Something to know about the Wyndham, La Quinta deal

The news about Wyndham Worldwide’s planned $1.95-billion acquisition of La Quinta Holdings’ hotel franchise and management businesses is only days old, leaving many questions up in the air.

Wyndham Hotel Group President and CEO Geoff Ballotti spoke with Hotel News Now during the first day of the Americas Lodging Investment Summit to share some new details about the pending deal.

1. La Quinta’s footprint will grow
“One of the most attractive aspects of La Quinta’s footprint is how many markets in the United States of America they are not currently in ... how many of STR’s tracts they are not currently in,” Ballotti said. “Roughly two-thirds of those tracts are available to put La Quintas into today.”

(STR is the parent company of Hotel News Now.)

Combining La Quinta’s and Wyndham Hotel Group’s sales teams opens up the number of franchise developers looking at those available markets, he said.

Outside of the U.S., Wyndham views expanding La Quinta’s presence in Mexico and Latin America overall as a priority, he said.

“Post-transition, all of our international divisions are asking the question: How quickly will La Quinta be an opportunity for our development teams in Europe, in the Middle East, in Southeast Asia and the Pacific?” Ballotti said. “How quickly will we be able to introduce LQ to markets potentially like China, where we now have 1,300 hotels and a growing management and distribution presence?”

2. Franchisees ‘will keep what they love’
Franchisees love the La Quinta brand, Ballotti said, so it’s important for Wyndham “to keep what they love.” He added the brand has such scale and breadth in a segment that Wyndham is not as present in as it would like to be.

La Quinta’s award-winning Del Sol prototype has been well-received, he said, and management has previously stated the majority of new hotels in the pipeline are the Del Sol prototype.

“It has great cash-flow return characteristics that we will obviously want to continue,” Ballotti said.

Wyndham also will work to add to and refine anything that resonates with developers and owners to make those hotels as profitable as it can be for the owners, he said.

3. La Quinta’s positioning means little competition within the family
Most of Wyndham’s hotels are in the economy space, Ballotti said, and most of La Quinta’s are in the midscale and upper-midscale segment.

“La Quinta Inn & Suites will be positioned as our largest flagship brand in the upper-midscale space,” he said.

Because Wyndham Hotel Group’s existing upper-midscale footprint is not significant, there are few potential conflicts among WHG and La Quinta franchisees, Ballotti said. In the event that any arise, the company will address them, he said.

“They all have my cellphone (number) and my email,” he said, referring to members of the La Quinta franchise advisory council.

4. Combined loyalty programs will generate demand across brands
Sixty percent of Wyndham Rewards members stay at multiple WHG brands, Ballotti said. They’re the guests who stay longer, spend more and are looking for more in a specific market, he said, and they’re looking for opportunities to earn points at different segments.

“You might be traveling for business and staying at a Super 8 or a Days Inn, but you’re looking to redeem points for a leisure stay, a staycation or a weekend stay or a stay in another market at a La Quinta resort,” he said.

5. Larger scale means more direct bookings
From a distribution standpoint, the deal adds tremendous opportunity to drive more business directly to the hotels because of the increased size of the Wyndham Rewards program, Ballotti said. La Quinta’s loyalty program, La Quinta Returns, has 13 million members, he said, and those rewards members have a tremendous sense of loyalty to the brand and constitute 44% of La Quinta roomnights.

“Combining those 13 million with the 55 million Wyndham Rewards members will have a direct and positive impact to driving more business directly to our franchisees and owners,” he said.