WICHITA, Nebraska—Bruce Haase has not wasted much time putting his own stamp on the former Value Place brand.
The company a week ago announced it is changing its name to WoodSpring Suites and adding a new brand extension in WoodSpring Suites Signature. The move comes just over a year after Haase was named CEO of Value Place. He said he intends to continue to push the 12-year-old company’s development efforts.
“Value Place started out in a very different place,” when it was founded, Haase said. He added: “The name didn’t fit where we were going or what we were all about.”
Founded by hotel industry icon Jack DeBoer in 2003 as a hybrid hotel/apartment model, the company post-name change is pushing forward with a growth strategy that could see it double its 196-hotel portfolio during the next five years, Haase said.
The Value Place name will be sunset over the next six to nine months while work begins to build out the fledgling WoodSpring Suites brand via a two-pronged approach. Haase and President and COO Kyle Rogg said the WoodSpring Suites Signature brand will locate in higher-barrier-to-entry markets that feature more expensive land costs, such as those found in the Northeast and in California.
Lower-barrier-to-entry markets, such as Milwaukee, Pittsburgh and Madison, Wisconsin, also will be considered for WoodSpring Suites, the executives said.
“We have a very proactive strategy to build a much more widely distributed brand,” Haase said.
The company has 196 hotels in its portfolio today, 84 of which are corporate-owned. The company’s 200th hotel will open this summer, Rogg said. New construction will be the driver of growth because it is difficult to find quality conversion opportunities in the lower chain scale extended-stay space, Haase said.
“There is a unique opportunity to separate ourselves from the rest of the market,” Rogg said.
One of the company’s goals is to do 50 franchise contracts during 2015, Haase said. A total of 36 contracts were sold a year ago.
Extended-stay segment
Haase said there is a void in the market that WoodSpring Suites can take advantage of. Overall, he said he is optimistic about the outlook for performance in extended stay.
According to data from STR, Hotel News Now’s parent company, the United States extended-stay segment notched year-to-date through March occupancy of 73.1%, up 0.6% from the same period a year earlier. Average daily rate was $92.48, an increase of 6.9%. Revenue per available room grew 7.5% to $67.55.
“In our space, there’s not a whole lot of new supply coming into the market,” Haase said. “All the supply in extended stay is coming in at the upscale level with brands like Residence Inn.”
Also, he said some extended-stay brands, such as Extended Stay America, are focusing on renovating their properties rather than unit growth.
Extended Stay America expected to spend between $190 million and $210 million on renovations in the fourth quarter, CFO Jonathan Halkyard said on the company’s fourth-quarter earnings call. The renovations program generated more than 90% of the company’s revenue growth during the fourth quarter and has helped the chain attract higher-rated corporate business and the shorter-stay transient guest, CEO Jim Donald said.
WoodSpring Suites is looking at markets that can support at least three WoodSpring Suites-branded hotels, Haase said.
“There’s a tremendous amount of geography underserved by our product,” he said.
The executives did not share any worries about securing financing for the new-build effort. The company has access to “robust and available” financing via a capital provider. And on the franchisee side, he said WoodSpring tends to work with large, savvy developers who have access to equity to get deals done.
“All of the pieces are in line to substantially grow this company,” he said.