that benefits both guests and owners.
“You’ll capture two segments of the marketplace; you’re not doing a transient hotel with a transient hotel, you’re doing a transient hotel with an extended-stay hotel,” Ohlsson said. “Two different guests can stay in the same building but have different experiences while they’re there. From a development standpoint, it’s one of things we’re most excited about. … Sometimes when people do dual brands they do it for the guests, but they don’t think of the ownership, and in this case we thought of the guests and the ownership, and made it one of the most efficient dual brands.”
Scott Buchalter, brand leader and VP of operations at Hawthorn Suites by Wyndham, said the company was considering Hawthorn refresh options at about the same time as the La Quinta deal, and the lightbulb went off.
“We were in the process of acquiring La Quinta and it struck us that these two brands would be so amazing together: a solid midscale extended-stay brand like Hawthorn, and an amazing iconic midscale in La Quinta,” Buchalter said in a separate phone interview. “We knew the extended-stay/midscale segment dual-brand concept was starting to gain some traction in the industry, and we thought partnering the two brands was a win-win.”
The makeup of the dual-brand prototype is about 65% La Quinta and 35% Hawthorn, Buchalter said. Estimated building cost is $108,000 per key, but as low as $75,000 per key in some markets, he added.
Buchalter said he anticipates the dual-brand property will thrive in markets that have both transient and extended-stay demand, citing guests that might stay a few nights for a college visit or more than five nights for extended medical treatment. He added gas and oil markets in Texas, West Virginia and Pennsylvania, along with resort markets such as Orlando, are all good targets for the La Quinta-Hawthorn model.
There’s also the potential for transient La Quinta guests to be converted to extended-stay Hawthorn guests.
“This arms the director of sales with two offerings, rather than just the one,” Buchalter said. “There will be crossover between the La Quinta guest that was not familiar with Hawthorn to say, ‘Hey, tell me a little bit more about this.’ … You can make the switch whether you're in the transient room for two nights, and say, ‘Hey, I want to change over to the extended stay, because my company said I need to stay for another week.’”
Barber said the prototype is still customizable for each market in terms of room-count split between the two brands.
“The interesting point about the dual brand with extended stay is maybe you have 30 rooms of demand in a particular market, whereas a standalone Hawthorn would be 70 to 80 rooms,” he said. “So you can right-size it for that particular market.”
Editor’s note: Wyndham Hotels & Resorts paid for meals, registration fees and accommodations at Mandalay Bay Resort and Casino to attend its brand conference. Complete editorial control was at the discretion of the Hotel News Now editorial team; Wyndham had no influence on the coverage provided.