Defining Hospitality

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Dan Ryan: Today's guest is a proven, articulate thought leader in our industry. He's delivered exceptional results in strategic management, operation, sales, leading development, and acquisition efforts in our brutality industry. He's a recognized lodging and restaurant industries. He's the Chief Development Officer at Sinta. Ladies and gentlemen, Brian Quinn.
Brian Quinn: Hello, Dan Ryan. How's it going? Oh, it's
Dan Ryan: so good. It's so good to see you. And I'm, I've been talking to, you know, a lot of people on your team to kind of get this all set up.
And one of the things that I've been most excited about, and we'll get [00:01:00] into it, um, in a bit, Throughout the pandemic, I saw like in our industry, there were people who went away. There were people who just batten down the hatches and got super defensive. And there were a few people and companies that really pushed on the throttle and said, this is a time for growth and opportunity.
And in the last category, I feel like maybe I can count those on like one hand. And Esta is definitely one of those that looked at this as a, as a once in an opportu, once in a lifetime opportunity. So before we get into that whole story, because I think that whole idea of abundance and growth and what the future is, is super exciting.
You've been in hospitality since 1991. You started in the midst of a recession, um, after the savings and loan, and I think it was also the Gulf War was raging. Like, what do you love about [00:02:00] hospitality?
Brian Quinn: You know, I think it's a lot, a lot of us from all the different parts of the discipline, whether it's the design side architecture, development ops, it's really about either falling in love with the industry or not.
And I think ultimately it calls for, you know, loving people and a high eq. Uh, and I think you have to recognize that our broad industry is different. Um, we are required to be hos hospitable in the hospitality business, and those are two h's. Sometimes that are hard to get outta your mouth, but, but I really mean it, right?
We, we have a different care and concern for our employees because they deliver. Our product, right? And we are really all joined together. A great design idea really only comes to life if there's someone willing to put it in their building. And is that rooted in something that the consumer needs and can they get a return on it?
Right? So I think, um, we are all linked together. We're all in the industry for a reason because we do have that, um, maybe [00:03:00] connection to the human condition and, and, um, you know, an overarching, um, need and ability to be with others that are, that are like-minded and to care for each other. Uh, but I do believe we do have a duty to be hospitable in the hospitality business.
And, and on occasion when different people or enterprises get off that path, you can see that, um, you know, they're off their strategy because the hotel business travel, tourism has to have that route. It's why we're able to come to market different with our products and why we all try and take care of each other and bring everything along on the journey.
Dan Ryan: And, and for your whole career, you've. You have the hospitality bug, you've never strayed out of it. You've been in it since even before your official career started as a kid, correct?
Brian Quinn: Yeah. I started out as a belman, um, slinging bags when I was 17 on in Long Island. Uh, where was what hotel? Uh, it was the Holiday Inn Rock Taima near Long Island, isli MacArthur Airport.
So, uh, great. And I think like a lot of us though, either you fall in love with it or you don't. [00:04:00] And, uh, I found my people and I found my, uh, my business and, and I really did ops for just a little over 10 years. Uh, and, and didn't realize that my career would end up in this incredible journey to be on the, uh, business and real estate and franchise side.
But, uh, it's been a incredible, uh, opportunity and journey, and I'm blessed to have had the opportunities that have been put in front of me.
Dan Ryan: Okay. Now I, I love that and it really resonates with me, especially. I don't know. You always hear those stories of the people who started as a bellman or started slinging bags like you were saying, and then now you know, like you've just stuck with it and stayed.
It's been a long, steady progression for you. Um, I'm also amazed that now in hospitality we're, we're so thirsty for good people to work in hospitality and it's been hard to get people to come back. I also think that this is the best time ever to start a career in hospitality because if you can get in and you're, and you're working and you're make, and you, you feel [00:05:00] that high eq like you said, and that love of job.
I think that the career trajectory right now is probably among the steepest in all industries out there. What are you seeing? How do you speak to. Yeah,
Brian Quinn: I mean we, we've got, uh, a very large employee base at Esta, somewhere between 80 510,000 employees. But we, um, you're on this journey with the rest of the industry trying to fill all of our positions and, uh, and we have, we have, you know, significant number of, uh, of open, uh, roles, uh, and continue to do that purely as a function of some of the, uh, sort of follow on issues with, uh, you know, from the pandemic and, and from Covid.
But I, I, I agree. I think the industry has to continue to do a good job to tell the story. It's hard work, but it's incredibly rewarding work. And if you have any sense of adventure, whether it's in meeting new people or in seeing the world and seeing the country, it's one of the industries that, that, [00:06:00] um, you know, affords that that opportunity.
And also I think, you know, lot of different debate around the cost to operate a hotel and the cost to renovate a hotel and the, uh, upward pressure on wages and all of that is real. But coming out of Covid for the first time in a long time, we've got some positive pressure on rates. So maybe we can, we can trickle that down.
I think Covid also taught us how to use technology across the business in all different ways to try and cost some cost out. Uh, so hopefully we'll bring that into, into balance. Um, but yeah, I think the opportunity, because um, some people have left the industry, there are roles and it is one of the few industries left where literally, um, you can start out as a dishwasher or, or a bellman and end up, you know, running, running the business or a part of the business.
So, um, if you have that sense of adventure or that commitment to hospitality, I agree with you a hundred percent. It's a great time to, uh, to jump in. I love
Dan Ryan: it. And then also, I, [00:07:00] I don't know. We met a few years ago through some friends. Right. And one of the things that I, that's always drawn me to you and excited me about you is that, um, look, there's glass half full people, there's glass half empty people.
But I really feel like you are definitely on that glass half full like abundant mindset. And that's kind of where I want to kind of dig in here. Cuz I think the esta story through the pandemic also you finding your way there, um, is really incredible because how many, how many properties about did Esta have before the pandemic
Brian Quinn: started?
Yeah, before, before the pandemic? Uh, somewhere between 30 and 50. Mm-hmm. . Uh, so it, it, it had, um, RMR purchased it in 2012, uh, and it had less than 10 at that point. Mm-hmm. and then, um, RMR through H P T svc. Had a big footprint with some of our down competitors and those assets at different times would rotate in and [00:08:00] out of Esta either acquisitions that needed renovations or impact and that kind of thing.
So that was, that was, um, part of the strategy to, to have the brand to continue to grow the portfolio. But obviously Covid and the Pandemic brought a couple of other unique opportunities to the, to the floor and uh, to, uh, John Murray and, and, uh, Keith Pierce's credit, they took the bull by the horns and made some pretty big, bold decisions, uh, along with the balance of the team that brings us to, you know, to where we are
Dan Ryan: today.
And, and what is that number approximately right now? I know it changes day to
Brian Quinn: day. Yeah, just, uh, we like to say approximately 1200 hotels and 16 brands. So if you can imagine in that period of time, Bringing the, uh, bringing the companies together and launching the other brands. Pretty incredible. Bold move to make through, you know, to make through covid.
And some of those decisions were made when we didn't have line of sight to the, to the vaccine and the, you know, the changing protocols and the, and the snap back [00:09:00] in travel. I mean, I think we all hoped that a return to dining out and a return to travel would be robust. Um, I continue to be incredibly impressed with the resiliency of the public to travel.
Mm-hmm. , uh, even with the sort of little bit of, uh, cloudy view on the economics right now, um, I think if unemployment. Stays strong. Um, when you're told you can't do something for a while, do people want to do it? And just that dining out and travel is such a high self actualization, um, component of who people are because I think they were restricted for so long.
So Totally. We've got a nice little run as long as we can keep employment strong, I think. So
Dan Ryan: to really go from like 30 to 50 to 1200, I mean, that's just unheard of. And I actually, when we, I saw you at the lodging conference, I did speak with Keith over a glass of wine and he was kind of running us through like how the planets aligned, which really became almost a, at [00:10:00] least in our industry, like a once in a lifetime kind of opportunity.
Absolutely. Were you on board before that happened? As it happened, after it happened? Like what was your story and then like again, you being that glass half full person and being like, oh boy, how did you recognize that it was a once in a lifetime opportunity and like, How are you keeping your energy levels up to keep up with all of the, all of the needs?
Brian Quinn: Yeah, I think, you know, that's that. Give me a few minutes to weave that whole story together. Um, I, uh, uh, left choice just as the, just before the pandemic was beginning, I had run new construction, uh, the new construction business for them. So kind of an interesting time to pull back on new construction.
But you can see why that sort of was the dynamic that was gonna occur. So then, you know, sat back like everybody and said, you know, what's, what's gonna happen in the marketplace? How is this gonna work? I did have an opportunity to join Doo. Which was an str uh, [00:11:00] company and got to learn a little bit about multi-family business and how they used the sort of commercial engines a little differently in that space versus traditional hotel.
But during that whole time, I had reached out, uh, to some friends at Cesta and a few friends had put me in touch and sort of two things were happening at the same time. Um, svc our capital partner had a strategic relationship with both Marriott and ihg in addition to a couple of other of our competitors with smaller footprints and through c.
Something had to be worked out because there were some dynamics there that weren't sustainable. Um, so that really is what drove, um, the esta inventory coming back into the Esta brand. Um, and that was a, um, just under, over a hundred hotels came back from both, uh, IHG and from Marriott. And that started to create the platform of the Esta brand.
So Esta Simply Suites became the mid-scale, upper mid, [00:12:00] um, extended stay esta Es, which had already, uh, been launched previously, got some new inventory in it. And that Suna ES is the upscale extended stay product, sun Select. We needed to have an upscale, um, select service brand. And that was the process there.
And then Esta and Royal Esta at the same time talking about, uh, uh, great minds thinking alike as John Murray's putting that together along with the esta team. Keith Pierce, former president from Wyndham, was working through an acquisition at Red Lion, which, um, I knew something about because I had, prior to my time of choice, I was at, at Red Lion.
Um, and they had gone through some struggles, um, uh, and there was an opportunity to, um, acquire that business. Um, so when the conversations really heated up, it was a very unique situation for me in that I had a rapport with both John and Keith. [00:13:00] Um, they both were doing something pretty incredible during Covid came together and really the strategy.
As Keith and John explained it to me, is that they could get the growth going quicker by buying a platform instead of completely building a platform, right? So Red, the red line business absolutely needed an investment. But what was, what was sitting there? Qa, pip.com, revenue management, global sales training.
A lot of the platform elements you need for growth and franchising were already there on the Sonesta. Big investment in the real estate, right? Already there through the capital partner. Most of the major markets covered, which is usually the toughest thing to build your hub and spoke model, and a brand that was very, very clean and still had great equity at, um, had a, had a, you know, an upper upscale, upscale, uh, positioning.
You bring the two of those together and you just, it's the [00:14:00] capacity to get up the ladder so much quicker and start to, you know, uh, drive expense savings with scale, drive more revenue. Cuz now you have more tools, uh, and to, and to grow. Right. So, and then personally what was exciting to me is, you know, I had my former children in my Red Lion life and then my former children at ihg.
A lot of the SVC portfolio were Intercontinentals and Kimptons and Crown Plazas and Candle Woods and Stay bridges. Those were assets and transactions that I worked on when I was at ihg. So I knew, I knew a lot of the assets and a lot of the owners on both sides pretty quickly. So it was a very unique situation at a unique time.
Uh, and then hopefully, um, I was able to add a little bit of value to what those two gentlemen did because I knew both portfolios and, uh, so well,
Dan Ryan: so well, I just know you were at the other side of the room when I was talking to Keith, I was just like fascinated. I just heard you joke that, you know, whether Keith or John [00:15:00] thought that you would add value, but as I was standing at the lodging conference and Keith was telling me this crazy story of the planets alignment like this once in a lifetime opportunity, I really got the feeling that he was like, that you were such an integral part of that because of, like you said, that the children.
Or all the relationships that you had and the intimate knowledge that you could really kind of help bring all of this together. So I wouldn't, um, just from what I heard from the outside, like, you were,
Brian Quinn: you're a i'll, I'll take it. You know, I'm the youngest, these kids, I'll take a compliment, whatever. Yeah.
It
Dan Ryan: was amazing. I mean, just to kind of contextualize this for the, um, for the listeners, does this ssta like hyper growth, um, scenario, does it rhyme with anything from the past as far as in our industry? Um, or was it really just, I mean, you're talking about like a 25 x growth in like less than two years, right?
I mean, is [00:16:00] there anything else
Brian Quinn: similar? Uh, I, I don't think so, but it was very unique due to the circumstance, right? Because of the existing, um, dynamic for, uh, our capital partner and those brand relationships. And, and Covid really just created insurmountable challenges there. And, and also the recognition of, um, you know, talk about your network working, right?
Um, Keith reached out to John and, and they had a, they had a, a conversation about it and really saw the vision to accelerate, uh, the opportunity that was created by bringing the assets back. But, you know, you step back and say the, um, the most successful hotel brands did a couple of things, right? And, and I think we're walking our own journey through that pathway, but we're doing the very, um, key things that you have to do.
You have to invest in the major markets, right? And thankfully through our capital partner, In our parrot company, we've been able to do that. We have ga, great distribution in the top [00:17:00] 25 markets, in the top 50 markets. And when I say a significant develop, uh, investment, I mean billions of dollars in bricks and mortar in the major markets.
If you can imagine esta all coming together like this in the top 25, the only two markets that we don't have an asset in, and s vcr, par s vcr, capital Partners in the hunt to solve that is in Los Angeles and Miami. We have distribution. We just need to get a marquee asset in each of those. Um, I have, um, had the opportunity to sell brands that are, you know, in all different spaces across the Affinity platform and, and the, uh, positioning platform.
It's great to be able to sell off. Four great hotels in, in New York and the Clifton San Francisco, and three great hotels in Chicago. An incredible distribution in economy and extended stay and mid-scale and upscale, right? So when you're crafting the story of, of esta, um, a lot of the things that have proven are proof [00:18:00] points for a successful hotel company, um, came together just so much quicker.
I think the, the one unique thing about this was circumstance and speed, right? So other companies have deployed that, uh, strategy over time and, and now they've moved to more of an asset light strategy. You know, we believe we're different and we'll be a different type of, uh, partner, um, because we're an owner, because we're an operator, we have that lens on the stance and return on investment, those kind of things.
But the explosive. Really was a function of, of the vision, uh, of John and Keith and, and the circumstance. And that allowed, allowed the, you know, the acceleration. And then there's so many just interesting, um, common, uh, steps along the, the foot path of Systa, both Red Lion and Systa both. 1937 is a critical year for both of them around some of the birthing from, you know, from the founders on both sides.
And really when you think about Red Lion not [00:19:00] dissimilar from a lot of other mid-scale, upper mid-scale brands, as the, as the roads started to be paved around the, the country after World War ii and in the fifties in the Pacific Northwest, they really had this sort of network, uh, of, of hotels that fit the travel pattern of folks in the Pacific Northwest.
Um, and as the roads got paved, the more accessibility happened, really had, you know, a nice launch there. Similarly, um, the Sonna bins. In the, in the Northeast saw investment in a hotel as a way to sort of, uh, enter different verticals of the real estate business that the son bins were in. And Sonny and Esther saw an opportunity to be in the hotel space and loved the hospitality piece and that sort of birth SSEs that at the same time.
And, um, you know, but for a couple of twists of fate, uh, esta and, and, uh, and the Hiltons battled out for Statler and traded the plaza back and forth and different iconic assets around the country. Um, you know, the trajectory [00:20:00] could have, could have been, you know, very different at a different time. But super excited about, you know, so where, where it is.
And I think the other thing about, you know, the RMR acquisition in 2012 is that it brought all this other. Finance and real estate expertise to the business, right? Mm. I do believe the hospitality business is different and we do have to be hospitable, but it does sit in the real estate space, right? Yes.
And that capacity and awareness and different structures and those kind of things that do cross over, you know, to office and industrial and to healthcare, those different sides of the business that our parent is in. It is a further demonstration of, of why to do business with us and why to have faith in the, in our ability to succeed and to provide a great return is that we have a platform of incredibly smart folks that live and breathe and eat and drink every day, real estate and finance.
And then we are gonna protect these, you know, [00:21:00] hospitality brands and grow them and refine them. And that's really our job the next 24 to 36
Dan Ryan: months. I love it. It's, it's, it's interesting, like thinking, I just had a conversation, uh, in the past couple weeks with, uh, Jeremy Selman. I don't know if you know him.
He was like co-founder of Sdel. Um, oh, okay. He's a, he's a really cool guy. But talking about partnerships where like, obviously in a partnership you wanna find one plus one equals three or five or 10. In this case, the John and Keith coming is like one plus one equals 25 or 30.
Brian Quinn: It's insane. Or nearly 12 hotels.
Yeah. So
Dan Ryan: then to also just think on the, it is a part of the, of the, of the, of, of real assets, right? So obviously there's a finance component, they performing assets. Um, the real trick also to, okay, so you have this target, you have these great assets that you could bring together, merge the platform and the assets.
But then you need that elephant, or what is it, the [00:22:00] elephant gun or the, or the dry powder. Right. To actually make it all happen. Mm-hmm. , like how did that all come together? Because at that point, again, people are shortening up, but you were able, or, or John and Keith and a lot of other people were able to find capital partners through.
Svc, our, our, our rmr other people. You were just able to bring it all together, like it was
Brian Quinn: amazing. Yeah. Imagine, you know, when you're sitting there at the, uh, at the, you know, lowest levels of what Covid was doing to the occupancy, it just gets pretty thin. So you have to create your own sunlight in that dynamic, right?
So the idea was, you know, would we be, you know, would we be willing to take the hotels back and stand up the commercial engines and there's a cost there and that there's a journey to do that, um, and check the box. They were willing to do that, and that came with hard work and investment. And that is not a, you know, one or two year journey.
That's a three or four year journey. Um, and similarly, I think to recognize [00:23:00] that, that the company could get there quicker by making an acquisition was also a strategic move because a lot of those give you one sort of practical example. Um, we closed on the transaction, um, uh, three 17 mm-hmm. , uh, in 2021.
And we launched, uh, four of the Este, the brands at lodging conference, um, in fall of 21. Uh, I think we added September, end of September that year. Um, we did that in six months, seven months. God, the speed it would take you to normally create a franchise disclosure document, determine all the fees, figure out all the technology, you know, that can take years.
But in, in this case, we were able to to, to do it within months. And, and that journey continues. We, we just launched, um, this month the franchising effort around Royal Siesta. So we'll have something in the upper upscale space. Um, and, and look our, our capital partner. Our parent company continued to be incredibly bullish [00:24:00] on the business.
We acquired four hotels in New York. You know, our, our own internal sort of little, uh, way to tease ourselves is you're not really a brand until you're in New York. So we went and bought four hotels in New York, so why not ? So, um, uh, we converted the Benjamin into a Royal esta, uh, the Shell board into a Esta, and then we have the 50 and, uh, the gardens.
So we'll have a Esta Es and we have a Esta Select. And along with that transaction, we, uh, acquired the rights to the James brand. So we're going through the process of evaluating that as well.
Dan Ryan: So, and that, that was the Dhan transaction, correct? Mm-hmm. . Oh, wow. Cool. So there's so many brands. You said 16 brands, right?
But it's not Marriott where there's 32 or four ,
Brian Quinn: right. I think sixteens a lot, but 30 is double. Yeah.
Dan Ryan: But also with the 30. It's really amazing to see how they've been able to differentiate them. Mm-hmm. and the amount of work to differentiate them [00:25:00] and the thinking behind it is just mind boggling. But I feel like they've done a pretty good job, a really good job of doing that.
When you look at your 16 brands, where do you see the biggest growth or, or what's exciting you most within those 16 brands? I know you're gonna say I love all my children equally, but like,
Brian Quinn: yeah. . Look, there's a couple ways you can come at it. You know, what had the best returns through Covid, you would have to stay extended Stay and economy.
Mm-hmm. what's the most robust? Cuz everyone geared down on price and then extended stay. We already knew we were on this incredible journey with the extended stay space of our business. It just came into the fore because of technology work from home. You know, the flexibility around the ability to travel and work at the same time.
Um, so we see demand for, for extended stay and, and for, um, And for economy, but in the upscale and upper upscale space. The other thing that we have that's unique is we have market availability, right? So we have 16 brands and, and great distribution, 1200 hotels, [00:26:00] you know, eighth, eighth largest hotel company in the us but in a lot of the major markets, some of our competitors really are, um, out of product, right?
So the fact that we have market availability and basically every market with almost every segment, um, also just creates an opportunity to have a different type of conversation with the prospective investors and Joy Venture partners and, and, uh, prospective franchisees. Yeah, it's
Dan Ryan: like a blue sky moment, right?
It's, it's really, I mean,
Brian Quinn: some of our competitors are at 4, 5, 6, 7,000 and we're at 1200. So we've got a lot of work to do the next five years .
Dan Ryan: Totally. Um, and then I'm just trying to, so, and, and of the 16 brands. I guess so you have the, the blue sky moment. Right. So it's, it's really the sky's the limit. Yeah.
Brian Quinn: To get into the brand family. We really don't have too much crossover. Again, a few happy coincidences. So just take the vertical of extended stay for a minute. Sonesta Es was positioned as [00:27:00] upscale extended stay. So the competitive set there is Homewood Staybridge and residents in mm-hmm. Esta Simply Suites upper mid competitive set.
There includes Candlewood and Town Place. A little bit of wood Spring, a little bit of echo depending on the key count and the price point. And then guest house, extended stay was our sort of economy to mid, uh, that red Reliant was working on. Mm-hmm. more of a competitor like, um, uh, uh, suburban Studios. We take a traditional guest room and put in some extended stay amenities, storage and refrigeration, those kind of things.
So again, you said, you know, One plus one equals 25. That's another example where it wasn't necessarily set up that way, but it just fell in to place that way. You know, at the top of the food chain in the Red Lion business was rl, but it had never really gotten the distribution right? So we didn't have too much crossover there.
And Red Lion, red Lion in and Suites or mid-scale, when you move to [00:28:00] Upscale, esta Select and Sonesta Hotels, you know, very clean, you know, positioning, right? Sonesta Select is upscale, um, uh, but with a limited food and beverage, uh, offering the competitors there. Courtyard Hilton, garden Inn, Cambria, right?
Sonesta Hotels, upscale full serve, right? So Marriott, Hilton, DoubleTree Delta, Renaissance Ground Plaza. Um, and then Royal Comp Set there includes, you know, JW Intercontinental and, and those kind of different brands. Uh, so pretty clean positioning for the different ways that the consumers have. Group themselves together, and the way our industry has grouped, uh, grouped the brands together.
So, um, very thoughtful, you know, there's some white space and we're working through that and we're working through some things with the James a, a few gaps, but, but not a lot and, and, and not really any crossover. So pretty excited that, um, this is a pretty good, uh, set of brands to feel the [00:29:00] playbook from.
And it's almost
Dan Ryan: like, and for those of you who don't know, don't know much about this transaction, you, you could say it sounds like, oh wow, it sounds like really lucky that it happened. I, I just think, again, it's that maybe there's a little bit of luck, but it just seemed like these two entities were just kind of cruising together and had a shared vision.
And I don't know, it makes me think like, I don't really know John, but just in meeting Keith. One of that old adage like, the harder I work, the lucky I become. Right? Yeah. It's just like, I think there's those visionaries who are always deal makers that are always looking to like, make that happen. And then this just provided that once in a lifetime, um, moment.
Yeah.
Brian Quinn: And to also have a few of those critical success factors already in place that we had an investment from the parent company that we had, the major markets covered. You know how critical that is when if the hubs are set, you can build the spokes and the [00:30:00] extensions, but if you don't have the hubs, it's, it's critical.
And then I think the other thing going into Covid was, you know, there was starting to be some tension. Just in the industry around, you know, deliverables for the owner, um, and performance and getting the standards calibrations. Right. You know, we've got a natural governor on our standards and, and on our positioning because our capital partner owns the hotels.
Uh, the s a chunk of the SSEs we do now have just under 60 franchise Estes as well. Um, but the lion's share is still on the own side, uh, just over 200. Um, and then on the ROH side, you know, that's where the lion's share the, uh, balance of the franchise business came from. But look, um, we're excited to continue to stitch the business together.
We've done a lot of work on the finance side, legal, HR, back of the house. And I think the fun, uh, more commercial side, uh, for the consumer is, is, is the exciting part that's coming where we start to do some more of the integration in [00:31:00] the public facing part of the business. But, you know, Keith and John have us on a very specific, true north around.
Leveraging the scale and reducing the cost and taking advantage of the size, driving revenue into the hotels, um, and, and growth, right? Because you've gotta be where the consumer wants to go. Um, and look, we also had an advantage in the portfolio in that. In the Pacific Northwest, we had the drive markets covered and, and a lot of the national park, uh, dynamic covered, and that was critical through Covid.
And we had a lot of destination markets covered with Puerto Rico and Hawaii and Florida distribution. It helped on the SANEs side. So as the markets recovered and reopened and the different states calibrated their approach, we were able to give people, you know, experiences under the new, uh, under the new joined up, uh, new joined up business.
But, you know, we're, we're nearly 10,000 employees, right? If you can imagine. So one of the largest, one of the largest hospitality employers. In addition, just [00:32:00] just to our distribution, um, you know, eight countries, three continents, 16 brands. Um, and to, I, I think you mentioned it, it's just the speed at which we got there.
Um, and then, you know, there are pretty clean lines. Each of the boxes that we took into the family are, were built. In order to drive, um, revenue and take care of a very specific consumer. Um, so whether it's upper upscale and the Royal Estes with the extra amenities around fitness and sometimes spa and the extra food and beverage elements and outdoor elements that's there for esta, you know, solid upscale three meal a day, restaurant fitness and the meeting space est to select, you know, they're each built for a specific.
Mm. And the boxes were created so that you could drive revenue through them. Right. There's a business model that works Totally. And all the way down the line, midscale with Red Lion. And then, you know, um, esta Simply Suites, we won, um, for the JD Power, uh, award [00:33:00] for Esta Simply Suites. So, you know, that brand was pretty darn new to Win to win that for the extended state piece.
And then, uh, America's Best Value in also won second place in the JD Power. So hopefully we'll win more and more of those down the road. But, but just that we could punch through with two of the brands that quickly is also, that's unreal. That, that the brand teams can be incredibly proud of. So as you
Dan Ryan: were speaking, I was, I was going back in my mind to the financial crisis, like having lived in California forever.
There were Wells Fargo banks everywhere. I never saw one on the east Coast. Then in the financial crisis, Wachovia, I don't know if anyone ever remembers that bank, they got acquired by Wells Fargo and then all of a sudden it seemed overnight. Every single Wachovia had a Wells Fargo ATM and a sign in front.
Right. So taking that example of just signage as one example, how the hell do you change the signs on a thousand hotels seemingly [00:34:00] overnight? Like. Uh, how do you do that?
Brian Quinn: Well, the, the advantage was on the, um, R LH brands that signage didn't change. So America's best value in and, and Guest House and Red Lion, that all sort of stayed the same on the esta assets, though that came back from the other affiliations.
Yeah, we had to get after that. So there was a temporary signage experience and then the ordering and trying to get everything sort of manufactured and, and through the supply chain during the toughest time of, of Covid and then to get the output. I think there too, we had a happy coincidence in that when the signs, the permanent signs started going up on the buildings is right when people, when the travel started to ramp up and, you know, that was a different numbers had been thrown around 6 million, 8 million, 10 million.
And that was just that amount of investment and the number, just the sheer number of signs that went up, um, was an incredible way to start to drive, you know, the awareness. Um, and then, You know, we also had a unique experience where [00:35:00] our capital partner brought some assets to market. Um, about 70 assets were brought to market by our capital partner, and we were able to retain either through franchise or manage just over 60 of those assets in the family.
And the ones that traded away for the most part, uh, moved into the multi-family space. So that was an incredible way to, um, create, uh, value and create, uh, a way to accelerate the, the, uh, franchise, uh, franchise effort. And we ended up with about 18, 19, 20 franchise groups, uh, franchise owners across those 50 or 60 hotels, and they've been a great group to, to work with and to advocate for us and continue to grow with.
So that's been an exciting process that we're just finishing up the, uh, the tail end of that. So that's
Dan Ryan: another interesting question, like if I were a, a potential, a franchisee or a potential franchisee, I'm looking at all the different offerings out there from all the different brands. Like what would I find most attractive about coming to
Brian Quinn: [00:36:00] Sinta? You know, I think there's a couple of things. My top three are market, uh, market availability. Market availability is one, two is access to, to our executive team. Right. You know, we're small but mighty, so it's kind of fun. You can call the ceo, you can call the president, you can call me and really brainstorm through on the deals that market availability is critical. And then the. The third piece that seems to land so incredibly well and, and I've seen it work already, is just that owner lens.
The fact that our capital partner and our, and our parent company own hotels and that we have such a strong, uh, management business means that we are constantly looking for roi. We are constantly looking to have standards that are rooted in what the consumer needs, but that are also rational. Right? And then, you know, the incredible follow on commitment by our capital partner at the beginning of this year.
Um, SVC jumped out and mentioned that, um, they were gonna spend between 400 [00:37:00] million and 600 million in renovating the esta assets, right? So they've launched the brands and they're holding themselves accountable, uh, just like we're gonna hold the franchise community accountable. So we can tell the story now, and then in, you know, 24 to 36 months when the entire system is renovated, we'll be able to come to the market and further, uh, tell the story to the consumer and the, and the development community.
Similarly, you know, I talked about, uh, Miami and la that's a stated goal of our capital partner to enter it to Miami and Los Angeles. So the, the power of that, Commitment to the, to the bricks and mortar to renovate them and make sure that we're setting a good example. And two, to get into the one or two markets.
We don't, that cannot be, um, uh, short drifted as, as a critical success factor too. But specifically on the franchise side, what we hear from everybody is they like that we're an owner and they like that we're an operator. That we have that, that we have lens.
Dan Ryan: Hey Brian, when you think about the [00:38:00] 400 to 600 million in CapEx, you're gonna unleash, right?
How, I'm always curious how, um, hotels measure the ROI on that. So they're gonna invest all this money, it's gonna. How do you know that the money invested? How do you verify that the money invested is gonna drive higher rate and occupancy?
Brian Quinn: Yeah. There's two or three ways that you sort of underwrite a, a, a PIP or a CapEx renovation.
One is what happens to my performance if I do nothing, right? So you can look at your performance and you look, can look at your comp set and where you fit in the comp set. Are you outperforming, you know, are you even, are you underperforming? Um, and if you, if you don't take care of the product and don't continue to meet the consumer where they are, you know, what's the risk trade in your performance, right?
So that's, that's one way. Two, I always like to check for headroom in the market, right? So is there ability to. Perform better. Either my individual asset or as the market inflated, right? Is there is their ability to [00:39:00] perform better, right? Because we know that new wins and we know that renovated wins. So if I, you make the base case, what if I do nothing?
What happens to my performance? How long can I hold where I am with the performance? Is there headroom? Can I, can I outperform? Right? And then I think the third piece is as everything gets accelerated with the consumer from a technology standpoint and a use case, we've gotta react quicker, right? There's a lot of changes around food and beverage.
There's a lot of changes around in room experience. There's a lot of changes around, uh, what they expect from the frequency program. That investment is also a table stakes component, that if you wanna be in the space and grow, you've gotta have good, you know, examples to grow from. But what I've been so impressed with is the discipline process that our operations team and the brand team, and then the asset managers from the, uh, ownership have gone through.
They wanna have great hotels that are great, uh, examples, but it has to make business sense, right? So there's that, [00:40:00] both of those tensions in the process around return on investment, meeting the consumer where they are, but the investment has to, has to have a return. And you can measure that by, you know, stop loss, not, not losing your position, inflating your position and, and outperforming, right?
So you can just run a business model with all three of those. But I think the other, so you're measuring, so you're
Dan Ryan: basically, you're out go Good. Sorry. Oh, no, I was saying, I was basically saying, so you're basically allocating, um, the CapEx, you have a plan to outperform, uh, find new, new limit to, to kind of really turn up the volume on what's, what's happening.
Once it's all done, how do you guys go back to verify that? Like, Hey, you were on target, off target, or what we learned, we need to do something different the next time. Yeah. The, the,
Brian Quinn: from a esta standpoint, we, we have a, our parent company has an asset management function, and that's where some of that discipline comes from.
And then spc, uh, and [00:41:00] Rmo, they wanna write the, the checks they're gonna wanna return. So there's a, there's a check on the ROI all along the way. And I think that's part of what makes us attractive to the franchise community and the investment community is that a very similar process that, that they would go through and evaluating the franchise options we have to do in-house before anybody asks us to.
Right. And then I think, you know, the overlay to that is if we end up with great assets that have a return, you know, there's the proof point and that is our job as the franchisor and the brander to set a good example. Right. But, but doing it with that, Owner's lens and that asset management expertise means it should be more, uh, rational and it should be, um, driven around the things that actually move, uh, the consumer, you know, to give you more of their share of wallet when they're traveling.
Dan Ryan: I also think deploying that capital now as they talk about, oh, there might be a recession or this, or whatever's happening, I feel like when that is [00:42:00] allocated and the work is done, you'll be ahead of the comp set, correct.
Brian Quinn: Yeah, I mean the, the goal is always to be, uh, to be ahead of the cop set. But, you know, I think, you know, we're gonna take our rightful, you know, space in each of these segments.
And, and I think what the investment community and the development community and the franchise community can count on is that we're putting, uh, our power company is putting its money where its mouth, mouth is, right, that we're not gonna ask you to do anything that we won't do ourselves. And that there is a commitment from the capital partner to get, um, these hotels renovated and which creates a, uh, risk amelioration to a franchisee who might spend the money, you know, to do it.
And then all of those, uh, 50 to 60 franchise hotels that are now on the, uh, through the esta brands, they also all have a renovation requirement around that same timeframe. So it'll be really exciting to go back to the market and talk to the consumer, uh, look for those, uh, [00:43:00] improved performance, but also look for that connection, you know, connection with the consumer.
And
Dan Ryan: do you have a rule of thumb for what kind of ROI on that war chest of, of capital that you'll deploy to, to renovate the properties?
Brian Quinn: Yeah, because I'm not an officer of RMR or svc, we try and keep a little bit of a, a healthy, uh, uh, boundary there. So I don't want to, uh, I don't wanna go into their expectations.
I think the, the message is though that ROI is implicit, and these are public companies that need to drive an ROI and mm-hmm. . And if that creates some confidence in the esta brands, we'll, uh, we'll take it. It's great to have a parent, uh, and a capital party that wants to spend money. I'll leave it there.
Dan Ryan: Yeah, no, I love it. Um hmm. As you look at this growth, acceleration, driving scale, so right, you're in, [00:44:00] you're, you're obviously growing just in. Number of properties, you're growing revenue, you're reducing operational costs, which is like the true definition of scale. Um, what's exciting you most about this confluence of everything as you look forward in the medium to long term?
Brian Quinn: Yeah, look, I think, um, the resilience of the traveler is probably my most happy surprise through this, right? We knew that there was gonna be a snap back. I didn't think it was gonna snap back this strong, and I didn't think that the snap was gonna be as sustained. Um, And I tru truly believe whether we technically go into a recession or not, if unemployment stays low, people are going to spend their disposable income on dining out and go and traveling.
It's just, it's moved up on, their version of Maslow's Hierarchy for all the reasons that we know. And then technology has enabled it, right? We're all on a journey with Back to [00:45:00] Work, but that's gonna come to life a lot of different ways, but it creates a whole bunch of different stay occasions and different types of experiences.
So I'm going to continue to watch that resiliency of the traveler. You know, I think we have been through a lot, if you think about the fed raising rates and the election and capital markets and, and all of that. Were through some of that. I think we'll have to continue to watch the, uh, the Fed. But if we could get a little stabilization in the capital markets and, and the debt markets, that'll also be a bit of a platform, you know, for the next, uh, the next step up.
Uh, and then. You know, I'm just excited to see the innovation and the renovations that come through because I think we are at a very unique time where we can reset a little bit around, um, the relationship between the franchisor and the franchisee and also around the consumer, right? I think it's our obligation on the brand side and the franchisor side, you know, to flip over a few rocks and make sure that the service [00:46:00] profile and the things that we are providing are the critical ones that the consumer wants.
But also where we've learned that the consumer's willing to be more flexible than we expected around food and beverage and around housekeeping and around using technology would check in. Not that they're ever gonna give up table stakes, things like cleanliness and service when you need it, but there's a lot there that we can, we can right size to provide return.
To the owner, continue to provide good service and to, with the new brand, um, have the brand stand for some of those, you know, different elements. So some of the things we're not ready to announce today that I know that are, that are coming are, are pretty exciting in that, in that, um, in that, you know, those arenas, I think, you know, watch the space that the James sits in, watch the space that Royal Sonesta sits in.
Watch our approach to food and beverage. You know, there's some really exciting things coming, uh, you know, in the first part of next year. And look, these are great, [00:47:00] great canvases in which to work. And you think about, you know, the design community and the architecture community and the development community that you and I are so close to and have so many sort of friends and family.
And, you know, it's just gonna be exciting time for that group to work with Esta because of that commitment to that big spend. And this isn't, you know, when I say the four to 600 million that's comes right from SVCs, uh, investor relations page, that's just our. Capital Partners commitment to their 200, you know, plus hotels that doesn't include all the franchisee investment that's gonna come across the other 50 or 60 hotels.
And then the continual investment that comes from the former Red Lion business. Right? So you just, you know, not many brands can step out and say, you know, we're gonna have nearly or over half a billion dollars spent on the system over the next 24 months. Pretty incredible bet by our, by our capital partner.
And that should also be a, a confidence builder [00:48:00] for the potential franchisees and investors and JB partners.
Dan Ryan: I love it. And you know, going back to the beginning of the conversation and thinking about just abundance, excitement, acceleration, growth, like, I'm feeling it all, like just in talking to you and also Keith at the lodging conference, like I'm seeing it and it's almost like I didn't even know all of this was happening.
It's like, it's like an underreported. Story that I think we all just need to be mindful of, because I think good things happen when you come from a perspective of abundance.
Brian Quinn: Yeah. It's so interesting because I think last year, um, in the, in the industry trades, we were, you know, we were one of the good news stories, right?
There weren't a lot of 'em, and, and we were one of 'em just, you know, the growth and employment opportunities and those kind of things as everybody was going through. All the struggles, but the most industry in Indu. One of the most interesting things that we've been going through right now is just going back and learning about the origin [00:49:00] stories of the Red Lion business and the esta business.
And you know, Sonny and Esther did that well,
Dan Ryan: that was the other, my other big takeaway, Sonny and fucking Esther. That's amazing. Like I didn't know was Son and Esther and I wanna know who they are or who they were. .
Brian Quinn: Yeah. I mean, one of the greatest stories, you know, that I heard was that their first deal, they did, uh, the Preston in Massachusetts, they did with five partners, right?
So as the development lead, you go, well that's just great because partnership is sort of in our, you know, in our dna. You know, same thing on, you know, on the, on the Red Lion business, that was two partners that came together with an idea, seeing the market change for, you know, mid-scale lodging and, and uh, you know, sort of the paving of the roads and, and all those kind of things.
And you know, I think it was the Thunderbird in Portland, Oregon, uh, uh, motor in where it all started, but that ended up morphing into Red Lion and. And esta, um, you know, a lot of, a lot of different firsts. You go back to 1968, the year I was born, um, that's the first time they went [00:50:00] international. If you can imagine when, when the sonno bins were the, were the owners, right?
So, and all these incredible different stories. 1999, they launched Esta Posadas, um, with our partner Ghl. I was just down at one of those assets, these incredible, um, experiences in Central and South America, um, that, uh, that the guests can have in, in a really, uh, organic, um, genuine setting. You know, just sort of incredible.
Um, and you know, on and on it goes, uh, you know, the current company as, as sort of organized really does go back to, um, you know, the relationship with, with RMR and the, and the businesses, you know, coming together. Uh, and then, and then, you know, the pandemic really allowed it to be optimized in a way that probably was not completely, uh, probably accelerated a lot of the ideas that, that were sitting in the boardroom for the company down the
Dan Ryan: road.
Well, I think as you guys bring it all to continue to bring it all together and [00:51:00] really, um, kind of attach yourself to that rocket ship of growth and scale, um, I think so many of those stories are gonna come out. You know, everyone's been talking about storytelling and storytelling and storytelling. Um, I think that there's so much that could come out of this.
I want to go into a time machine for you. I know you said you were born in 68. You must have a great filter on your camera because I feel like you look so much younger than I do. Yeah, I'll take it. And, and you are older than me. Just for the record, everyone, you look pretty good too, Dan. Oh, thanks. You look really good.
You look really
Brian Quinn: good. Well, you let me set my own lighting, so come on. You know. Ah, I see.
Dan Ryan: Uh, if you were to go back, what, what was the name of the hotel where you were the
Brian Quinn: bellman? It was the Holiday Inn in, uh, Ron Kama, New
Dan Ryan: York. Ron Kama. That's right. So if you were to go back to that Holiday Inn in Roma, you right now, the Brian I'm speaking to, you're in front of your 18 or 19 year old self.
Um, what advice do you have [00:52:00] given all of your experience and all the cycles you've been through to your 18 year old self checking bags?
Brian Quinn: Yeah, I think. Uh, I'll, I'll take one further step back. I would tell everybody, find something that you're passionate about, right? Cause I still more days than not, when I'm heading to the airport to jump on a plane for a trip, there's more butter butterflies than trepidation, right?
It, it's hard to travel and it can be exhausting. And c and nine 11 and, you know, there's been a lot of challenges put, uh, uh, in our, in our way around travel, but it, it continues to still excite me. And I, I go, what is that rooted in? I got that job. Um, I fell in love with it. I liked the energy level. I liked the, um, you know, human, uh, component of it.
The other piece is, you know, uh, um, Kevin Wilson used to say half luck and half brains. You know, I had some incredible mentors along the way that, you know, I'm sitting in the hotel and get a new food and beverage director. [00:53:00] You know, there's a lot of downtime when you're the van driver and you're the bellman.
He invites me into the kitchen and into the, uh, into the storage room and into the liquor room. It just starts to teach me, you know, food and beverage cost controls. I didn't necessarily know I was learning them, but how you take an empty bottle out of the bar and you only replace the full bottle and how to, how you stack the meats in the refrigerator and when you write the food off against the expiration date and all those kind of little things.
And that was, you know, was that luck? Luck or brains or faith? You know, I was in the right place at the right time, but I was open, right? So find something that you're passionate about and then be open. There's always opportunities. To learn, you know, put yourself, put yourself out there. I did 10 years, 10 plus years in ops.
I didn't know I was gonna end up in, you know, uh, finance and real estate and, and the franchising side of the business. You know, gravity took me there over time. But I really was in love with ops at that point. But I had these incredible opportunities two or three [00:54:00] times to accelerate through my ops experience.
Um, you know, training's always something that's tough nowadays, and it's tough in some ways, but also there's more training than ever, right? You can get online and find out a lot of things about how hotels work and certain brands work, and certain technologies work. Go take a moment and to get yourself educated and when something new comes along, jump onto something new.
I'm, I was in New Orleans. In operations, uh, revenue management, we're gonna now do revenue management, something new. We're gonna have all this training. And, you know, this was in the, in the nineties post, uh, post, uh, the uh, um, sort of end of the Gulf War. And uh, I think, um, just at the end of that little mini recession and um, uh, we had two hotels in the French Quarter.
We let the humans manage the yield on one and we let the system manage the yield on the other. And of course, the system, you know, beat the humans cuz it could see the cancellations and it recognized the revenue across multiple days. And that's just something [00:55:00] you can't see when you look at the inventory.
But again, we had four hotels in the, in, uh, new Orleans and, um, I was the number two at the, um, I guess rooms, uh, doing rooms get service management at that time. And. Some of the hotels wanted to participate. I'm like, yeah, I'll participate. Right? I got exposed to the franchise side of the business, learned revenue management before it was ubiquitous, right?
Helped that company launch it. Uh, you know, so that was another leveling up, right? All of a sudden I had the new tools, um, as I was lucky enough to be exposed to 'em and, and had an incredible team around me that allowed me to go learn them. Um, you know, that was an accelerator, right? Uh, so I think, um, find something that you're passionate about, take advantage of any and all training, and then push in a little bit, right?
It took some guts for a 17 year old, uh, um, you know, bellman to say, yeah, I'll, I'll go. Tell me about this. How do you handle the liquor room or how you handle the, the kitchen, [00:56:00] how you handle the storage of all the food. Um, and to hang in there and, and, and learn it, um, was, was incredible. But, To, to think.
All of that has come together with two portfolios of hotels that I care about with two, uh, and, you know, an executive team that I respect with an incredibly well capitalized power company. Um, it's a pretty exciting time and, and I recognize that, uh, uh, more, maybe more luck than brands, but, uh, but, uh, that I'm in a unique spot and, uh, and happy to be, uh, sitting in the chair.
And I, I'm sort of can't wait to see what happens next.
Dan Ryan: I love it. Let's, well, let's just, let's not sell yourself short. Let's just say it's luck and brains. Okay, great luck and brains. We're not, we're not gonna skew it one way or the other. , I, I think something that resonated with me, and, and it reminds me of many conversations that I've had over the past, um, more than a year on this Defining Hospitality podcast, is this idea of openhearted listening, being open, being openhearted, [00:57:00] especially.
In the operations of a hotel because there's so many different channels of business that you could just go and work in a hotel and learn so much about everything, whether it's f and B, how to treat guests, how to connect with
Brian Quinn: people. It's technology. You're exactly right.
Dan Ryan: It's all there. It's like a little entrepreneurial laboratory, each hotel.
And um, yeah, and it also just seems to me like everything seemed to be so disjointed that you really need people to kind of like tie it all together. I, I know you keep talking about technology and I think that the platforms are evolving, but it still seems like everything has, you, you need people to make it all come together.
Brian Quinn: Yeah. Look, hospitality, you know, think about where we are just culturally and post covid and everything that's gone up. Right. A lot of division, a lot of disruption. A lot of calls for greater diversity. Hospitality is one of those beautiful things that sort of [00:58:00] works across all three of those, right?
Everybody's money is green. Everyone has an aspiration to travel. It's part of the human condition to climb up the mountain and look over the other side. So let's take advantage. Let's take the win. Hospitality is a place where we can not be disruptive, where we can embrace diversity, where we can come together, right?
Everyone loves a great drink. Everybody loves a great meal. Everybody loves to travel at all the different price points and you know, have all the different experiences. So I just think this is an incredible time for hospitality. You, you sort of framed it a different way as sort of someone entering the industry.
I also think for all of. That are leaders in the industry, let's show that we can be the opposite of those things and bring people, you know, bring people together. And then, you know, as it relates, as it relates to the franchisor franchisee relationship, I just think it's one of the most powerful ones ever created in American business.
Um, you know, people take their phones out, you know, and say, well, I don't know anything about franchising, but almost everything on that [00:59:00] iPhone or on that, uh, um, Gfo, uh, Google phone or whichever one you have is all licensing. And licensing is a form of franchising, right? Yeah. You want to take a brand to the masses.
There's usually some franchising or licensing effort underneath it. It's really the only way to, to scale up, right? So, um, if, if you've got a great idea and you wanna bring it to the masses, it's, it's that critical business element and business partnership between the franchisor, the FRA, and the franchisee.
You know? And then I think lastly, you know, it is our journey to bring other people on the journey, right? I was telling you about the, the circumstance that I had where the f and b team, uh, you know, uh, introduced me to that piece, and the, the tech team introduced me to the revenue piece. You know, it is absolutely, you know, our job, uh, at this point in our careers to bring other people along.
And that's been an incredibly, you know, fun part of it. And now I have, you know, some folks that I've been able to do that for, and I want, I wanna do it for others [01:00:00] and, and be mindful of that responsibility, you know, going
Dan Ryan: forward. I love it. And, um, you're, you're, you're speaking my language, man, so I appreciate that.
If people wanted to learn more about you or connect with you, what's the best
Brian Quinn: way? Yeah, I think LinkedIn is, is an easy way to connect. And then the, uh, systa development website, either one of
Dan Ryan: those. Perfect. And we'll put those in the show notes. So Brian, this has been really just so incredible and just, I'm, I'm feeling filled up and I'm, I'm feeling like, I don't know, I just feel very abundant right now.
And it's right, we're recording just before Thanksgiving, so like, this was a, a great cornucopia of a, of a conversation. So I thank you very much. My
Brian Quinn: sign off was gonna be, I am thankful for your podcast and for your interview and I am thankful for Dan Ryan. So have a happy Thanksgiving everybody.
Dan Ryan: All right.
And, uh, you ain't seen nothing like the Mighty Quinn. So , uh, thank you. To all of our listeners. Again, I say this every week and I'm just humbled by it. Our listenership, [01:01:00] it grows every single week, so we must be speaking about stuff that people are into. So, uh, if this has changed your opinion or way of thinking about hospitality or abundance or entrepreneurism or ing, please pass it on, uh, and share it with a friend.
So thank you everyone, and we will see you next time.