March 08, 2007 // Franchising.com // One of the hospitality industry's most familiar brand names in the upper economy segment – Budgetel – has been acquired by an Atlanta-based investor group which is headed by veteran hoteliers Mukesh "Mike" Patel and R.C. Patel. The purchase from The Blackstone Group includes all rights to the Budgetel trademarks and franchise operations in the United States and Canada.
"We have very ambitious plans to expand and enhance the rich history of this fine brand," explained Mike Patel, who serves as chairman of the new company. "Our first and most important step is to implement a superior infrastructure that can properly serve the new franchisees we are now actively pursuing."
The new company will operate from Atlanta under the name "Budgetel Franchise System" with a senior staff that includes some of the industry's most recognized and respected veterans, for example:
Randy Evanchyk, who will serve as executive vice president of franchise development and has held similar positions with Red Roof Inns, Accor Economy Lodging, and LaQuinta Inns
Currently, there are no "Budgetel" properties operating in the U.S., however, the company expects to open 15 franchised properties within 15 weeks.
"Most of these will consist of re-branding by existing properties, however, some may be new properties currently under construction," said R.C. Patel, who is chief executive officer of the new company.
The Budgetel brand will be positioned as an upper economy property by the company, which becomes the hospitality industry's first minority-owned hotel franchisor and will spark an evolution for fair franchising throughout North America. Goals include franchisee participation in brand development plus responsible, controlled growth to ensure long term value.
"We're going to give franchisees a unique opportunity to control their own destiny – by owning their property and also by being partners with us in owning the brand. In other words, now they can really own their present and their future," added Mike Patel.
"Our market research shows that the public has a very favorable opinion of the 'Budgetel' name and what it represents – namely, quality accommodations at an affordable price," said Carl Newberry. "So that's exactly what we plan to offer."
In addition to appealing to consumers, the new Budgetel brand plans a strong appeal to franchisees with its low fixed royalty fee structure and strong service support system.
"I've been a franchisee since 1979, so I know first-hand the priorities and concerns of owner-operators," added R.C. Patel. "My brother introduced the industry's pioneering '12 Points of Fair Franchising' during his chairmanship of the Asian American Hotel Owners Association (AAHOA) in 1998-99 – and we intend to operate Budgetel in this spirit of fair franchising."
According to Newberry, Budgetel expects to attract hoteliers whose markets are being saturated by other brands and whose profits are being eroded by "amenity creep" – the trend toward more and more upgraded services.
"Budgetel is the first hotel franchisor that's truly franchisee-friendly – our operators are real equity partners, not just in words but in fact," according to Randy Evanchyk.