Key West Inns revises franchise program

Chain hopes to grow to 50 hotels by 2008
Wednesday, April 26, 2006
ROY L. WILLIAMS
News staff writer

Birmingham-based Key West Inns has dramatically lowered cost for franchising its limited service hotels, a move officials hope will lead to dramatic growth for the chain.

Neal Jackson, president of Jackson Hospitality's Key West Inns' arm, said the company hopes to boost the number of hotels from 14 to 50 by 2008.

"We realized that in order to grow the chain, we needed to get innovative and aggressive," Jackson said.

As part of the plan, the company adopted a new royalty fee structure - a flat fee of $1 per room per day, fixed for two years. The company has an option to adjust the fee over time based on inflation. The old rate was a 4 percent gross room royalty fee based on monthly sales.

Key West Inns has also reduced application and entry fees from a combined $25,000 to $7,500. The plan was approved last month at Key West Inns' annual conference in Birmingham. "With these mechanisms in place, not only are we able to provide additional real value benefits to our franchisees, but we can also beef up our ability and focus on our aggressive growth objectives."

Historically, the typical growth pattern and focus of the Key West Inns chain has been growth through new construction. But Jackson said that conversion of older hotels that fit the Key West model is their main focus for future growth.

"We realized that we also needed to revisit our policy on accepting conversions," he said. "We now have a favorable conversion program for the Key West Inns brand."

To help each potential partner succeed, Key West Inns has created a new franchisee success coach position. That person will visit each Key West Inn a minimum of every 45 days and provide advice on revenue management, capital improvement, marketing strategies, front desk and housekeeping training programs.

"Site visits are less about inspections and more about ensuring that the property has every resource to sell more rooms and continuously and consistently satisfy the customer," Jackson said. "In short, Key West Inns will uniquely focus on the success of each and every one of our valued franchisees."

Key West Inns owner Rick Patel of Tuscumbia was integral in shaping the revised program.

"I liked having a say in how the new fees were structured and how that structure accommodated the needs of all the owners," Patel said. "And ultimately, I liked how by listening to my input we will all make the chain better."

Jackson said the old Key West Inns fee structure was appropriate when the chain was founded in 1989, but has become outdated. The license term is still 10 years, but franchisees have a one-year window to exit with no penalty, said Cory Jackson Jr., vice president of Key West Inns. The new fees don't include construction costs, which will vary based on location.

"Our costs to build are comparable to any other limited service hotel."

Key West Inns has eight properties in Alabama and six others in Mississippi, Georgia, Tennessee and Florida.

E-mail: rwilliams@bhamnews.com

Key West Inns revises franchise program

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