Our first motel in California was being built by a monied banker in Santa Rosa. He had built and leased a 67 unit Motel 6 in Santa Rosa, and now built an 80 unit Regal 8 Inn in Rohnert Park. We opened for business late summer 1996, opening off season and an unknown entity locally. We had a new manager in place with unknown abilities, which we ultimately had to let go and replace in late December. We had poor occupancy and there was little or no public relations.
In the meantime partner Don Geary flew to Los Angeles with me and we met a banker regarding the sale of their failed motel in Stockton. Don was impressed and we flew to Stockton and looked at the motel. It was in a poor location, had poor parking and was somewhat small. I was NOT impressed, but Don thought it would help our Rohnert Park location, so a deal was made. We opened Stockton and it turned out to be our slowest starter to date, with very low occupancy.
When Don saw the occupancy figures on Stockton he got a hold of the bank and talked them into taking the property back. By the next board meeting Don had convinced the other owners that California was a failure and they instructed me to close it down, get rid of it, any way, if necessary give it away!
Margaret and I gave it some thought and decided to form a corporation and take over Rohnert Park as a franchise motel. We called a meeting of our friends, supervisors and anyone we thought might be interested and made an offering of 100 shares @ $500 a share. Participants had to come up with $100 for each share and commit to an additional $400 if needed. We sold 55 shares and Bill and Frances bought 16 shares with Margaret and I buying the balance of 29. The Regal 8 Inn board accepted our proposal to take over and franchise the operation and we would pay them 2% of gross revenue franchise fee.
One of our investors was a couple Frank and Pat Walton, two very good managers that were operating our Fargo, North Dakota motel (at 96% occupancy). They took over Rohnert Park and completely turned it around and made it profitable in about 30 days. No more additional funds were ever needed from the investors (stockholders).
The corporation went on and had motels built in Vallejo (80 units) and Fresno (80 units). We subsequently leased on in Tampa (120) units) and purchased one in Memphis (140 units).
About a year later the shareholders agreed to sell their stock back to the company at $5,000 a share. Not a bad investment was it? $5,000 for $100. Bill and Frances were the only investors who did not sell and thereby ended up as sole owners of Regal 8 Inns of California. They ran it very successfully for several years.
See you again soon with the rest of the story.............
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