In addition, La Quinta will offer the same services at the same cost as part of its new franchise expansion program at no profit to the company. Unlike other purchasing programs for franchisees, all costs and fees related to the program will be "open book" --neither La Quinta nor Benjamin West will receive rebates, commissions or other remuneration by suppliers. It is the first time a major hotel brand has fully outsourced its FF&E purchasing program.
Services to be provided under the arrangement include specification, purchasing and installation management services. The purchasing services program will be an integral part of La Quinta's recently announced renovation plans, under which all hotel rooms and 270 hotel lobbies at the brand's 299 existing company-owned hotels will be refurbished. In addition, Benjamin West will provide purchasing services for three company-owned La Quinta hotels under construction, totaling 571 rooms, including a new prototype inn near the south entrance of the Dallas/Ft. Worth airport.
"Our goal is to continuously enhance the quality and integrity of the La Quinta brand and remain a leader in the mid-market, focused-service segment," said Butch Cash, La Quinta president and chief executive officer. "We expect to invest approximately $60 million in FF&E at our existing and newly constructed company-owned properties over the next three years."
Cash said that outsourcing the purchasing function would be both less expensive and less management intensive than conducting the program internally. "We carefully reviewed purchasing costs among our competitive set and found that Benjamin West can deliver superior purchasing results at a lower cost than in-house programs. We estimate that outsourcing our purchasing to Benjamin West will save us between 12 and 15 percent."
Cash noted that Benjamin West also will provide a design perspective to the purchasing process through its strategic partner, HVScompass Interior Design. "The design service adds significant value to the purchasing process by matching the most well-designed, functional and durable FF&E products with the best possible cost. This process creates value but does not sacrifice quality for price." HVScompass will provide input from its offices in Washington, D.C. and Boulder, Colo.
Benjamin West already has begun reviewing every current product's specifications and will source the best price-value by focusing on product quality, durability, manufacturing and freight efficiencies, warrantees and installation. "A typical La Quinta FF&E project will include more than 250 specified items from more than 70 companies," said Alan Benjamin, president of Benjamin West. "Our size, national scope and scale, along with our proprietary purchasing and project management programs, will allow us to manage this massive program in a way that improves hotel FF&E quality, reduces costs and minimizes guest disruption."
Cash said that in addition to speed, cost and quality considerations, La Quinta wanted to send a clear message to the hotel franchise community. "We have carefully observed the problems associated with purchasing in our industry and determined that we would better serve our franchisees and shareholders by providing a purchasing program with the highest integrity," he said. "Our goal is to get the best product at the lowest possible price that can be delivered on time and installed efficiently. We will create the highest value for our franchisees and shareholders by doing what we do best, owning, operating and franchising hotels, and by letting Benjamin West do what they do best, create superior hospitality purchasing FF&E solutions."
"In addition to examining a number of purchasing organizations' qualifications and capabilities, we looked closely at intangibles, especially reputation and integrity," said Sharon Beach, La Quinta's vice president of purchasing. "Benjamin West is a founding and active member of the International Society of Hospitality Purchasers (ISHP), which has been a guiding force in establishing and monitoring ethical hotel purchasing standards. Our goal is to set a new standard for integrity in purchasing in the hotel industry."
About Benjamin West
Benjamin West, LLLP, headquartered in Boulder, Colo., is one of the nation's largest hotel FF&E purchasing firms. The firm provides a full range of purchasing services, including specification, bidding, technical analysis, code compliance, financial management and installation for hotels in the mid-market, upscale and luxury segments. Additional information about the company may be found at its Web site: www.benjaminwest.com.
About La Quinta Inns, Inc.
Dallas-based La Quinta Inns, Inc. owns and operates 229 Inns and 70 Inns & Suites in 28 states. La Quinta is the lodging division of The Meditrust Companies
[NYSE: MT]
, a real estate investment trust. For more information about La Quinta, please visit its Web site at www.laquinta.com. Other news about the Meditrust Companies is available at www.reit.com.
