DailyFranchiseNews.com

Honey Baked Ham Takes a Hit!

Wow! Wouldn't want to see this story for too many franchisors--sure things are tough out there but so what?  This is not the first bout of hard times and in franchising it's the fourth recession we've seen in the past two decades--all of which were good for franchising except this one.  I don't know about you, but when I am feeling sad or deprived a nice Honey Baked Ham is exactly what I would enjoy--with some wine and chocolate!  Everyone needs to perk up a bit!  However, bad press like this is NOT helpful right now for franchising and franchisors!

Read story here in USA Today!

 

Birmingham Bumps Up its Value

Talk about a company that’s beating the odds!

The Birmingham Business Journal reported that economy extended stay lodging brand Value Place is expanding its presence in the Birmingham region. Value Place opened its first Birmingham location in Pelham last year, followed by a Bessemer location, which opened in June, said Gina McKee, vice president of franchise development. She said the chain is currently evaluating sites for three additional franchisee-owned properties.

McKee said the chain has identified a spot at Highway 78 and Roebuck Drive and another at Interstate 59 and Chalkville Mountain Road in Trussville for potential sites. A third has yet to be identified. Value Place can be found coast to coast, with 159 open now and 170 slated to be open by the end of the year – 43 of which are company-owned.

The Triangle Ups its Value

Though many lodging chains have limited or ceased expansion in the past year, Value Place is taking the exact opposite approach.

The News & Observer reported the Wichita-based chain is calling for 500 properties to be built over the next five years – six of which will be in the Triangle area but over the course of 10 years. The first area Value Place will open in Apex in January. That the plans of the Wichita, Kan.-based company have not been scaled back because of the recession speaks to Value Place's no-frills business model. For about $200 a week, plus a $100 damage deposit, Value Place guests get a clean, safe place to stay and not much else. The approach has proven attractive at a time when corporations are slashing travel budgets and more people find themselves in housing limbo because they have relocated but can't sell the home they left behind or simply because they are out of work.

"A lot of apartment dwellers don't want to commit to another year lease because they don't know where there job is going," said Gina McKee, Value Place's vice president of franchise development. McKee said occupancy rates across Value Place's 160 properties have remained about 80 percent during the recession. She also revealed that the Triangle market is attractive because of the large number of business travelers coming for extended visits and because so many people are moving into the area.

Carter Rise, a franchisee in Richmond, Va., who hopes to start construction on a Value Place on Capital Boulevard in Raleigh early next year, said the brand fits the current economic environment. "You get basic, ultra-clean, very safe lodging in a comfortable but not ostentatious room with minimal amenities," he said.

Extended Stay Chain Expands in Richmond

If you’re between residences, traveling for work or planning to visit family in the Richmond area over the next few months, there will be a new extended stay lodging option to consider when making your plans.

Richmond BizSense reported Value Place will open in Colonial Heights within the next few weeks. The local franchise is owned by Carter Rise, who is also owner of Sandpiper LLC — an apartment company with properties in Harrisonburg. “With Fort Lee and all the growth in Colonial Heights, we saw a need for an affordable extended stay alternative,” said Rise, who lives in Richmond.

Rise hopes to draw military contractors who need temporary housing, as well as people moving to the area in need of a place to live while they look for permanent housing. The Colonial Heights location is the second one for Rise, as he opened his first Value Place in Chesapeake at the end of September. That location is doing well, he said, and is attracting a mix of military contractors, business travelers and people in between homes. Rise said the chain is growing in a down economy because of the price point. Rates at his new location will be $229 per week, with a one-week minimum stay. The hotel’s rates are between $159 and $359 nationwide. The average length of stay is 90 days, according to the company. “It is a high-level value at an attractive price point,” said Rise. “And you’ve got a kitchen in the room, so there is further savings in that.”

The business model of Value Place allows it to keep prices low by cutting out amenities. There is no free breakfast, and daily linen service costs extra. It also operates on a lean staff; Rise plans to hire between six and 10 employees to run the 124-room property. Rise plans to open additional locations in the area, most likely in the West End, Midlothian and near the I-95 corridor north of Richmond, but it won’t be until credit loosens up, he said.

Gina McKee, Value Place’s vice president of franchise development, said that in addition to Rise’s four planned locations, McKee said the company is looking for additional franchisees to develop two more locations in the area.

Cleaner, Safer, Simpler…and Successful!

Now is not the time for bells and whistles…it’s the time for nuts and bolts and Jack DeBoer’s latest venture is thankfully focused on the latter.

Lodging Hospitality reported that DeBoer, the creator—or “grandfather,” jokes the 78-year-old entrepreneur—of the extended-stay hotel, has turned the traditional hotel thinking upside down with Value Place – an economy extended stay lodging and short-term residential property brand. While the rest of the industry has struggled through one of its deepest downturns, Value Place has continued to grow. Occupancy is up, tipping 80 percent, and development has continued despite the financial-market meltdown. The brand will soon open its 158th property, in Sacramento, the first on the West Coast, and the portfolio should reach 170 by year’s end. Forty-three are corporate owned by DeBoer and co-owners Greg Kossover (CEO) and investment firm Perry Capital. The pipeline is even stronger: Forty-seven franchise groups have committed to have 500 properties open by 2015. The secret for DeBoer, the company’s chairman and founder, was turning traditional hotel thinking upside down. Value Place brings DeBoer back to his apartment roots, when he was one of the largest multi-family developers in the U.S. during the 1970s.

“People are looking for safe, clean, affordable and simple,” says Gina McKee, Value Place’s vice president of development. “They don’t want to sign a long-term lease, but they don’t want to pay the high price of $159 a night. They need a clean, safe place to live and that’s what we offer. Jack has created this brilliant business model, whether you’re a guest or an owner.” As the brand has grown despite the hotel industry’s decline, more hotel developers are taking a second look. “Everybody was so busy doing what they knew how to do, why would they want to monkey around with something like this?” says DeBoer. “Now our phones are ringing.”

Click here to learn even more about this soon-to-be household name.

Its Biggest Asset (Besides Value)? Strength

Many businesses have been affected by the economy and Value Place is no exception. However, the Wichita-based economy extended stay lodging brand still has enough strength to become the largest chain in its niche.

The Wichita Eagle reported that after opening its latest hotel in Shreveport, La., Value Place has 156 franchise and corporate-owned hotels across the country, surpassing InTown Suites, according to Value Place officials. Gina-Lynne Smith, president of Value Place Franchise Services, said the company's growth rate slowed dramatically in the past year as Wall Street and the big national and regional banks squeezed off credit for new construction. But some franchisees are still getting financing from local banks, she said. The company expects to be at 170 units by the end of the year. "That is a sign of the strength of the performance that we have been blessed with operationally," she said.

Value Place hotels have a chain-wide occupancy rate of more than 80 percent for all units open at least 90 days, she said. Smith said the company has even been able to raise rents $10 or $20 a week in some markets because occupancy is so high. "We will be one of the first to see a rebound because of strong performance," she said.

Knoxville Gets Some Added Value

People are looking for value now more than ever. Knoxville area residents are lucky: They have to look no further than 4412 Singleton Station Road in nearby Louisville, where the newest Value Place hotel has officially opened its doors.

The Knoxville News Sentinel reported Value Place, an economy extended stay lodging chain headquartered in Wichita, Kan., plans to open five hotels in the Knoxville area by 2012. The Louisville location will be owned and operated by Evan Carzis, an architect and real estate developer, and Bill Davidson, a former principal with Foodtown Supermarkets and the founder of Pet Food Giant. Though based on the East Coast, Carzis and Donaldson own warehouses in Knoxville and felt it was a great market for the Value Place concept as well.

"We liked Value Place immediately because it fit perfectly with our backgrounds but also because it was a business addressing an underserved niche," Davidson said. "While most extended stay chains focus on higher price points and business clients with expense accounts, Value Place focuses on the guests that are picking up the tab themselves. It made a lot of sense to us," Davidson said in a statement.

Gina-Lynne Smith, franchise services president for Value Place, said investment in the Knoxville market will be $4 million to $5 million per location and that company officials will be meeting today in Knoxville with potential investors looking at purchasing Value Place franchises. "Many of our customers are business travelers, but typically our brand is for anyone who pays for lodging out of pocket. We are appealing to housing transitioners - people in transition who are relocating to a new city ahead of their families," Smith said.

Gina McKee, vice president of franchise development for Value Place, said the company is looking to locate franchises in U.S. markets similar to Wichita. "Knoxville has a lot of growth and development and we believe Knoxville has a need for the market niche we provide," McKee said.

Photo: Gina-Lynne Smith outside a Value Place property.

A Vast Improvement

Though it’s been nearly four years since Hurricane Katrina, New Orleans is still in recovery mode. The good news is that local residents and businesses alike are helping to restore the city to its former glory.

The Times-Picayune reported Value Place is just one of those businesses lending a hand in terms of redevelopment with plans to build a four-story, 124-room economy extended stay hotel at the intersection of Gen. de Gaulle Drive and Sandra Drive. Demolition of the existing derelict buildings will commence within the coming weeks and the hotel is expected to be open for business by May 2010, said developer John Cattano of CC Development in Columbia, S.C. A restaurant and office space will also be developed. 

"I think it's going to look really nice, and everybody was very complimentary of the design," Cattano said Thursday. "It's going to be an improvement over those two buildings that are there now." The developers have gotten zoning approvals, changing the site from business to commercial, and demolition would begin after Mayor Ray Nagin signs off on the ordinances and a demolition permit is obtained, said Wiley McCormick of Park Square LLC, a New Orleans partnership that purchased the site after Hurricane Katrina. "As soon the mayor signs it, I'm sure we'll be moving" toward closing on the sale, said McCormick, who owns property nearby for a development he declined to reveal. "We're excited about this project, because it also improves this whole corridor."

Cattano operates seven Value Place franchises in South Carolina and Georgia, and his partner, Phil Cox, has another three. He expects the rates at this property to be $279 per week and plans to employ five people full time. "We certainly hope to break ground in September," Cattano said. He is also in talks with restaurant groups as a potential tenant, but none has been selected. The restaurant and office space will be a $1 million investment, he said. 

Jacksonville Increases Its Value

Need a place to stay that won’t break the bank? Look no further than Jacksonville.
 
The Jacksonville Business Journal reported Value Place is preparing to start construction on two new economy extended stay properties in Jacksonville. The Wichita, Kansas-based company already has two franchise-owned locations in Jacksonville already, and hopes to start construction on two additional properties by the end of 2009, which will be available for franchise purchase.

Gina McKee, Value Place’s vice president of franchise development, said the company plans to open three more hotels in the Jacksonville area by 2012.

Successful Franchisee Expands Empire with Value Place

If at first we don’t succeed, we’re told to try try again. But what if someone succeeds right off the bat? If they’re Vijay Malladi, they try again anyway!

IndUS Business Journal reported that after graduating from B.M.S. College of Engineering in Bangalore, Malladi came to the United States from Hyderabad in 1992. He attended Long Island University, graduated with a master’s degree in computer science in 1993 and spent the next decade working in IT for companies such as AIG, AT& T Corp., Philip Morris USA Inc. and The Black & Decker Corp. All of his IT consulting work kept him on the move and he eventually looked to settle down. “I was very dissatisfied because I was constantly traveling,” he said. “And I always wanted to work for myself.”

After settling in Northern Virginia, Malladi founded Nova Hospitality Group with partners Mannem Reddy, Kishore Kohda, Prashant Reddy and seven additional investors to begin expanding his franchise footprint with Dunkin’ Donuts, Baskin-Robbins, Chics n Wings and several Indian grocery stores and restaurants. Nova Hospitality’s latest venture, however, is bringing the first location of economy extended stay lodging brand Value Place to the Washington, D.C. area

Malladi first came across Value Place while attending a hotel exposition in 2005. He said he was immediately struck by the extended stay concept. “Instantly I like the way they were doing it and I said, ‘This is something I should be doing,’” he said.  According to him, he liked that Value Place was not just really competing with hotels, but also with apartments. He felt as the economy continued to spiral such an extended stay option would become increasingly popular. In recent months, as he prepares to open his first Value Place, he feels his foresight has really played out. He said he has done a lot of research in the region and found that with the cheapest apartments running approximately $900-a-month and most at least $1,200-a-month, his weekly rate of $309 can really compete with a single-room apartment. “With the economy down, you need this type of offering,” Malladi said. “Products like Value Place are in the right position … It is a no-brainer.” Though Malladi’s first Value Place is yet to open or begin construction, he has already put up a sign touting the property and showing the price, which has garnered a welcome response. “I get so many calls – at one point I got 10 calls a day,” he said. “They say, ‘We are really looking forward to this hotel. We really need this place.’” After his first Value Place opens this year, Malladi has plans for three more.