Group buys rights to 10 franchise sites including Marin and Solano counties

BAY AREA – The company responsible for three of the nation’s most familiar economy hotel brands will extend its newest extended-stay line to the Bay Area soon, adding more than 30 to the region including several in Solano and Marin counties.

Veteran hotelier Jack DeBoer, creator of Residence Inn, Summerfield Suites and Candlewood Suites, launched his newest brand, Value Place, in its headquarters city of Wichita, Kan., about six years ago. The company has since opened more than 120 locations and has another 53 in the works, including the first California site in Sacramento.

A majority of the sites are franchised to investors, and recently Walnut Creek-based Pegasus Group purchased the rights to 10 Value Place locations, including one in Marin and another in Solano. Other investors have plans to finance locations reaching from the South Bay through San Francisco and into the East, West and North Bay areas.

Pegasus Partner Bob Dailey said the group hopes to complete at least two sites per year, with all locations including in the North Bay completed in the next five years. Each site is closely modeled after a 124-room, four-story Value Place prototype.

The franchisee can choose a few unique features and the location, but most will total about 45,000 square feet and have similar amenities including a kitchen, laundry facilities, Internet, indoor-access-only rooms and other safety features.

Mr. Dailey said Value Place is the company’s first hospitality venture since it was created in 1985. In the past, Pegasus’ three partners operated mobile home parks, big box stores and at one time was the 10th-largest self storage group in the industry.

“We wanted to go a different direction, and we started looking at the Value Place concept,” he said.

“It has many similarities to the self storage business. Site selection is similar. You want a high exposure location, where you can have good signage. … And the management part of the property is also pretty similar to self storage.”

Value Place Vice President of Franchise Development Gina McKee said Pegasus is not unlike many of the company’s investors. In fact, about 95 percent of current operators have never owned a hotel before. For the most part, investors only need to provide capital and negotiate the site purchase. Most choose to have Value Place manage the property.

The total capital needed to build a new location ranges between about $4.5 million and $7.4 million.

“Our franchisees come from all walks of life. …We have a guy who was a career Navy guy, a car dealership owner, bankers, loan officers,” she said.

Value Place plans to add 100 new hotels per year during the next 10 years for a total of 1,200 locations. In spite of the recession, Ms. Mckee said now is actually an ideal time to expand the brand because prices are low and customers are passing on luxuries for more value-centered products.

Mr. DeBoer works as chairman of Value Place with partner and President Gina-Lynne Scharoun. Before becoming a hotel mogul, Mr. DeBoer also made his mark in residential construction, building more than 16,000 apartments in 30 cities in 25 states in the '70s.