WESTLAKE, Ohio -- Even as its new owners were discussing the future of TravelCenters of America in a conference call yesterday, the truckstop chain was reaching out to potential new franchisees. The move is indicative of the new owners' desire to grow not by dramatic leaps, but rather through methodical hunting and pecking.
The target growth is the 500 full-service [travel] centers that exist in America, said Barry Portnoy, managing trustee of Hospitality Properties Trust (HTP), which announced its purchase of the Westlake, Ohio-based chain on Monday. [image-nocss] Of the centers that TA doesn't own, there's one other chain of about 65 centers, and [just about] everything else is owned in one and two sites by individuals. That's going to be an acquisition target for growth.
While not offering any absolute numbers for the TA chain may eventually achieve, HTP officials did say the company will through a variety of methods.
This is a fragmented subsector of the hospitality industry, said Mark Kleifger, CFO of HPT, during yesterday's conference call with investment bankers. TA may achieve continued growth as an industry consolidator. At the same time, there are significant barriers to new competition due to both limited site availability and also high construction costs. The average cost for a pumper-only site is about $8 million, while the cost to build a full-service travel center can range up to $20 million. However, there are long-term programs at work in TA that would allow TA to grow selectively through new-site additions.
Kleifger said there are approximately 3,000 truckstops in the United States, of which about 500 are full-service travel centers. Currently industry sales for all 3,000 travel stops are estimated at about $55 billion, and TA represents only 10% of that business, he said.
Meanwhile, TA, which is expected to be reintroduced as a public company called New TA following the closing of the HTP acquisition, issued a call yesterday for successful, independent travel center operators who are interested in becoming TA franchisees.
TA currently has 23 franchise operations across the country. "We are very selective in who we invite to join the leading brand of travel centers on America's highways," said Dave Raco, TA's director of franchising. We're looking for strong operators who would represent the TA brand well.
TA's first franchise operation in Mt. Vernon, Mo., recently marked its 25th anniversary under the TA sign. So successful is the association, according to TA, that franchisee Dwight Wilmoth purchased another travel center 42 miles east in Strafford and franchised it with TA as well.
"It has been a great relationship," said Wilmoth. "While TA puts serving professional drivers and motorists above all else, it also helps us operate a successful business with its strong brand value, national purchasing contracts, national fleet diesel and repair shop programs, training staff and field support."
Interested single or multiple unit owner-operators can contact Raco at (440) 808-3298 or e-mail at raco.dave@tatravelcenters.com.
TravelCenters of America is the largest network of full-service travel centers in North America. The company has more than 12,000 employees at 162 locations in 41 states and Canada.
As previously reported in CSP Daily News, TA announced that it has entered into an agreement with Hospitality Properties Trust, under which HPT will purchase TA for approximately $1.9 billion. TA expects business to continue as usual at its 162 locations in 40 states and Canada during the transition period.
John Murray, president of Newton, Mass.-based HPT said several things about TA quite compelling when considering it for acquisition. TA operates the largest and only nationwide full-service travel center network with 162 sites across 40 states and in Ontario, Canada, and is among the largest travel center companies by all measures, he said. We believe the TA network is superior to its competitors because most of the TA sites became travel centers when land at interstate exits was available and before current permitting requirements. The TA network may be largely irreplaceable along the U.S. interstate highway system.
Also, because of its broad product and service offerings, it has become the principal supplier of diesel fuel and on-highway services and parts to many of America's largest long-haul trucking fleets.
Murray also praised TA's leadership. One of TA's greatest assets is its employees and management team, he said. TA's senior management has broad industry experience. On average, TA's senior managers and regional VPs have well over 20 years each of industry experience. They have grown TA from a company with 48 sites to 162 sites today, successfully integrating five smaller networks along the way.
Most if not all of that management team is expected to remain with the company following the close of the acquisition.
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