Vimana Franchise Systems Starts Strong
During its first year in business, Florida-based Vimana Franchise Systems branded 40 properties with one of its two flags. Of those, 14 hotels—comprising 1,479 rooms—became either a Centerstone Inn, Hotel or Plaza Hotel. Meanwhile, another 26 properties with1,536 rooms took the Key West moniker.
Centerstone and Key West are attracting owners with their 3% franchise fees and contracts as short at 36 months. We talked to CEO Steven J. Belmonte to learn more about the new brands and their advantages.
Belmonte comes to the franchise business with more than four decades of experience, starting as desk clerk making $2.25 per hour when he wasn’t quite 16 years old. At 18, he was the youngest general manager in the Holiday Inn system, handling the Holiday Inn O’Hare Airport. He came to run other Holiday Inns in the Midwest and eventually became president and CEO of Ramada Worldwide.
Belmonte has managed hotels. He’s bought and sold hotels. And, as an owner of Hospitality Solutions, he’s helped hotel owners resolve issues with their franchise companies. As such, he’s uniquely qualified to launch his ambitious franchise company offering two brands.
Tell me about the brands.
Key West is a themed leisure brand with three tiers: two-diamond inns, three-diamond hotels and four-diamond resorts. When someone walks in they get the feeling they’re in Key West. The ice bucket is a coconut, the light switch a palm tree. We have a lot of little things like lemonade key-lime cookies. The whole experience is well-themed. The brand applies to a multitude of areas, not just coastal properties. It has a leisure, kicked-back feeling that’s good anywhere.
The Centerstone brand is more of conventional brand, designed to serve a balance of leisure and business travelers. It’s also divided into three levels: two-diamond inns, three-diamond hotels and four-diamond plaza hotels.
I created them primarily as conversion brands. Currently, we’re nursing 29 deals in various stages. With the exception of two new-construction properties, they’re all conversions right now.
Why did you create the brands?
I’ve owned, managed, franchised. I’ve done everything relative to hotels. In my old equity days I bought and sold close to 30 hotels. We would renovate, reposition and sell. I’ve done every aspect of the hotel industry and always loved what I’ve done.
I’ve always dreamt of a better franchise model, a real franchise company that is franchise-friendly in everything it does.
What makes this model different?
We offer all the support mechanisms you’d expect from a brand—signage, a cutting-edge reservation system, quality assurance, field assistance, marketing and Internet. All the services of any hotel franchise company. We just do it under unusual terms. Our fees are 3%. That’s a huge difference. We don’t make people sign 15- to 20-year agreements. We have as little as 36-month agreements.
We avoid mandates that don’t provide return on investment. The difference is, if you look at some of the big franchise companies that are public, many CEOs weren’t in the hotel business. I have been.
Will I ever be Wyndham profitable or Choice profitable? No, and that’s OK because we’re not a public company. We don’t have to worry about satisfying our shareholders first and our franchisees second.
How do you compete with these larger, established brands?
Ten years ago that mattered. With the advent of the Internet, the shopping and buying habits of the consumer have changed. Guests are making decisions based on the Internet site, quality of photos, overall appeal of the hotel. If they don’t book online, they shop online. If your Internet presence is solid, you’ll do just as well as the big brands.
A new name is a good thing. If your quality and presentation are good, the new brand will draw more business. Everyone wants to try something new. A lot of the mature brands have kept their baggage. A new brand doesn’t carry that baggage.
From the franchisee side, there’s an emergence of new hoteliers who want to do it their way. They don’t want to live in the vanilla box mandated by their franchise company. We think the public is a little tired of cookie cutter. If the overall quality is in place, we embrace it.
Where are Centerstone and Key West hotels concentrated?
They’re all over, heavier throughout the South. For the future, we’re really focusing on major gateway cities.
How is the economy affecting your success?
I thought I was smart to launch this at the beginning of a recovery period. I still have serious questions about whether we’re in a recovery or not. Until lenders get back in the business, I have questions about it. I don’t see anything on the near horizon that tells me things are going to change for the better. We’ll continue to do business, but we’re all going to lose a lot of great deals because of lack of financing.
I’ve got 14 projects that could absolutely happen—either new construction or acquisition-and-rehab—but they can’t get financing. It’s an all-too-common story. And yet most of the banks are sitting on record hoards of cash. I don’t think anything is going to trickle down to our industry for a while.
What’s going on with your brands right now?
As a new brand I think it’s important that we keep the ship nice and clean and shiny. We actually deny more properties than we take. People mean well, but they can’t get the renovation loans and I can’t just bring them in because they’ll kill the brand in the interim.
In early August, one of our franchisees opened the Centerstone Warner Hotel in West Chester, PA. It’s in an area outside of Philadelphia with chic restaurants and boutiques. It’s all new construction on the site of the original Warner Brother’s Theater. The original theater is where the lobby is now.
We have another new construction, a Centerstone Hotel being built near Revere Beach in the Boston area. We expect that will move along fairly quickly.