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With Acquisition by Blackstone Group Complete, La Quinta Management LLC
 Plans to Focus on Corporate Owned Hotels, Will Convert About 100
 Baymont Hotels to La Quinta and Sell Baymont Flag

By Suzanne Marta, The Dallas Morning News
Knight Ridder/Tribune Business News

Mar. 14, 2006 - GRAPEVINE -- With its acquisition by private equity firm Blackstone Group complete, La Quinta Management LLC outlined a plan Monday to expand aggressively and boost profit.

Wayne Goldberg, who took over the reins as chief executive and co-president in January, pitched a new approach as he kicked off a national conference at the Gaylord Texan Resort & Convention Center.

After four years of focusing on adding franchise operators, the Irving-based company will instead add corporate-owned hotels.

La Quinta will streamline its operations and enhance its brand, investing $275 million in property upgrades over the next few years.

La Quinta is also selling its sister Baymont flag and franchise system to focus on the more profitable La Quinta.

The company will keep about 100 Baymont locations and convert them to La Quintas, Mr. Goldberg said. La Quinta bought 185 Baymont, Woodfield Suites and Budgetel properties and franchises in September 2004, greatly expanding its reach in the Midwest and the Northeast.

But with the lodging market on an upswing, La Quinta plans to focus on boosting profit by getting a stronger foothold into robust urban markets, upgrading its existing properties and expanding its national presence.

Fast-growing demand and few new hotels under construction mean "this is not the time to be shy about raising rates," Mr. Goldberg told 1,100 revved-up general managers and franchise owners.

Limited-service hotels as a group were the industry's best-performing segment in 2005, with room revenue growing 11.7 percent, according to Smith Travel Research.

The focus on corporate-owned hotels is a return to La Quinta's roots. It launched its franchise program only four years ago.

Mr. Goldberg said, "being awarded a La Quinta franchise going forward will be on a much more selective basis."

La Quinta plans to add 100 company-owned hotels this year in addition to the 60 franchised locations it has scheduled to open.

The company is looking to grow primarily in the eastern United States and in California.

As a public company, La Quinta focused on franchising as a vehicle for growth.

Under Blackstone, "we no longer have capital constraints," Mr. Goldberg said.

Expansion is important for La Quinta, which doesn't enjoy the broad distribution of its competitors, said John Keeling, senior vice president of PKF Consulting in Houston.

"Just about any city in America has a Hampton Inn or Courtyard, but you can't say that about La Quinta," Mr. Keeling said.

La Quinta is also focusing on adding locations in urban areas with high barriers to entry and those with high visibility.

"If we're going to spend $20 to $30 million on a project, let's not risk our investment to competition," said Alan Tallis, co-president and chief development officer.

It is converting an office building in Chicago into "the only limited-service hotel within the loop of Chicago," he said.

The company has also begun preliminary talks with partners in India and China.



Copyright (c) 2006, The Dallas Morning News

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