Microtel Inns & Suites;
The Rocco Valluzo Story

Franchise Success Stories

By Amy Covington

When Rocco Valluzo traded the Golden Arches for a Microtel Inns and Suites franchise in Daphne, Alabama, it was the best decision he ever made. Prior to buying a Microtel, Valluzo worked for McDonald's. Well, not really. He was a second generation McDonald's franchise operator; however, he wasn't meeting his desired earning potential.

"If there were a spectrum," Valluzo said, "Microtel would be at the good end and McDonald's would be at the bad end. McDonald's gets money off the top, bottom, and middle. Franchisees are forced to use approved suppliers, so McDonald's gets a commission. Microtel will give a list of approved suppliers and if you use them they will receive a fee but you don't have to use them; you can use whoever you like as long as the quality is the same."

While making the leap between McDonald's and Microtel does not seem intuitive, it made perfect sense to the overworked Valluzo. "My wife stayed at a Microtel and was amazed at the ease of operation," Valluzo said. "She came home and presented the idea to me. At first I say 'no, I'm a McDonald's operator,' but after six months I decided I was tired and wanted to sell my McDonald's franchise, so I took another look at Microtel."

Despite the good things he'd heard about Microtel and US Franchise Systems, which also owns Hawthorne Suites and America's Best Inns & Suites, Valluzo waited until he'd done his homework before signing on the dotted line.

"I toured properties and looked at the franchise cost and what the service fees would be," said Valluzo. "A lot of those points were negotiable. You can stagger the fees in the first year, which helps out with cash flow initially. They [US Franchise Systems] do anything and everything to help you. They will think outside the box to make you profitable."

Valluzo is so satisfied with Microtel that he plans to open 2-3 additional locations. Currently, he plays a very active role in the day-to-day operations of his hotel. If he plans to do the same with his new hotels, he will be one busy guy. But Valluzo is doing what he loves--and from time-to-time he gets to act the part of Good Samaritan.

"I like interacting with guests," he said. "I work the hotel everyday, I do all shifts and I work the front desk. I've been very fortunate to be situated in an area where we've had several hurricanes and not sustain any damage. The property is designed to hold 150 guests, but was holding 400 because of Hurricane Katrina. I went out to find medical supplies for people, which was tiring yet rewarding."

Perhaps Valluzo's positive attitude was a factor in his success. On his opening night, the hotel had a 35 percent occupancy rate, on the second night it was at 50 percent. They were in the black by year's end after opening on May 15, 2003. Valluzo recognizes the support from the corporate level as a key to his success.

"I'm on a first name basis with the corporate staff; it's just a marvelous experience. Basically, if you make money they make money, so everything they do is to help make you profitable. And they don't do anything without franchisee approval."

As a testament to US Franchise Systems' upstanding reputation, they were the first hotel company to receive the Fair Franchising Seal from the American Association of Franchisees & Dealers. Among other things, USFS was cited for our exemplary record of franchise practices that embody equity, fairness and service and also achieved 88 percent conformance to AAFD's Fair Franchising Standards-the highest grade ever given.

But it's not as if running a hotel located off of a major Interstate is not hard work. "Initially opening up there's a fear-you think you don't know what you're doing but after a day or so that fades. Initially the hurdles were mainly mechanical such as haste to open, and not checking out systems thoroughly, so some room numbers in the phone system got crossed."

After the grand opening, business took off for Valluzo and he hasn't looked back. "My profitability with one Microtel with a staff of 15 equals that of six McDonald's stores with 300 employees," he said.

According to Valluzo there are a few key factors that make a winning formula. "The key to success is having the support of the franchisor and we have a tremendous amount in every aspect." Valluzo said. "We approached this business not knowing anything. The key is having a good feasibility study done by a reputable person with a track record of success. When we hired the person who performed our study we researched him and found that he'd evaluated numerous Microtels, and his predictions were on-target.

"Of course location is important but just because you have a piece of property on an interstate doesn't mean you have a good location for a hotel. Anybody involved in a franchise needs to understand the lease and license issues-what they will mean in all aspects of the business, in continued years of operation, at start up, at buy in. You need a thorough understanding of the process."

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