Shilo Pushing Franchise Envelope

PORTLAND, OR— Shilo Franchise International is pushing for growth and brand awareness outside its West Coast concentration of hotels and is aggressively targeting multi-brand owners. “We’re out to show them that we’ve got a fresh alternative,” said Jim McCulloch, COO. “We’ve decided we can expand very quickly by franchising, which is something we haven’t done in the past. We’ve got lots of multi-property owners that are very interested in exploring new flag options.” McCulloch said he got good feedback during a recent trip to New York City for his first International Hotel/Motel & Restaurant Show, despite his booth’s location in “the basement,” crammed among the colleges, food art displays and “lots of lighting guys.” Remaining optimistic and having enthusiasm goes hand-in-hand with growth plans for Shilo, he noted. “We were not going to not travel because of all the terrorist things in New York. We wanted to show the colors and it’s important that we build brand awareness. We know it’s not as strong on the East Coast as it is on the West Coast.” Since its startup in 1975, Shilo has been building its portfolio through new construction and conversions of acquisitions. It now owns and operates 47 properties representing more than 5,000 rooms in nine western states: Arizona, California, Idaho, Montana, Nevada, Utah, Washington, Wyoming and Oregon, its headquarters state. Shilo stopped new-construction projects six years ago and since then has been renovating its inventory. Shilo offers four brand variations— Inn, Suites, Hotel and Suites Hotel— ranging from limited to full service, along with protected territories. According to McCulloch, what has surprised him is the strong interest in franchising from the Southeast. “It’s a region where we didn’t feel we had real strong brand recognition. The brand awareness is very strong in the West, but as soon as you get east of the Rockies, it begins to diminish. But the Southeast United States has been very responsive.” Brand recognition among financial lenders also follows the same East/West lines. “It’s a real education process, particularly as we’ve come East. Some of the smaller lenders really aren’t familiar with us. But the western lenders are because they’ve been loaning us money for 28 years and we have a good track record. It’s an education process for everyone. We’re making the lenders aware of us and our new expansion plans, and once they see our track record, they’re more comfortable with us.” McCulloch said the “normal” expectation for the franchise push would be to add 50 properties a year and Gary Miller, director of franchise sales and service has increased the hotel groups sales staff by five. However, in the current economy and with the United States at war in Afghanistan “we really don’t know what the long-term implication is going to be. Probably we’ll scale back that estimate more to a 35-property range. “Now we’re also watching for some options to buy. Some things are coming on the market that are good buys and we’re very interested in that,” he added.