LaQuinta Sees Potential for Overseas Expansion
- Apr 30, 2009
While the hospitality sector downturn has forced many firms to put expansion plans on the back burner, LaQuinta Inns & Suites is not one of them. The company opened 11 hotels in seven U.S. states, and added more than 800 rooms in the first quarter of this year. The select service brand, which had 719 hotels and 75,000 rooms open at the close of the quarter, is aggressively targeting growth opportunities in foreign markets, particularly in Central and South America. “The economies of these countries are pretty strong,” said Rajiv Trivedi, (pictured), LaQuinta’s chief development officer & executive vice president for franchising. He revealed that LaQuinta has signed an agreement with a developer to build 13 LaQuintas in Panama, and work will begin shortly on a LaQuinta in Panama City, located near the Panama Canal. The chain is also looking at development possibilities in India and China, and has 12 development projects underway in Mexico. While acknowledging that finding capital for hotel development has become challenging, developing a hotel today can make financial sense, Trivedi said. Lenders are requiring that developers contribute 30 percent equity into a transaction today, where that figure was probably 20 percent a year or two ago. But, that increased equity requirement could be offset by lower cost of development, caused by factors such as a fall in price of some construction materials. “There is money available for development,” Trivedi said, noting that lenders will lend for hotel development in the select service sector, favoring developers with successful track records. Earler this month, LaQuinta opened a 241-room hotel in Chicago, located in the city’s Loop area. LaQuinta’s greatest growth will come through franchising, Trivedi said. LaQuinta has signed more than 600 franchise agreements since it launched its franchising program in 2001. Trivedi said the company is also open to selling some of its company-owned hotels, which numbers 400. The hotel industry is likely to face a tough 2009, but Trivedi said he is hopeful that the industry will start to rebound later this year. LaQuinta has lately seen some increase in its weekend business, which translates to a pickup in leisure travel. And an increase in leisure travel was the first sign that the last industry-wide recession was ending back in 2001, he said.