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Lexington Makes the Leap

The upstart membership brand is gaining traction. Here's the scoop.

Monday, November 19, 2012
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Midscale to Upscale Hotels

Vantage Hospitality is looking at yet another record breaking year. Its Americas Best Value Inn is adding tons of properties and its efforts to expand globally are well on their way. For example, the company is already entrenched in India and China and just last week the company announced a master franchise deal for Korea, for which it expects to yield myriad properties.

But the real story is starting to develop over its midscale Lexington Collection, which is finally gaining the traction company executives have hoped.

“Things are starting to pop,” says Bill Hanley, a partner in Vantage Hospitality. “We are having a real good year so far and the balance of the year will be equally good. We are most excited about Lexington Collection getting some real movement.”

So far this year Lexington has added nine new hotels in 2012 and Hanley thinks another three will be added before the year is out. With 25 now open, Hanley and his team are feeling like they are reaching the state where owners are coming to them, rather than the other way around.

“These things are a process. I think we have been beating the bushes and talking to people and slowly building the brand. We don’t have critical mass yet but we have production and we are getting the representation. We may not have a lot of hotels, but the truth is we perform,” says Hanley. He is so confident in the ability of the Lexington brand to deliver guests that he insists potential Lexington member owners call any existing ones.

They have been doing that and it seems to work in Lexington’s favor too. Nine additional hotels are in the pipeline right now; which is a nice change for Hanley and his team. Till now many potential Lexington properties have been previously unable to switch flags because they were financially upside down. That meant there was no money available for them to complete the needed PIPs to make the switch. Fortunately as the industry has gotten healthier, it’s made it easier for hoteliers to get the cash and make the switch.

If all goes according to plan expect new Lexington Collection hotels shortly in places such as
Sacramento, Phoenix, near JFK in New York City, and up in Canada in places such as Toronto and Windsor. And even some new builds too. “There are a lot of good ones coming in, we are excited about that prospect,” said Hanley.

And those that do are yielding great rewards for the effort, according to Hanley. He says some of the hotels in the system are running as much as 25 percent higher in revenue after they joined Lexington while also reducing their fees to be a part of a system making for a swing of about 60 percent to the bottom line. For the membership focused Lexington, fees run in the neighborhood of about 4 percent.

“Our records are clear, we are producing on average through the system between 40 to 45 percent of guests, which is what they’re getting from the other guys,” says Hanley, who also noted the potential for great rates is there too.

At a Lexington Collection hotel adjacent to LaGuardia airport in New York City they are getting about $175 a night. Wow!

On the guest front to make hotels more attractive to those craving guest loyalty points, the company has worked out a deal with Voilà Hotel Rewards, a rewards supplier that has close to 1 million customers in Europe and Asia. Hanley says Voilà wanted a “beachhead” in the United States and a deal was struck because Vantage could get them into the hotel business quickly. For guests collecting points, they can use it many places such as with Delta Air Lines, iTunes, Amazaon.com and the micro loans group Kiva, to name a few.

The thought here is though Lexington does not yet have hundreds of properties, guests can use points elsewhere. That is where Hanley and crew think the rewards market is headed, rewards beyond hotel status and free stays.

The deal also gets them database access for direct marketing programs on behalf of the entire company or individual hotels.

Meanwhile on the Best Value Inn side the Korea deal will create hotels that run about 130 rooms as opposed to Americas Best Value Inn hotels that average about 80. Up to 10 properties will immediately become part of the system and an equity partner is in place for new build hotels. Expect up to nine under construction something in 2013.

Canadas Best Value Inn added 10 more properties 10 over the last 12 months, more than any other Canadian brand as well. One of which is even in the Yukon.

“The great growth we are seeing has given us an opportunity to talk about Lexington up North. We hadn’t pushed it there yet but we are seeing a fair amount of opportunity in Canada as well,” says Hanley. “There are a lot of hotels out there that are in our wheelhouse that need our help.”
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