Jack DeBoer • Founder of four successful hotel brands

 

Success in Business Without Risking Family, Friends and Reputation

Reinventing Extended-Stay

09.28.2010

lodgingmagazine.com

When travelers choose an extended-stay hotel, the reasons often go beyond everyday business purposes. Many higher-end extended stay hotels primarily target business travelers, where companies frequently pick up the (often costly) tab. But what about the average person, who may need a viable extended-stay option for reasons other than business? Value Place has found a successful niche in this market that caters to consumers who may require long-term temporary housing for motivations and needs other than work travel.

Value Place was launched in Wichita, Kan., in 2003 by Jack DeBoer, recognized throughout the hospitality industry as a pioneer in extended-stay lodging, as he designed and built the first all-suite Residence Inn in 1975. As the creator and developer of additional brands, including Summerfield Suites and Candlewood Suites, DeBoer saw a void in the market for an extended-stay option for the budget-conscious. As an entrepreneur and industry veteran, he was able to look at extended-stay through a different lens.

Since then, the company has been growing at a rapid pace, positioned somewhat under-the-radar, as a friendly, affordable alternative to expensive lodging in the extended-stay sector. Value Place is sandwiched squarely between hotel and apartment living. The unassuming brand features basic studio suites with full kitchens, onsite laundry rooms, numerous optional amenities, and an automated check-in process, all with plenty of pay-as-you-go choices.

“When you go into business, you identify a need, create awareness, and then you can compete. At Value Place, we’ve identified a need,’ DeBoer, who serves as chairman, explains. “Where we create the awareness, we win, because we are the lowest priced, the safest, and the simplest. For example, we have reduced our employee count to about 4.5 to 5 employees per property, essentially reducing our costs—and we are outperforming everyone in the industry.”

Attracted to Value Place’s commitment to safety, cleanliness, and simplicity, guests generally fall within several categories: work travelers; those in the midst of a housing transition; medical family caretakers; family vacationers; and military personnel. According to DeBoer, about 50 percent of Value Place’s business is from walk-ins; 30 percent from word of mouth, and the rest find the properties via the Internet.

According to Gina-Lynne Smith, president of Value Place Franchise Services, the company’s guest profile has shifted substantially over the past two years. “As the economy changed, we repositioned the brand to maximize our awareness among different consumer groups,” she says. “For example, 40 percent of our customers were from the construction industry three years ago. Today, that number is closer to 10 percent.

“The reverse is true among housing transitioners. Now making up approximately 40 percent of our business, customers in need of temporary housing has increased dramatically,” Smith continues. “With our primary brand focus on grass roots efforts, we are a nimble company. Our direction from a national perspective is to provide tools and resources to support local marketing and to build brand awareness regionally and nationally through web strategies.”

Value Place currently has 171 properties nationally, with an expectation that the brand will grow to 175 before the end of 2010. Approximately 213,000 guests check into a Value Place every year.

Offering simplicity and flexibility, Value Place offers low weekly rates, allowing guests the convenience of paying one weekly stay at a time. One of the brand’s game-changing policies is offering amenities and services on an a la carte basis. Further, they can be switched from week-to-week depending on a guest’s own personal lifestyle choices.

According to Gina K. McKee, vice president of franchise development at Value Place, two of the most popular selections at most properties are Internet access and linen exchange.
Focused on providing the essentials, Value Place is dedicated to offering extreme cleanliness, affordability, and simplicity to guests—and the company is serious about its high standards in each of these categories. For example, it promotes a “99-step” cleaning process, where the entire unit is scrubbed and sanitized from top to bottom.

DeBoer says emphatically, “We are cleaner than any other lodging brand—period. The reason for this is we have no eye candy. All too often, the industry tries to be all things to all people, but realistically no one is good enough to always deliver with excellence. So we said, okay, let’s limit what we have to deliver, but we deliver with absolute excellence.”

Regarding safety, each Value Place property ensures its guests feel comfortable from the moment they drive into the parking lot, as all facilities are brightly lit. Value Place has also instituted a guest privacy policy, with electronic locks for all common areas and studios, and video cameras positioned at entrances and throughout the public spaces. The hotel also scans all driver’s licenses, offering an extra layer of security that is often uncommon among economy properties.

In keeping things simple, Smith adds, “We combine the convenience of a hotel with the necessities of an apartment, while removing the complexities of both. The operating model is simple for investors and teams, and the pricing is easy for our guests.”

The new construction and curb-appeal don’t hurt either, as each Value Place is built from scratch, offering guests the added consistency throughout the chain.
In addition to its customers, Value Place franchisees are experiencing a robust marketplace. The extended-stay industry hasn’t experienced the declines in occupancy and RevPAR that traditional hotels have had to contend with in recent years.

“We anticipate that within the next five to 10 years, we will have more than 500 locations open from coast-to-coast,” Smith says. “I expect that extended-stay hotels, particularly those in the economy segment, will continue to outperform conventional hotels.”

Offering a clean, secure, budget-targeted extended stay option, Value Place has found the product to be largely recession resistant. For example, a 124-unit Value Place property operates with very limited staff, versus a traditional property of the same size.

DeBoer points out that although at first glance, Value Place appears easy to manage, the brand’s infrastructure is much more complex. He reveals, “We have many different challenges such as our front desk is not open 24 hours, and housekeeping is not daily.”

Not surprisingly, Value Place chooses franchisees carefully, in an effort to guarantee brand consistency. Value Place has 47 franchisees—all who understand the importance of the model.
“We have extraordinarily rigorous standards. We have never sued a franchisee, and we have never been sued by a franchisee.” DeBoer says. “I’m interested in two things: One, that we have standards that work. Two, everyone lives up to them—and we are very, very tough. And, most important, that our franchisees make money. And they do, they have— and it works just fine.”

When asked about future extended-stay lodging trends, DeBoer replied, “I think the industry really hasn’t figured out which percentages of people are staying more than seven days at hotels. When hotels try to sell both by the day and month, it complicates the operating model, so you really have to be one or the other. That’s why we are not in the daily lodging business.”


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