Despite the economy's near devastating impact on the lodging sector, Rajiv Trivedi opened 81 new La Quinta Inns and Suites last year. In addition, the chiefofficer has 218 hotels in the pipeline, slated to open over the next 24 to 36 months.
But there's a bigger story. Trivedi, 47, joined LaQuinta in September 2000. At the time, the company was primarily a hotel owner and operator. His job was to grow the company's franchise program, which launched in early 2001. Under his leadership, “franchises have gone from one hotel in McAllen, Texas, to more than 400 today,” says Trivedi.
The 400 franchised properties represent nearly 48% of the company's approximately 800 hotels. “Over the last few years almost all of the growth has come through franchising,” says Trivedi. “Future growth will be predominantly franchising growth.”
Trivedi first changed the model for franchisor-franchisee communications. Rather than send franchisees to multiple contacts at the corporate level, which changed throughout the development cycle, Trivedi boiled the contact down to a single regional operations director.
“[The directors of operations] are in charge of their franchisee from the moment they sign the agreement until the agreement expires,” he says.
The second component of the program was a shift in focus from top-line revenues, such as revenue per available room and average daily rate, to bottom-line measures like cost cutting.
“If we continue to increase expenses for the franchisees where they're not yielding better profit, it doesn't do any good for the brand or the franchisee in the long run,” Trivedi maintains.
Trivedi has grown the brand by signing agreements with existing franchisees. In fact, 65% to 75% of new business comes from current franchisees. These owners have portfolios of three to four properties and existing relationships with local and regional banks.
The story that La Quinta's franchisees can tell lenders is thatcosts have fallen, lowering the cost to build per key from $70,000 at the peak of the market to $55,000 today.
But the most profound measure of success for Trivedi is not in costs or revenue, but in his relationships with his hotel partners. “In 10 years of franchising, we have had no lawsuits filed against us by any of the franchisees.”