Value hotels are a necessity in this country. From budget vacations to last minutes pulls of the highway, they are always there when we need them.
Americas Best Value Inn is a value hotel that provides clean, comfortable rooms, for lower prices. They have been satisfying guests for many years with their luxury stays for budget prices. As part of a family of budget hotels, they have a network of support for both owners and guests alike and they use it to their advantage.
Americas Best Value Inn is currently looking to add more hotels to their rosters and they need franchisees to help them achieve it.
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Americas Best Value for Lodging
There are plenty of budget hotels out there to choose from. Many times, the customer is simply looking for the closest and/or the cheapest option for their stay. Americas Best Value Inn likes to ensure that their guests aren’t only getting a convenient location and low price tag, but that they feel comfortable and welcomed for the entire length of their stay.
Best Value Inn was founded by Vantage Hospitality in 1999. In just 7 years, they would grow to over 1,000 hotels in the United States by 2006. In 2014, Vantage would acquire Americas Best Franchising and its franchises. With this acquisition, Americas Best and Best Value would merge to officially become Americas Best Value Inn.
In 2016, Vantage Hospitality, including Americas Best Value Inn, was purchased by Red Lion Hotels Corporation. Though each individual hotel is owned and operated by a franchisee, Red Lion still serves as the overseer and parent company to ensure the chain is run smoothly and efficiently.
Becoming One of America’s Best
To become an Americas Best Value Inn owner, the applicant must go through a selection process with Red Lion Hotels. Applicants must be able to demonstrate their financial ability to shoulder the cost with opening and running a hotel, along with their previous experience in the hospitality industry. Because there is so much competition in the industry, Red Lion prefers their franchisees to have prior experience working with hotel guests and owning a property.
In addition to the previous experience, Red Lion also requires a high level of financial acuity. Hotels are expensive to purchase and operate, so the candidate must have the means to pay for the process.
The franchise license fee alone will run $11,500, which is actually extraordinarily low for a franchise license. The real cost comes with the startup requirements. Because a hotel requires such a large building that is completely furnished, the costs begin to add up rather quickly. It is expected that it will take between $2.8 million and $5.9 million to launch a new Americas Best Value Inn location.
Whether the hotel is newly built from the ground up, or if it is an existed property that is renovated and turned into an Americas Best will be some of the deciding factors of how much it actually costs. New construction costs much more than a renovation.
Running the Hotel
With the hotel open and operating, Red Lion will serve as the parent company with the franchisee serving as the operator. This will mean that the franchisee has most of the control of the company, but they will still have to stay in line with the rule and standards of the franchisor.
The license period will last for three years, with the renewal periods also lasting three years. Red Lion may charge renewal license fees for each new contract that is signed, as most franchisors do, but they do not explicitly say that in their franchising information.Full disclosure should be made before the initial license is ever signed.
Most franchisors also charge ongoing fees, such as royalty and advertising fees to their franchisees. Red Lion does not advertise any of these. While it is not uniform across all franchisors, it is very uncommon to have no fees associated with franchise ownership. It’s possible that the license fee is all the new owners will have to pay to Red Lion, but it is highly unlikely.
Americas Best Value Inn’s Performance
Prior to their acquisition by Red Lion, Americas Best Value Inn boasted a location count of over 1000. Since they have been taken over, Red Lion has posted their total location count of over 1,400. That would appear to be a good, solid growth over two years, but that is not the total number of Americas Best Value Inn locations. It’s all Red Lion hotels in the United States and Canada.
Because they do not separate out how many of their hotel locations are Americas Best or a different chain, it’s hard to tell what their performance has actually been.
Red Lion boasts about their straightforward franchising system with low fees, but they do not go into much detail. Very little information about the chain as a whole can be found.
The only thing that Red Lion seems to focus on when advertising their franchising opportunities is their low cost of ownership versus their revenue potential. They claim that of the budget hotels, they offer one of the highest returns on room investment. While that is a good sign, it also doesn’t mean much without numbers to back it up. At this point, the applicant has to take their word for it that it’s a good investment.
Determining the Value
With the lack of information regarding the franchising process available, it does not appear that this is a good opportunity. Most franchisors are falling over themselves to tell potential investors about their process and about how good it is. Red Lion offers a few vague details and hopes the applicant will jump.
Hospitality services can be a very lucrative industry with the right franchisor backing the chain, but Americas Best Value doesn’t seem to have much to offer. There’s no real insight into their total location count, and they aren’t even straightforward concerning the fees that they charge. It’s hard to convince an investor to put down money if they don’t know how much it will cost in the long run, or how likely it is that the location will succeed.
Their low franchise fee may be enough to convince some potential franchisees that it is worth the chance. For those franchisees, it would be advisable to gather as much information as possible from Red Lion about the actual chain before signing any sort of paperwork. The shroud of mystery surrounding this brand is disconcerting, to say the least.
Without further details into the investment, it’s impossible to recommend this opportunity to anyone. Low license fees are not enough to ensure profitability. At this rate, any return on investment can’t be ensured, let alone a strong return.
There are several other brands of budget hotels that offer franchising opportunities. Do the research and find one that is more forthcoming about the process. Americas Best Value Inn appears to be hiding too much to make it a comfortable decision.