PHOENIX—A new and expanded senior management team is in place for Value Place LLC, which plans to repeat the success it had during its first 10 years as it prepares for its second decade in existence.
Greg Kossover, CEO and longtime associate of Value Place chairman and founder Jack DeBoer, stepped down to become a franchisee for the brand. Two executives have been hired to lead the company: Dan Weber was appointed CEO in September after Kyle Rogg was hired as president and COO in August.
Value Place’s concept is part hotel and part apartment building. Rogg said during a break at last month’s Lodging Conference he is looking forward to watching the concept blossom even more after observing it for years from his various positions at Corporate Lodging Consultants, which, like Value Place, is based in Wichita, Kansas.
“I like Jack’s vision… I like the product,” Rogg said. “It provides a lot of advantages to guests and developers on both sides of the equation, whether it’s traditional lodging or more residential. The opportunity for growth is immense.”
Weber joins Value place after serving as a principal with RED Development LLC, a diversified commercial real-estate firm with a portfolio of 39 shopping centers and mixed-use properties. Prior to that, he was executive VP and CIO for Cole Real Estate Investments, a diversified real-estate investment firm that manages several public non-traded and private real-estate funds.
More openings planned
Value Place has 175 properties open, including 43 that are company owned. The company manages 81 of the hotels, including all of the company-owned stores. Three properties are under construction; four more should break ground by year’s end, said Gina-Lynne Smith, president of Value Place Franchising Services. She expects the brand to open 15 to 20 franchised properties next year.
“Like many development-oriented businesses, the last few years have been slower than we’d like because of the recession,” Smith said. “But we’ve maintained our presence and awareness and believe there is a lot of pent-up demand to build efficient products like Value Place. We’re very optimistic.”
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Rogg said one of the first things he took part in when he joined the company was an in-depth look at each of the brand’s 175 properties’ return-on-investment data to determine the most common attributes of successful properties. That exercise allows the brand to plot its course more effectively, he said.
The difficulty in plotting that course mainly comes in the form of the business model the company touts as “hotel convenience, apartment essentials” and “short-term residential.”
Among the more difficult tasks is determining the most effective competitive set in each market—starting with the hotel vs. apartment issue then advancing to which of the other brands and properties in the market are truly competitors.
Smith, who has been with Value Place since the beginning and has a long history with DeBoer’s hotel business, said selecting a comp set landscape takes plenty of research.
“We do take some business from hotels, but we’re a specific lodging concept,” Smith said. “We get business from all different sources.”
A variety of guests
Who Value Place guests are is easier to determine. The tough economy during the past three years has been beneficial for Value Place, the executives said. Forty percent of the brand’s guests are the result of housing transitions. Small-business travelers, consultants and construction crews are other extensive sources of business for the brand, and that target market is paying off, according to Smith. She said the brand will end 2011 with occupancy “well in excess of 80%.”
In addition to increasing the size of the company’s leadership team, it is increasing the size of its franchising development team to prepare for the recovered economy, Smith said.
Value Place properties need less than two acres and cost approximately US$40,000 a key to build, Smith said. It is zoned as a hotel, which has made borrowing difficult during the past three years. With financing opportunities for developers expected to increase sooner than later, the brand is readying for rapid expansion.
“We are ready to play offense,” Rogg said. “There is a sense of optimism from employees and franchisees. That’s a nice thing to walk into.”
