Hotel Brand Charts Significant MN Expansion

An “extended stay” hotel franchise named Value Place is eyeing an aggressive Minnesota expansion, hoping to open 24 new franchise locations in the state over the next five years.
 
Based in Wichita, Kansas, Value Place prescribes to a Cosco-style business strategy—selling its product in bulk for a cheaper price. When guests stay at Value Place, rather than paying for a hotel room for the night, they pay by the week. Value Place requires a one-week minimum purchase—with prices beginning as low as $169, although they vary by location.
 
There is currently one Value Place hotel in Minnesota, located in Rochester, which was constructed May 2009 and is franchise-owned. The Rochester hotel offers rooms between $239 and $289 for a weeklong stay.
 
But the company has chosen the Twin Cities area as one of five new markets in which it plans to heavily expand its franchise-owned hotels—along with New Orleans, Louisiana; Pittsburgh, Pennsylvania; Philadelphia, and Milwaukee, Wisconsin.
 
Value Place was founded in 2002 and has grown to 185 locations throughout the country—74 of which are corporate-owned, while the rest are franchise sites.
 
The business has opened six new locations across the country so far this year and added 11 new locations in 2012. According to Director of Franchise Development Keith Jones, the business plans to open 50 new corporate-owned locations throughout the country over the next few years—in addition to the two dozen franchise sites in Minnesota.
 
“We chose the Twin Cities because the economy is right for our product,” said Jones. “There’s a real need for Value Place—with housing shortages and a lot of value-minded citizens, it just made sense.”
 
Jones said that while a guest has to pay for a minimum of one week, the average length of stay is actually around four weeks. According to Value Place’s website, a large portion of the guests staying at the hotel come from the business community.
 
“We get a lot of temporary workers, construction crews working on a new Walmart, electric crews working on a power plant, or traveling nurses working at nearby hospitals,” said Jones. “Although we do get a lot of vacationing families as well, or people moving out of their house or visiting family.”
 
Value Place has 60 employees at its corporate office in Kansas and usually employs about five full-time workers at each hotel; the company said having fewer employees is key to keeping its costs down.
 
While Jones said the Minnesota expansion is still in its early stages, the company is looking at Burnsville, Coon Rapids, and Minneapolis as key potential sites for new locations. One potential investor, Jones said, was especially interested in opening up around the University of Minnesota-Twin Cities campus.
 
All of the locations are fairly similar—four stories, housing anywhere from 108 to 124 rooms, and around 40,000 or more square feet. Franchisees pay about $50,000 in start-up costs and 5 percent in royalty fees.
 
Value Place is holding an executive reception on October 22 at the Millennium Hotel in Minneapolis for potential investors and developers interested in expanding the brand in Minnesota.