Orlando asset underlines La Quinta-Wyndham synergies
 
Orlando asset underlines La Quinta-Wyndham synergies
02 JULY 2018 8:30 AM

Executives share highlights of the first month since La Quinta Inn & Suites joined the Wyndham Hotels & Resorts brand family, including a side-by-side development in Orlando which looks to capitalize on new synergies.

REPORT FROM THE U.S.—Little more than a month since the La Quinta Inns & Suites brand officially joined the Wyndham Hotels & Resorts family, both parent and child are seeing and reaping the benefits of a relationship executives said has proved to be a perfect fit.

The earliest and perhaps most concrete example of synergies and opportunities being created by the acquisition might be the recent groundbreaking of two hotels, a La Quinta and TRYP by Wyndham, being developed side by side in Orlando, Florida.

Another more visible exhibition of the La Quinta-Wyndham connection could be coming, said Raj Trivedi, president of the La Quinta brand, who expects an announcement in the near future regarding adding the “By Wyndham” designation to the La Quinta Inns & Suites name.

At Wyndham’s Global Brand Conference in April, President and CEO Geoff Ballotti announced the addition of “By Wyndham” to 12 of Wyndham’s brands—Super 8, Days Inn, Howard Johnson, Travelodge, AmericInn, Baymont, Ramada, Ramada Encore, Dolce, Dazzler, Esplendor and Trademark—and said he hoped to add La Quinta to that list once the acquisition closed, as long as it “makes sense in the franchisees’ and owners’ minds.”

Trivedi said his impression from recent conversations with the brand council is that “the overall feelings are to move forward in that direction,” and the council is “in the process of finalizing details.”

Side-by-side and dual-brand properties
The Orlando development represents multiple firsts. It’s the first new-build hotel for La Quinta since it joined Wyndham, “and the first new construction for La Quinta in a long time,” according to Trivedi. It’s also the first TRYP hotel in the Orlando market.

He called the project “absolutely a fantastic introduction” to La Quinta under Wyndham and to synergies between two brands “that fit with each other so well.”

TRYP brings an international renown, while La Quinta is “very well-respected domestically,” he said. Both brands operate in the midscale to upper-midscale segments. La Quinta is select-service and TRYP is full-service, but working together, from a sales perspective, they will be able to book more and larger groups than what was possible for either individually, he said.

The compatibility of the two brands—from a price, guest segment and amenities point of view—opens up the possibility to move from side-by-side to dual-brand hotels for future projects, said Chip Ohlsson, Wyndham’s EVP and chief development officer for North America.

“Side-by-side is a great model and a great way to capture different guest experience, but also doing that dual brand, which is a flavor of the month out there in development, allows you now to create those synergies that we couldn’t create before,” he said. “Whereas before we had people that were developing hotels with us saying, ‘We wanted to be in the midmarket, and we want to move up to the next level with TRYP, but we have to do them side by side, because we wouldn’t allow dual brands to be in the same building under different companies.’ Now we’re able to do that.”

Trivedi agreed that “potentially in the future, moving from side-by-side to dual-brand (hotels) will be the right way to go so that we can create even greater synergies for our franchise partners.”

“What we would like to see is La Quinta becoming an anchor and allowing the franchisees to look at a second brand up or down or extended stay,” he said. “I envision tremendous interest from franchise partners and developers in that in the future.”

Benefits on both sides
Ohlsson said what the La Quinta acquisition has done, for franchisees on both sides, is to expand offerings and options for capturing different guest segments and potentially an entire market for the Wyndham brand family.

“We’ve very happy because, at 90% new construction with La Quinta—there’s a tremendous amount of new construction going on—this now opens the door for us to go in with some other brands and allow them to capture the entire marketplace with the Wyndham family of brands,” he said. “And that’s what we’re more excited about is being able to offer our franchisees the ability to expand their footprint with our brands.”

Trivedi said owners are also realizing synergies in operations, with large, regional operations teams that have the ability to share best practices; in technology, as the company evaluates internal systems from CRS to those at the property level; and in negotiating with the online travel agencies.

“We are already starting to see various benefits at a different level,” he said. “Synergy already in the purchasing side, with such a large group—the company and the people and the brands, with 9,000 hotels—it allows us to provide our La Quinta franchisees tremendous amount of benefit into purchasing, pricing.

“Among the best and most important synergies for the La Quinta franchisees that shall happen in the very near future is substantial savings in the OTA costs, because we are going to be able to tag along with Wyndham’s program, which was not the case. So it is an immediate impact on their bottom line. So as I see it, and in my opinion, we have just scratched the surface, and as we go through and put other things into place, it will keep growing.”

Ohlsson said he sees La Quinta as a “missing piece for the Wyndham family of brands also.”

“Being a strong, new-construction, midscale to upper-midscale offering further enhances us as a company. … It really brings us full circle, and that’s why (the acquisition) really made all the sense in the world,” he said.

From La Quinta’s perspective, Trivedi said the brand has come a long way.

“As I describe it, the last 50 years were a journey,” he said. “We have now reached a destination. La Quinta has a home potentially forever, and a home that was much needed. In my opinion, being part of a large company in today’s era of consolidation gives so many possibilities to La Quinta. … We are starting to see the possibilities of international growth, the possibilities with technology integration, possibilities after we finish the loyalty program integration. ...

“It’s already a strong brand; it’s going to become even a very strong brand once all these processes are completed. By the end of the first quarter next year, when we have all of these synergies in place, franchisees from both sides, brands from both sides and the growth for La Quinta is going to be in a different gear.”

Development focus
Both executives said they see tremendous development opportunities ahead, for the La Quinta brand and for Wyndham as a whole.

“Since the announcement (of the acquisition), we’ve had tremendous interest from all across the U.S.,” Ohlsson said. “We haven’t been limited to Texas or the Northeast or to California. We’ve really seen people contacting us saying, ‘Hey, you finally have what we’ve been looking for. Let’s talk about this site, let’s talk about that site.’ It’s primarily people taking down sites of about four acres, now enabling us to go into that market with some different offerings.”

While he wasn’t ready to highlight any particular target market for development, Ohlsson said the company has been “working very closely with markets in the Northeast, Southeast, some out west,” and he expects there will be some announcements soon.

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