LAS VEGAS— Acquiring complementary limited-service brands and snapping up lodging real estate for conversion to its proprietary brand are just two of the new focused growth tactics on the radar screen for La Quinta Corp. this year. The strategies were presented here last month by President/ CEO Francis “Butch” Cash to more than 650 attendees during the Dallas, TX-based company’s annual national conference. “La Quinta is now in an excellent position— operationally, financially and strategically— to expand our brand and diversify through acquisitions,” said Cash, telling HOTEL BUSINESS® “we would hope by the end of this year that we would have something done. We’d like to do something in the magnitude of $0.5 billion, something like that. So it will be a fairly substantial acquisition.” Cash estimated 150 to 200 hotels could be layered in and indicated distribution concerns really weren’t that critical, depending on the buy. “I would like to find a brand, if we’re going to own the real estate and convert it to La Quintas, that has a different distribution than we have— Midwest, Northeast— not concentrated in the Southwest like we are. But if we’re buying just the brand, it wouldn’t matter to us.” The buy situation could stem from a standalone brand that lacks the scale, financial resources or management expertise to grow or could be a brand of an existing company, said Cash. The corporation also will zero in on continuing to improve existing operations, which saw major gains at year’s end, and to grow its franchising program, which is now in its third year. A conference highlight was the achievement of a benchmark 100th franchise hotel, a 71-room La Quinta Inn and Suites in Galveston, TX. The four-story, new construction property is owned and operated by Sam Ghandi. Alan Tallis, executive vp/chief development officer for La Quinta, told HOTEL BUSINESS® the property signals the success of the franchise program. “To open 100 units in less than three years, in our opinion, is a great testament to what we’re trying to do for the franchisees and the very core of our program,” he said. Tallis added the success of the program would allow those who are hesitant or tentative about acquiring the La Quinta brand “to go forward and do so based on understanding the success that our other franchisees have had. It definitely signals the fact that we are truly in the franchise business.” There are roughly 50 more franchise deals in the pipeline coming on the heels of the 31 added in 2003. The majority of those projects are new construction. Cash said that adding a new complementary brand could also open up other opportunities for its existing franchisees, as well as new ones. As for adding a brand for conversion, he said the brand would work with existing franchisees to make it “attractive for them to want to convert to La Quinta.” For the traditional La Quinta franchise, Tallis said incentives are offered depending on location. “Quite candidly, we’re not buying business. But if there’s a strategic location we feel is key to our system, we’ll work with franchisees and provide some form of contribution,” he said. “We need to be where our guests need us to be. The more markets we are in where our guests want to stay, the stronger our brand becomes and the more market share we can claim,” said CFO David Rea. “In addition, our current infrastructure of systems and people can support a larger La Quinta.” Wayne Goldberg, senior vp/operations pointed out the company also reduced management turnover in 2003 to 20%, thus creating greater stability. With its corporate restructuring now considered complete and armed with a strong balance sheet and a considerable cash war chest of some $327 million, La Quinta is set on getting ahead of the industry curve in terms of recovery and leveraging its recent sustained performance. The conference’s rallying cry of “Whatever It Takes” apparently already “took” for La Quinta in the second half of 20
