LAS VEGAS—Vantage Hospitality Group is altering its traditional approach to development for its two brands with the expectations that continued growth in North America and an untapped potential in Asia will be filled.
Throughout various panels and discussions held Wednesday during the company’s annual conference and trade show, executives repeatedly referred to controlled growth of their freestyle lodging concept as a top priority for 2013 and beyond. The freestyle lodging approach allows members to choose which amenities it wants to offer as long as they offer a minimum number of them.
“‘Mandate’ is not in our vocabulary,” said Bill Hanley, group president of the Lexington brand and managing director of international development for Vantage. “The time is right for Vantage’s evolution.”
Hanley and Roger Bloss, Vantage’s chairman and CEO, said the promotion of Patrick Mullinix to executive VP of development will allow Hanley to focus more on “presidential duties and international growth.” Along with the announcement of Mullinix’s new role, Bloss said the company’s other 11 development executives will cross-sell the Vantage’s family of brands. In addition to Lexington, Vantage offers other brands, including Americas Best Value Inn, Canadas Best Value Inn, Chinas Best Value Inn and Value Inn Worldwide.
Room for growth
Vantage has 1,091 properties in its global portfolio, and Hanley said there’s plenty of room for more.
“There are incredible opportunities for growth in Asia and Canada,” he said, specifically citing China, India and South Korea as target markets in Asia.
“The timing is right,” Bloss said. “Banks have been kicking the can down the road, and they’re running out of kicks.”
Bloss and Bernie Moyle, Vantage’s CFO and COO, declined to put a number on how many properties the company expects to add during the next 12 months.
“It’s more about the quality of it and the opportunity—we’re not fishing to see how many we can bring in,” Bloss said. “To just get numbers and turn numbers is not what we want to do. If that owner’s not engaged, they’re not the right members for us. We don’t want owners that put up a flag and say that’s our secret sauce, now I can go out and play golf.”
“Of course, we have business plans and pro formas, but we don’t have quotas,” he added.
Expanding to India
The company will place its development focus on India. Earlier this year Vantage, in conjunction with Asian-American hoteliers Mukesh Mowji, Yogesh Patel and Tarun Patel, launched VanMYT hospitality. That company will concentrate on establishing the Value Inn Worldwide and Value Hotel Worldwide in India.
Bloss said he has been attracted to India’s hotel market since he first visited the country in 2006.
“I am utterly amazed at the number of hotels existing that are 2- and 3-diamond caliber,” he said. “When I saw the properties, I called Bernie and said, ‘I can’t believe how many properties I’ve seen that would fit our system today with no renovation.’”
Bloss said Vantage will primarily use hotel ratings determined by the Federation of Hotel & Restaurant Associations of India to determine which properties best fit Vantage’s brands. The FRHIA has 2,358 hotels in its membership ranks.
Bloss estimated there are approximately 3,000 properties in India that could fit into the Vantage brands. One of the biggest challenges is the lack of technology in the hotels—Bloss said many of them use the room-key-in-a-cubbyhole approach for room management.
“The (online travel agencies) are facing (technology issues) now,” Bloss said. “Travel agents are still very prevalent there. It’s one of those things that will take time. The hoteliers are embracing it.”
The company is offering its existing members an opportunity to become shareholders in the new venture. Members can buy shares of stock for $1 each, with a minimum of 10,000 shares.
Moyle said the opportunity isn’t a case of the company wanting to raise money, it’s more of an example of how Vantage wants to help its business partners reap the rewards of a growing company.
“It’s more of a personal investment, not so much a financial investment,” he said. “It’s an opportunity to acquire a class of stock that makes you an owner.”
“It’s just another extension of our philosophy on how we want to work with people,” Bloss added.
Moyle said he doubts if there ever will be dividends paid as he expects most proceeds will be invested back into the venture.
The stock play is similar to what Bloss and Moyle presented when they launched Vantage in 1999. At that time, they offered Class B shares of stock to early members.
Meanwhile, the growth plan for VanMYT is on gradual expansion. Moyle said most of the additions early on will be individual hotels. Bloss said he expects a pace of about one hotel per month for the first two or three years.
“Let’s focus on making sure those first 24 or 36 are so successful that the rest will follow,” he said.
Hanley said it’s well documented that India will experience a boom in hotel growth during the next decade. “India has about half the hotels it needs now,” he said.
VanMYT’s expansion will start in regional clusters in the individual Indian states, he said.
Bloss said one of the biggest differences between those hotels and hotels in the U.S. is the focus on food and beverage.
More than 50% of the revenue in the Indian hotels comes from F&B, he said.
“All will have (F&B),” Hanley said. “There is a tremendous need to provide food, even at the smallest inns.”
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