More Tage Inns To Come After Sale Of Burger Kings; Focus Is Steady Growth

ANDOVER, MA— Focusing on growing its hotel brand, Tage Inn Corp. has divested 13 Burger King restaurants, choosing to become the king of hotels instead of the king of burgers. Currently, there are three Tage Inns open; another two are in the development pipeline and expected to open in 2002. It was 30 years ago when Joseph P. Tagliente opened his first Burger King restaurant, but it wasn’t until approximately 11 years ago that the company made its first foray into hotels. Then, the company was looking to develop a parcel of land it owned next to one of its Burger King properties in Milford, MA. Meanwhile, Tagliente’s son, Joseph D., was attending the Cornell Hotel School and working at the front desk of a Koala Inn. He approached his father about building a hotel, and the company decided that his idea was the best fit for the land. The plan was to implement an operations structure similar to that of a limited- service hotel, but with more luxurious rooms, explained the younger Tagliente. “There was no restaurant, bar or meeting rooms, but we were offering complimentary continental breakfast and provided hair dryers and coffee makers in the rooms,” he said. He added that amenities now include cable hook-ups and two phone lines along with high-speed guestroom Internet access provided by Wayport at a cost of $9.95 per day to the guest. The 93-room property in Milford, MA opened in June 1989. The hotel was developed by the Tage Inn Corp.’s development arm, as are all newly constructed Tage Inns. “We believe that we can do the construction and development internally. If we can’t, we will seek out high quality local contractors,” he said. Tagliente noted that in its first month, the property ran at 72% occupancy, and within the first year ran at an 80% occupancy. That property’s success led to more hotels. The second Tage Inn to open was a foreclosed Koala Inn in Andover, MA sold by the New World Bank. After extensive renovations, the 180-room property opened with Tagliente serving as general manager and sales manager. The newest Tage Inn is a 149-room property which opened in Somerville, MA in May 2000. It was while this property was undergoing groundbreaking that the company decided it would be best to divest its ownership in the Burger King restaurants. “Burger King was looking for its franchisees to focus on Burger King, and while we wanted to keep our Burger King restaurants, we wanted to focus on our hotels. It’s always been our family philosophy to do something 100% or not do it at all and that’s how we made the decision to sell the restaurants,” Tagliente said. The company is looking at two more parcels of land in Massachusetts to develop to expand its hotel portfolio, Tagliente noted, adding “we want to grow quickly, but smartly. We eventually want to be a nationally respected hotel chain. We will entertain the idea of franchising, but only once we are comfortable.” Tagliente feels his restaurant experience will be useful in developing hotels. “We feel that restaurants in hotels die, but restaurants next to hotels thrive because they have participation from both the hotel guest and the general public.” He noted that Tage Inn Corp. is developing relationships with restaurant companies such as Chili’s. Tagliente added that “we want to be the emotional hotel brand of choice,” with customers having a strong loyalty to the brand. “It’s like that guy that you see riding his Harley. He’s so loyal to Harley Davidson because of his experience with the company that he’s even got a Harley tattoo.” While Tagliente is not looking for Tage Inn tattoos on his customers, he does want to offer them experiences that make them loyal enough to say that if there’s no Tage Inn, they’ll keeping driving until they find one. Though one of the pipeline properties will be flagged as a Tage Suites, Tagliente said there has not been much discussion about branching out into different segments. “It’s always worth consideration and I wouldn