Further expansion in the cards for La Quinta Corp.

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WASHINGTON - The La Quinta Corp.'s recent acquisition of Baymont Inns & Suites may only be the beginning.

Before entering the franchise market in 2001, the 36-year-old La Quinta Corp. primarily grew internally, slowly expanding its La Quinta Inns and La Quinta Inns & Suites brands. But now the company is looking at expanding through acquisition.

"We think there will be other acquisition opportunities for the company," said Francis "Butch" Cash, La Quinta's president and CEO.

Other acquisitions would likely be geared toward adding other hotel categories to La Quinta's portfolio.

The limited-service Baymont brand, for example, complements the midprice La Quinta, but Cash said, "To be a great lodging company, we will need to have brands in all different segments. Going upscale to the full-service hotels in the long term is something that might be attractive."

If La Quinta does add another brand or set of brands to its portfolio, it probably won't happen before next spring because La Quinta needs time to integrate Baymont into its marketing and sales systems.

"We are shooting for April 1 of next year to have all of this done," he said.

La Quinta went public earlier this summer with a plan to acquire 86 Baymont properties, seven Woodfield Suites and one Budgetel Inn from the Marcus Corp., a Milwaukee-based company that owns hotels and movie theaters, for $395 million in cash.

Geographically, adding Baymont, Woodfield and Budgetel broadens La Quinta's reach into the Midwest. The hotel company's core markets are the Southwest and Southeast.

Cash said the acquisition also will provide La Quinta and Baymont opportunities for synergy, growth and improved distribution.

For instance, Cash said, La Quinta will be able to grow Baymont's Internet sales, which lag behind the rest of the industry. "Baymont only gets about 6% or 7% of its revenue from [sales on] third-party Web sites," Cash said.

By comparison, 13% of La Quinta's revenue comes from sales by online agencies.

La Quinta also intends to market Baymont on its branded Web sites and vice versa, along with linking rewards programs for frequent guests.

Additionally, Cash said, "We will end up with one technology platform for the reservations system, and we will end up with one sales force."

The acquisition will also present development opportunities for existing franchisees of La Quinta and Baymont brands, said Cash.

"And when our franchise salespeople are calling on a potential new franchisee, they will now have two brands to offer," he added.

The acquisition could also open the door to international expansion. Last year, La Quinta signed a deal to open its first international hotel, in Vancouver.

To contact reporter Michael Milligan, send e-mail to [email protected].

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