The video footage from May 3, 2016 is spectacular. In it, a newscaster reports against a backdrop of the raging wildfire in Fort McMurray, Alta. that would dominate the Canadian headlines until it was declared under control two months later. In this clip, just over the right shoulder of the clearly rattled reporter, a Super 8 hotel — the most successful in the whole system — is engulfed in flames. Great billows of black smoke lift into the sky above this beleaguered city — 53,000 of whose residents would be ordered to evacuate.
The then 15-year-old Fort McMurray Super 8 did $7.4 million in business in 2014 — more than any of the 2,200 Super 8s worldwide — and was always a system-leader in average daily rate, occupancy and RevPAR counts. It had 140 rooms — lots, by the brand’s standards — and they were always busting at the seams. Indeed, so spectacularly did this property perform that its parent company decided to erect a sibling Microtel beside it. But last Christmas, when the four-floor newcomer was framed and freshly under roof cover, an arsonist torched it. Undeterred, Superior took another run at it in March. The foundation of the second-try structure was in the ground on May 3 when it was destroyed in the same fire that destroyed its neighbour.
“This is about as bad as it gets,” the Global National correspondent declares on the video clip filmed that day, gesturing at the disintegrating hotels behind him.
Marc Staniloff, president and CEO of Superior Lodging Corp., would almost certainly concur. “It’s been a challenging year,” he says, before conceding that the Calgary market as a whole is down 25 per cent, and the Calgary airport hotel is down 40 per cent. But then he grabs hold of the phoenix that soared so capably from these embers and he’s off in characteristic fashion, expounding on his company’s winning ways.
Superior Lodging, this year’s Pinnacle Awards honouree for Company of the Year, is a dynamic Canadian hotel developer — the most active in Canada — and real-estate investment company. It owns 250 hotels across the country under the Super 8, Microtel, Thriftlodge and Travelodge banners and its principal focus is on the entrepreneurial development, investment and management of limited-service hotels for hotel owners (franchisees) and investors. The limited-service market is a purposeful point of focus, says Staniloff, given that its minimal site amenities and manageable operating costs make it the most profitable segment there is.
This privately owned, Calgary-based company is a standout for a whole suite of reasons, not the least of which is its $1-billion portfolio of real-estate assets. Consider that two of Canada’s top 10 hotel brands — Travelodge and Super 8 — are Superior properties. The organization’s cultivation of Super 8 is among its most celebrated achievements and the Microtel brand, currently ranked among the best economy/budget hotel chains in Canada, is poised for its own greatness with 14 locations opened in just four years with four more expected to open by the end of 2017. Superior also plans to deploy the first location of its proprietary brand, Jmarc Inn & Suites, in 2017.
Consider, too, the way Superior has exploded onto the market in the past two decades, growing its lodging oeuvre from five to a spectacular 247 hotels. Since 2015 alone, the company has added six Super 8s, five Microtel Inns and Suites, 85 Travelodge and six Thriftlodges to its count.
And consider its impressive dedication to charitable initiatives and environmental stewardship. Superior focuses its development efforts on those projects that minimize the environmental footprint on the communities it occupies and to endorsing environmental awareness and protection programs that educate, influence and reduce waste. It was among the first hotel companies in Canada to embrace the Ecostay LivClean program and it recently transitioned into a homegrown usurper, Common Ground, that counts environmental sustainability among its most treasured tenets. Superior also participates in Green Key, a graduated-rating system designed to recognize hotels keen to improve environmental and fiscal performance. On the charitable front, the company provides financial sponsorship to a range of social causes and grants its full-time employees three paid days off annually to volunteer.
But first, consider that all of these wins lift out of a disproportionate number of Superior’s franchisees being “very focused in the West.” The struggling oil market in this country lights its home fires in the same place Superior does — of its 129 Super 8s, 36 are in Alberta (with another two signed but yet to open) and 10 are in Saskatchewan; of its 14 Microtels, four are in Alberta and three in Saskatchewan; and of its 85 Travelodges, 18 are in Alberta (with another signed but yet to open) and nine are in Saskatchewan. “We’re certainly affected by the downturn,” Staniloff says.
All of this explains the whack of belt-tightening measures Superior has had to introduce to its operations including, says CFO Samantha Charlesworth, a rationalization of executive travel. Nobody took a wage cut, but some corporate positions were realigned. These initiatives, she says, “came when we took a hard look at budgets and realized this economic downturn was going to last 12 to 24 months, if not more.” Reducing costs has been effective, says Staniloff, and strategic, too. “When the business comes back, it’ll turn very quickly to being profitable.”
In the meantime, the company’s been engaged in a development flurry elsewhere, madly obliging existing properties coming around to the powers of a branded hotel, including name recognition, consistency, predictability, standards, thriving rewards programs and abundant representation with online travel agents. “If you’ve got a Joe’s Motel and a Super 8, you go to the Super 8,” says Staniloff.
While the company’s revenues are down in hotels in resource-based communities, sales figures on a unit-by-unit sales basis in Ontario are up. Same with Quebec and the Maritimes (save St. John’s, where oil has also wreaked havoc). Overall, Staniloff demurs, “my year has been okay. If I look in specific markets, I’m challenged, but because of my diversification, the net is growth.”
Superior owns interests in 32 hotels and has had an interest in more than 100 over Staniloff’s history with the company. This business model sees it, in conjunction with partners, developing and seasoning properties (for between a month and 10 years) before selling them. Sometimes they’re existing entities that want to franchise or that Superior has identified as ripe for branding. Sometimes they’re from-scratch creations (whose origins begin with a would-be franchisee approaching the brand, or the brand culling together interested parties in a likely market).
What differentiates Superior from many of the other franchisors is that it’s also a developer. That means it will assume partial ownership in a hotel compared to the other brands, which are just trying to sell a franchise. “My providing equity to these franchises gives these guys a degree of comfort. They’re looking for partners and I’m prepared to risk some of my capital on the asset side — it’s a win-win.”
Indeed, Superior’s partnership approach is key to success on all sides, says Chip Ohlsson, chief development officer for North America for Wyndham Hotel Group, which partners with Superior on the Super 8, Microtel and Travelodge banners. “They understand the value of a give-and-take relationship and they’re not in this for short-term gain,” he says. “They stand alongside us at every launch of every initiative and truly believe in the growth of the brand. That they’re so invested makes for a great relationship.”
Nowhere is that dynamic more apparent than in the Microtel case. “What’s firing-up the growth with Microtel is MasterBuilt’s involvement,” says Eric Watson, chief operating officer of MasterBuilt Hotels, a vertically integrated hotel-development company of which Superior Lodging owns 25 per cent. “We’re the only guys out there putting skin in the game. There’s human capital that goes into a Microtel development that other brands just don’t have. That’s why it’s growing so fast.”
Indeed, Microtel is the fastest-growing new construction hotel brand in Canada. The company, which has opened 14 new-construction hotels since the first Microtel opened in Canada (in Estevan, Sask.) in 2012, has an agreement with Wyndham to have 45 Microtels in operation across the country by 2021, and 75 by 2036. It currently has 40 deals in the pipeline, all with identified sites and markets. “We’ve got people across the country who are exclusively invested in helping to develop the Microtel brand. These are much deeper partnerships, where other brands are just trying to sell franchises.”
Also firing the growth of this contemporary midscale player are the stellar reviews it attracts. Of the 12 Microtels open for at least six months, seven are market leaders on TripAdvisor.
Another success factor is the company’s purposeful strategy of diversification. By spreading its hotel-development interests across the country, Superior’s been able to mitigate the impact of the oil-ravaged backdrop that serves as Superior’s home-base scene. The company anticipates a revenue boost in 2016 of 15 per cent over 2015.
Today, the foundation of the third iteration of the resilient Fort McMurray Microtel is complete and Superior execs are in the development process of rebuilding the Super 8 that so famously met its end beside it. “My highest-grossing Super 8 burns to the ground on May 3 and I’m still smiling. How’s that for a year?” says Staniloff, before getting sanguine about the stuff. “It’s business. It is what it is. We’ll get it figured out.”
Volume 28, Number 4
Written by Laura Pratt