Former Starbucks CEO Jim Donald has infused new life into the struggling Extended Stay America chain.

• Jim Donald was named CEO of struggling Extended Stay America in February 2012.
• The CEO’s first task was to open lines of communication throughout the 683-property portfolio.
• The ambitious “DANCE” plan aims to enhance the guest experience and turnaround the chain’s balance sheet through 17 initiatives.

LOS ANGELES—When Jim Donald took over as CEO of Extended Stay America a year ago, he found a company unable to shake the stigma of bankruptcy because of its crippling inability to communicate.

The cause? Employees had stopped dancing.

Today, Donald has reenergized the ranks through a tenacious tide of communication that has ranged from emails, 60-second company-wide voicemails, an ambitious strategic plan called “DANCE,” and culminated with Donald’s still-ongoing, 200,000-mile journey across more than 350 properties of the extended-stay chain’s nearly 700 properties.

The company, which is officially listed as Extended Stay Hotels at present, will revert to its old name, Extended Stay America, following the consolidation of its five brands under its ESA flag later this month.

What was once a company where corporate credos never made it to the property level is now a nimble hotel giant that can turn on a dime. Such is Donald’s command that fellow hotel-industry CEO, Mit Shah of Noble Investment Group, praised ESA’s ability to initiate change during a recent general session at the Americas Lodging Investment Summit.

“It helps me execute as well to the point where you saw Mit Shah say, ‘That’s fascinating,’” Donald told HotelNewsNow.com during a break at ALIS at the JW Marriott at L.A. Live. “If I send a voicemail out right now and say I want all properties to have a green star on the door by tomorrow, I bet 90% gets that done.”

It helps that 100% of the company’s 683 properties are corporate owned. ESA was acquired out of bankruptcy in a $3.9-billion deal in October 2010 by an investment group led by Blackstone Real Estate Partners VI, Paulson & Company and Centerbridge Partners.

But it wasn’t until Donald, a former Starbucks CEO, signed onboard in February 2012 that things started percolating.

Taking out the slack
It didn’t take Donald long to transition from the world of retail to hospitality.

“There really isn’t that much a change in the major pieces of running a business: communication, being accessible, getting work completed and executing through the front line,” he said. “Obviously there are differences with just the product that you’re selling: rooms, space versus fresh yams, bananas and things like that. But by and large we’re a business that is guest-facing like retail is consumer-facing. The success and or failure of our company goes through the doors at each property managed by properly-level people.”

But getting ESA’s 10,000 associates to buy in required a radical, cultural shift that all started with communication—and lots of it.

To that end, Donald brought with him an old trick he’s employed at every position he’s worked in since 1991: the daily voicemail. Typically lasting only 60 seconds, the message is sent to every property throughout the system, every day, without fail.

The first addressed the bankruptcy. “We are done. Let’s move forward and get some things done,” he said in the voicemail.

The topics since have varied. Sometimes they highlight a key goal. Other times they focus on a best practice. And others still offer a simple word of encouragement, Donald said.

The communication is only as important as the consistency, and this CEO expects his people to pay attention. Often he’ll request follow up from property-level managers. If Donald doesn’t get a response, that means a manager has fallen asleep at the wheel.

Donald calls this “slack.” And there’s nothing he hates more than slack.

To cut back on slack, the CEO tries to make every team member accountable. Through the company’s “Reach” program, for example, Donald trained 4,100 non-salespeople (e.g. maintenance, engineers) to sell.

The initiative is reaping dividends every week, he said, highlighting one such example in which a Spanish-speaking maintenance worker helped a sales director close $75,000 worth of business with a Spanish-speaking client.

Doing the ‘DANCE’
“We have a saying that the job of a leader is not to make the numbers dance but make the people dance to make the numbers dance,” Donald said.

Right now, most of his 10,000 employees are dancing. Donald said that’s typical with new ownership and leadership. People get excited.

“But if people quit playing the music, people quit dancing. Once people stop dancing, it’s the same old same old.”

Donald is trying to keep the momentum going through an ambitious strategic campaign called “DANCE,” which stands for:

• Delight guests (through property refreshes and enhanced service)
• Activate associates (and preventing slack)
• Neutralize costs (through cost-containment measures)
• Care for community (by creating a sales community for employees and guests)
• Expand revenue (through sales and rate initiatives)

The program comprises 17 individual goals, most of which Donald said are showing significant progress.

The chain’s owners have certainly bought in. The collective has invested $400 million in operation expenditures and capital expenditures since ESA emerged from bankruptcy.

There’s plenty work to be done, however—so much so that the CEO has yet to even contemplate expansion.

“We have enough work to do to strengthen the existing footprint,” he said, underscoring that ESA is the largest managed and owned hotel chain in North America.

“That’s big enough for us right now, just to finish fixing up the properties and doing all this stuff.”

Source: hotelnewsnow.com – By Patrick Mayock

Subject: Extended Stay America extended-stay hotels