Interview: Value Place COO Kyle Rogg

Economy extended stay brand Value Place in 2011 shook up its leadership structure, bringing in CEO Dan Weber and COO Kyle Rogg to help reignite the brand's recognition and growth. Founded less than a decade ago by entrepreneur Jack DeBoer—also the founder of extended stay brands Residence Inn, Summerfield Suites and Candlewood Suites—Value Place now has almost 180 properties, largely franchised. Rogg last week spoke with BTN lodging editor Michael B. Baker about his efforts over the past year and the brand's plan for expansion and attracting new corporate business.

What have been your priorities in your first year on the job?

Jack brought us on to start the brand growing again. We've started to open properties again. We've started construction on a corporate property. We have franchisees that are constructing properties and planning to build properties. We're a 100 percent new-construction brand. Every property in this system was originally developed as a Value Place, and that helps us maintain our consistency and quality. When you're converting, it's much more difficult to be consistent.

What's your target guest?

Current research says we're 57 percent residential/leisure and 43 percent business. Our business traveler is going to be sort of a blue- or gray-collar traveler, so you don't think suits and ties. Think work boots and flat-panel trucks: construction crews, independent salespeople, traveling medical workers, mobile nurses who are on temporary assignment, military on temporary assignment. Those are our sorts of business travelers, by and large.

Do you offer corporate agreements?

We have over 1,000 accounts that we work with on a national basis. They're typically accounts that employ the kinds of travelers we were talking about. We offer them some special reservation services and some direct billing services, and they like the low rates. We feel like, in the business travel world, we're a pretty well-kept secret. We haven't gotten the word out. We don't run Super Bowl commercials. We just rely on really inexpensive prices and being clean and safe. We've looked at our volume at our national accounts, and it grows significantly over time. They try us, get a good report from their travelers and do more the next year and the year after that.

What about government business, particularly with per diems for 2013 to be kept flat?

We do more with the military and some otherwise with the government. The per diems are still relatively high compared to our price point, and if the government traveler doesn't spend as much as the government gives them to spend, they don't get to put the rest in their pocket, so they tend to want to spend as much as they can.

What is your sales approach for corporate business?

We think you can do clean and safe, and we think you can do affordable, but doing both at the same time we think is pretty special. We are just crazy about cleanliness in the properties. We shampoo the carpets on every checkout, something that a hotel typically would not do. We wash bedspreads and shower curtains on every checkout. What we're fighting against is the picture that comes to your mind when you think about $190 a week. The picture that comes to your mind is not a pretty one. We think we can deliver a clean and safe property at that price point. A lot of our competition hasn't had the capital investment and hasn't had the strict management that we've had, so they have a difficult time matching us on being both affordable and clean and safe.

What have you been doing to increase brand awareness?

We played it a little closer to the vest before and let the product do the talking. Now, we're doing a few more interviews and conference panels. We've hired more staff in our national accounts group. We also have more franchise development staff—the guys selling the franchises. We have a great story to tell. Our return guest rate is very high. Almost a third of our guests have stayed at a Value Place before, so for a smaller brand, we like our return-guest percentage.

In development, where are your target markets?

Right now, we've got two properties under construction in Texas. One is oilfield-driven in Odessa; we have a more traditional property in College Station. We have a property under construction in the D.C. area, part of a larger growth initiative there. We have a property under construction in the Atlanta area, in Alpharetta, which is part of a growth initiative there. Primarily, we're in the South, the Southeast and the Midwest, so our initiatives are to expand our footprint farther west and farther north and northeast. We're seeing more activity in New Jersey right now and anticipate some construction starting in the greater Philadelphia area. We're seeing significantly more interest in Chicago as we push north in the Midwest. We're seeing interest in Denver as we push more to the west. It's about filling out where we already are and expanding our footprint into markets. We're not as likely near-term to put a property a long ways away from where we are now.

What's your long-term vision? Do you plan to expand outside the United States?

International is not in the near-term picture just because we think there's so much opportunity in the United States for us. In the next few years, we think doubling the brand is not at all unreasonable. We can be 350-plus properties. We have territories identified for over 1,000 U.S. Value Places, so getting north of 350 in the next few years is reasonable. Our guests typically come from a city that already has a Value Place, so people become familiar, and when they travel, they look for a Value Place. Our best marketing thus far has been one of our four-story properties with a big pole sign that announces the rate.

Have you added any new offerings lately?

We're launching a Value Place 2.0 product, which is an upgraded room type compared to what we have now. It's designed to be very clean. It's even easier to clean than what we have now. It has a really beautiful wood plank flooring, so it's actually a hard-surface floor, and our guests tell us it feels cleaner, and it's a really nice product. We've improved our cooking area. We have a ceramic cook-top stove as opposed to coil burners where food can drop in, so that makes the kitchen area cleaner. We're rolling that out now. The first property to have it in total will be our Alpharetta property, which opens in November.

Will these apply only to new builds?

We're remodeling rooms to contain many of the elements of the new property type. We toured our franchisees through a property last week, so we're actually starting to upgrade. There are a few elements that you have to build in, but many of the elements you can retrofit. We're starting to do that with our own properties as well.

Will the price point stay the same?

Yes. We still want to be an affordable brand. We don't want to raise price a whole bunch. We hope people will like the product, and we'd hope that they would stay with us in greater numbers, but we still think affordable is absolutely key to being who we are.