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Cobblestone Building Brand One Stone at a Time

You may not have heard a lot yet about this upstart economy all new build brand. But trust us, you will now.

Monday, January 07, 2013
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Sometimes when people are backed into a corner that’s when inspiration strikes. We all know the mind can do some great things when forced to improvise – just check out MacGyver! – and the folks behind Cobblestone Hotels developed the brand not because they wanted to change the branded hotel world; nope, they had no other viable solution at the time.

It was a fortunate confluence of events that’s resulted in a quickly growing nascent brand that is finding success with an economy new build product at a time conventional wisdom says otherwise. You read it right, new build!

With just 31 rooms, each Cobblestone hotel has many of the amenities travelers have come to expect, but development has sidestepped the major hotel companies. That’s because the founders of Cobblestone tried to align their hotels with a major brand, but doing so made the economics come apart, says Brian Wogernese, President and Co-founder of Cobblestone Hotels.

“Starting this brand was more of an accident than anything,” said Wogernese, who started WHG Companies in 1999, the company that would eventually launch Cobblestone in 2008 when they couldn’t get a flag they wanted at a price that made the pint sized properties financially viable.

Back in 2007, Wogernese says his company was building a smaller sized hotel and they tried and tried and tried again to align themselves with one of the Big Branded hotel companies. However, Wogernese said the economics just didn’t pan out because they would have had to have an ADR north of $80 to cover all brand related fees and still make a profit. But that was a price point nowhere near the economy segment Wogernese was hoping for.

Several Big Brands has already tried smaller hotels for smaller rural cities and also found it was not the profit center that was expected. So for the most part an obvious niche presented itself to the Cobblestone founders.

So Wogernese and his partner Mark Pomerenke came up with a professional looking logo and created a hotel with curb appeal that would attract customers.

“We just made it look like a big brand so customers would have no concerns. Then we realized this could be a part of something bigger and thought we could do this other markets. We did the first three and the phone just started ringing,” says Wogernese, who added the company is getting a couple of inquiries daily in regards to Cobblestone. Now they have five full time development people for the brand that has hotels in rural places such as Wisconsin, Nebraska, Iowa and Kansas. In November the company broke ground on a property in Colorado. In 2012 the company opened 12 hotels. Since its launch in 2008 the company has now opened 21 hotels with another 25 in various stages of development.

At between $65,000 - $70,000 per key, including land, the two story prototype is able to eliminate costly to build items such as elevators because the property is only two stories. Hotels have 24-hour staffing, rooms have microwaves and refrigerators, while there is a a small business center in the lobby and swimming pools and meeting space can be added should the market warrant those additions. Additionally all hotels feature a full hot breakfast with items like eggs, sausage and waffles and an on-site convenience store with general necessities and microwavable meals.

“By 9:00pm most restaurants are closed and we wanted to be sure if someone comes in late they can get a microwaved meal or a pizza,” says Wogernese.

According to Wogernese, Cobblestone is not a typical franchise company and is more of a membership organization. They offer a 10 year agreement with a flat fee charge of $2,000 per month, which Wogernese said was necessary to create consistency and longevity for the emerging company.

The company has also recently launched a conversion brand as well dubbed Borders Inns and Suites. “We are owner operators ourselves so we understand there are many hoteliers that cannot afford to do upgrades with the brand they are currently with. There are hard times out there and if they are picking up in regards to business they are in recovery mode after three years of pain. So this gives them a place to find success,” says Wogernese.

Come April the brand will have its first ever member owner conference where every hotel gets and equal vote in the future of brand policies, which Wogernese says will help steer the brand to success.

“We sit here and kick ourselves a bunch of jokers from Wisconsin that were hotel operators now have a viable hotel brand. We did this to help our own portfolio but now it’s ‘oh my gosh, we have a real brand here’,” says Wogernese. “This is a lot of a fun to watch grow.”
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