CARROLLTON, TX—If you’re going to create a new position to raise the bar on company growth, it’s probably best to get an industry heavyweight to do the lifting.
Which is exactly what the executives at G6 Hospitality LLC did earlier this year, reeling in 30-year industry veteran Rob Palleschi for the economy lodging chain’s inaugural post of chief development officer.
A fixture at Hilton for a dozen years serving as global head of full-service brands, and most recently president/CEO of TGI Fridays, Palleschi just wrapped up his fourth month at G6, where he’s tasked with continuing the company’s strong growth pace, particularly putting international development into overdrive, for its Motel 6 and Studio 6 brands.
“It’s really about the growth,” said Palleschi. “If you look at G6 today, there’s elements that are reminiscent to the old days of [Hilton brand] DoubleTree. You’ve got a brand that we need to grow and expand, not only domestically in certain markets but also internationally. I’ve got that background. Additionally, there’s the opportunity to refresh some of the existing estate and maybe introduce—not new brands—some new products.”
He indicated this could include launching a dual-brand concept or a concept that “celebrates the heritage of Motel 6.”
The brainchild of William Becker and Paul Greene in the 1960s, the brand only charged $6 per night when it started. Over time, its popularity grew, as did its distribution and rates. It changed hands a few times over the decades; most recently, Accor S.A. [now AccorHotels]sold the Motel 6 and Studio 6 [launched in 1998]brands for $1.9 billion in October 2012 to The Blackstone Group. G6 Hospitality was subsequently created as the brands’ management company.
Under President/CEO Jim Amorosia and EVP of Franchise Development and Management Dean Savas and his team, G6 in less than five years inked agreements with almost 700 franchisees and opened more than 550 properties. Currently, there are some 1,425 properties, of which 485 are corporate owned.
“Blackstone is very positive about the business and excited about what has been done over the past almost five years. There’s a world of opportunity out there, and so there could be expansion opportunities from not only franchise growth but also perhaps JVs or acquiring additional assets,” said Palleschi.
Coming from the multi-brand world of Hilton to the streamlined G6 stable, Palleschi has been absorbing the new corporate culture; getting out on the road traveling the United States and visiting G6 properties, both corporate owned and franchised; meeting with owners; and making the rounds at conferences such as AAHOA, Hunter Hotel Investment and the NYU International Hospitality Investment Conference. He’s also been taking the pulse of partner activity in Mexico and India.
“It’s been really learning this segment. All my career, aside from the short stint at Fridays, has been in full-service hotels. So this is a new segment for me and it’s fascinating what happens in this business. The focus is on the balance of quality and performance and the return on the investment, because profitability in this segment is obviously critical,” said the CDO.
Still, he pointed out, “A hotel is a hotel is a hotel” when it comes to parlaying his expertise at G6 Hospitality.
“We have owners that are maybe smaller from the investment standpoint than what I’m used to in full service but they’re passionate owners nonetheless. They’re heavily invested. They have their blood, sweat and tears invested in their properties and they want them to succeed. All the owners—whether on the full-service side, luxury side, economy—they’re proud of their assets and they want their properties to be successful,” said Palleschi.
“On our side of the ledger, we’ve got a business that’s not dissimilar to what I’m accustomed to,” he continued. “We’re a legacy business; We’ve been operating 55 years. Motel 6 led the pack, not dissimilar to what Hilton did… It’s all about taking care of people at the end of the day.”
G6 Hospitality is looking to bring that “care” to more international locations and Palleschi noted it’s still critical to have the right local partners when looking to develop abroad.
Earlier this year, G6 made a foray into India, inking an area-development agreement with Auromatrix Holdings Pvt. Ltd. to open 40 properties under the Motel 6, Studio 6 and Hotel 6 brands over the next five years.
At the same time, G6 signed an area-development agreement with InterAmerican Development Group Inc. (formed by Guatemala-based Grupo Portalis, Mexico-based Leisure Partners and Nicaragua-based Calvet & Asociados), to bring Hotel 6 and Estudio 6 to Belize, Costa Rica, Panama and other destinations, opening up to 10 hotels over the next five years.
Both moves expand upon G6’s initial step outside the U.S. in 2014, when it signed an area-development agreement with Latina Promohoteles, a subsidiary of Mexico-based developer Promodesa Comercial, with plans calling for opening dozens of properties over the next several years in Mexico.
“We’re fortunate. We took the time and signed some excellent partnership agreements in Mexico, in India and, most recently, in Colombia. We’ve got partners that own real estate. They are familiar with the hotel business; they have expertise in it, so, they can really guide us… The partnership is the key.”
The executive indicated the growth of the middle class in countries such as China, India and elsewhere has been a boon for products such as Motel 6 and Studio 6.
“Even in the U.S., people want a really good quality economy product. Outside the U.S., it’s three-star. It’s what they want: clean, comfortable, safe, a reputable Western brand. All those types of things, they resonate,” said Palleschi. “And we can deliver that.”
Domestically, Motel 6 and Studio 6 have historically been concentrated west of the Mississippi. “So for me, it’s how do we grow in Florida, in the Mid-Atlantic, in the Northeast? How do we grow the business there and expand? The good thing for us, whether it’s here in the U.S or it’s outside, is our [brand]awareness. Our [brand]awareness is amazing,” said Palleschi. He cited having a casual conversation in India wherein he was explaining who he was and the company only to be met by the listener with: “Oh, we’ll leave the light on for you,” the decades-old catchphrase made famous by pitchman Tom Bodett.
Lights aren’t the only thing on at G6; adding technology also has been a focus.
“We launched our My6 mobile app and it’s doing exceptionally well. We’re seeing double-digit growth every month with usage on the app,” said the CDO. “It’s direct-connect so it works great not only for the customers but our properties and our owners.”
G6 also partnered with HotelKey to roll out a tablet-based property management system at Motel 6 and Studio 6. “We’ll have the entire system changed out by the end of August,” said Palleschi. “We’ve been moving rapidly with that.”
G6 also has been aggressive in the digital marketing space, said the executive.
“We have a lot of walk-ins and a lot of same-day reservations. As we start growing into major markets, into the major cities or growing on the East Coast or the Orlandos of the world, we know we have to have a little bit more of a pipeline, we have to be booking farther out. So, it’s good that we’ve now got the tools and the resources in order to facilitate that,” said Palleschi.
Growing into such areas might also require a tighter footprint for a property. Toward this, the CDO said there’s currently a dual-brand proposition putting a Motel 6 and a Studio 6 literally under the same roof.
“So, you’ve got the convenience of a quick overnight from a Motel standpoint or the extended-stay Studio experience that’s got a full kitchen that a lot of our customers gravitate toward. Having that in the confines of one building, one footprint, low-build cost is resonating with owners. We haven’t gone aggressive and launched it yet. We’re spending some more time working on some of the designs. Even with that we have 16 opportunities that we’re in negotiations with; we’re getting ready to break ground on a couple,” said Palleschi, noting the model would be some 120 rooms in total and that there could be two roofs but the one roof makes for greater efficiencies.
The executive said both Amorosia and Savas, along with other team members, “are constantly challenging the business to look at things a little bit differently and challenging us to move forward. They’re really in tune to what the customer wants and ensure that that’s delivered in a profitable way for owners.” HB