Ten years ago, a lot of hotel industry skeptics thought Americas Best Value Inn was a bad idea. The industry didn’t need a new brand, especially one steeped in the values of fair franchising, the naysayers moaned. And who were these upstart hotel and non-hotel people who thought they could elbow their way into a crowded brand landscape?

A decade and more than 800 satisfied owners later, the critics have been silenced: Americas Best Value Inn is one of the largest chains in the industry and certainly the fastest growing major flag of the past 10 years. More importantly, the brand has reset the balance of the franchisor-franchisee relationship (ABVI is a membership group but has many of the same elements of a franchised organization).

“Value and values is what Americas Best Value Inn gets right,” says Teresa Matsui Sanders, president of InnWorks, a Minnesota-based ownership and management group with four ABVIs. “We joined the system because we had the sense the company would respect the dollars we send to it. And we were tired of other chains providing private jets for their CEOs instead of giving us value.”

ABVI is a singular hotel company in the lodging industry. It’s large (nearly 900 properties) and still growing rapidly (a record 100 new members in the first nine months of the year); and while it’s built around a powerful personality (founder, President, CEO and primary driving force Roger Bloss), it’s much more than any one person or persons. Just as influential and powerful are the brand’s other partners, including first among equals CFO & COO Bernie Moyle. Each partner has a primary focus and expertise that ensures the company covers all the important operational and member-care bases. Original partners are Peter Frantz, the chain’s marketing guru, and Gene Kordoban, head of member development and the man who traveled the country convincing most of the early joiners to believe in the chain. A relatively new partner is industry veteran Bill Hanley, who criss-crosses the globe to spread ABVI and sister brand Lexington Hotels to countries such as China, Canada, Mexico India and more.

WHY IT WORKS
“The focus is always on our members,” says Bloss. “We provide them with the programs and information they need, but they have the flexibility to market directly to their customers and offer the amenities that meet their guests’ needs, rather than Vantage (ABVI’s parent company) ramming down their throats initiatives that aren’t applicable to their local markets and customer demands.”

Indeed, no other brand can claim the member-oriented innovations ABVI pioneered in the past 10 years:

Affordability. The chain’s Freestyle Brand Affiliation Model features low, flat monthly fees ($11 to $16 per room per month, depending on property size, plus an $8 per-room, per-month marketing fee) that are typically one quarter or one-third of what most chains impose. Members also enjoy short-term contracts without liquidated damages. Membership fees (but not the marketing fee) are waived for one year for new-construction properties entering the system

“We’re also serious about not negotiating our fees,” says Bloss. “Every member pays from the same fee schedule, no matter whether they’re bringing one property or 1,000 into the system.”

Participation. It takes two-thirds approval by the membership to implement any changes in chain policy. Past voting topics have included smoking policies, additional amenities, green initiatives and fee increases. A member advisory council helps management craft policy issues that come up for vote, and an ad council okays all marketing programs and expenditures. Members can also be heard individually during an open forum at the brand’s annual conference or by just picking up the phone.

“We’re a close-knit family,” says Julie Buchanon, owner of an ABVI in Manitou Springs, CO, one of the system’s first properties. “Roger’s number is in my cellphone. I can call him anytime I want, and I do. If we were part of another chain, I probably would never even meet the CEO.”

Flexibility. A flat organizational structure allows for a quick reaction to changing times. When the current downturn overtook the industry, the company quickly shifted resources to drive more revenues and value to members.

“We learned a lesson long ago to attack and never retreat when times are difficult,” says Bloss. “The philosophy among everyone in the company is ‘Give me the ball; I’ll run with it.’ We empower our vice presidents by giving them the resources they need and letting them do their jobs.”

Even though ABVI is a simple concept, brand leaders are always looking for new, but uncomplicated approaches to member services and business-building programs. The corporate structure suggests more an ongoing group brainstorming session than an exercise in bureaucracy.

“We’re always willing to try new ideas and approaches, even if they all don’t work,” says Moyle of the company’s culture. “We constantly encourage everyone on the staff to give us ideas, even if they seem silly because often the silly ideas are often the seeds for really good ones.”

Two good example of this out-of-the-box thinking are the chain’s ROI Promise and its Economic Stimulus Plan Now (ESPN) initiative, which was ABVI’s reaction to the industry’s recent downturn.

The ROI Promise is simple: If ABVI doesn’t deliver more revenues that an owner pays in fees, the membership fees are waived. The chain doesn’t stop there, however, as it tracks ROI data on an ongoing basis and will notify an owner if revenues delivered by the chain begin to drop. A member care team will then offer assistance to the owner to restore the revenue stream.

ESPN is an even more powerful tool for owners who find themselves in deeper financial straits. Under the plan, an owner can choose to delay paying current fees and attach them to the back end of the membership contract. And as with the ROI Promise, the chain offers operational and marketing assistance to the troubled property.

“Sometimes owners may be faced with a choice between paying their mortgages or their membership fees. This makes that choice a little easier,” says Moyle “And while we defer some income now, but recoup it later and gain a loyal member for life.”

Consultant and franchising watchdog Stanley Turkel isn’t surprised at ABVI’s success and believes it will continue.

“The company’s story reflects what I’ve always said about the hotel franchising system, and that is if someone came along and gave an even break to franchisees they would enjoy a lot of success,” says Turkel. “Of course, franchise fairness isn’t enough. It must be coupled with significant reservations generation, and ABVI has also bridged that gap.”

PARTNERS MAKE IT HAPPEN
The story of the formation of the company informs its philosophies, attitudes and work ethic. In the 1980s, Bloss was a Holiday Inn GM in Florida, where he met Bernie, a recent law school graduate. They and a few other friends formed a modest investment club that blossomed to include some lodging investments, even as Bloss’ career in franchise development took him to Knights Inn and then HFS. After leaving HFS, Bloss helped a group of Motel 6 owners reposition their properties, but he and the hotel industry came to a crossroads.

“I knew the industry was changing and needed a creative new idea,” says Bloss “Also, when I was with Knights and HFS, I got all the calls from disgruntled franchisees who didn’t like the way the current system worked.”

Bloss, along with Peter Frantz who he worked with while at Knights, formed plans for a new brand they were originally going to create and operate on behalf of AAHOA. That scheme didn’t materialize so they, along with Moyle and Gene Kordoban (a co-worker from HFS), struck out on their own. “We all trusted each other and knew our strengths and weaknesses,” says Bloss. “Without that trust and commitment, it never would have worked.

“While growth was slow at first, we wisely spent the time and our resources building the infrastructure of the brand, so once momentum began to build we could accommodate the large numbers of owners who chose to join the system,” he says.

“It was also important that we initially operated franchised properties ourselves so we knew very well the variety of issues owners face,” adds Moyle.

WHAT’S AHEAD
Bloss believes history shows ABVI is a brand positioned for both good and bad times. After the terrorist attacked of Sept. 11, 2001, many cash-strapped hotel owners looked to ABVI as an alternative to brands with high fees. “That’s the situation many owners are also in today,” says Bloss. “And, of course, during the good times, we benefit in the opposite way. Owners see occupancies in the 80s and wonder why they need to pay eight to 14 percent of their revenues in franchise fees.”

Bloss, Moyle and the other partners are firm on one thing: ABVI and Vantage aren’t for sale and doubt whether such as member-friendly system could ever succeed in a more traditional hotel brand company.

“We love what we do and want to see our legacy continue,” says Bloss. “We like who we are and what we’ve created and have a passion to continue. Also, it’s a culture our members have bought into.”