The company also set to break ground on new ‘ESA 2.0’ remodel in October
EXTENDED STAY AMERICA is finalizing its plan to franchise its brand for the first time early this year. The company also plans to break ground on the prototype for its properties in October.
ESA is finalizing its franchise disclosure document, said Jim Alderman, EVP and chief asset merchant for the extended-stay economy brand. “I imagine we’ll wrap it up by mid-first quarter,” Alderman said, adding he expects to see licensing agreements signed by the third quarter.
The company has been “thoughtful” in its approach to franchising, Alderman said. “We want to approach franchising from a little different take from others. When you’re trying to come up with a new generation, you really want to be careful.”
Alderman started with ESA in October in part to lead the franchise process. He previously served as chief development officer for Kimpton Hotels and Restaurants, and also held positions at Wyndham Worldwide and Starwood Hotels & Resorts. His background includes experience in hotel and restaurant development, private equity fund investment, management contracts, franchises, public/private partnerships and investor relations.
ESA plans to sell some existing properties to franchisees who also agree to build hotels under the new prototype. “It’s really going to help propel us into what we call ESA 2.0.” Alderman said, referring to ESA’s renovated look. “We want them to make a commitment to not only be good stewards of our brand, but to also enhance our portfolio.”
ESA 2.0, announced at the publicly traded company’s investor day in June, is the brand’s growth plan for the next five years. The strategy involves franchising and increasing the number of both franchised and owned/operated units with the new prototype. Chief Executive Officer Gerry Lopez told investors at the time that ESA will expand to 700 hotels from its current holdings of 629 hotels, with 75 percent being owned/operated and 25 percent being franchised.
Lopez said the company would favor licensing to seasoned, sophisticated franchisees seeking to diversify their portfolios. Alderman said they want to attract owners who would build ESA properties in a market “cluster.” “They work phenomenally well that way,” Alderman said.
The company has received many inquiries on the franchising plan since the investor day event, Lopez said. “We are pleased, frankly, by the response we had to the investor day back in June. We’ve had any number of calls from folks who are ready, willing and able to hear what our proposition is, [people] who understand the economics.” He said hoteliers are eager to learn more about the brand and the markets in which it is feasible to develop.
Prospective franchisees and developers will be able to see the ESA 2.0 prototype designs this spring at the company’s headquarters in Charlotte, N.C., Alderman said.