The recent “discovery” of the giant Bakken oil field, described as the “largest continuous oil accumulation ever assessed by the US Geological Survey,” bodes fundamental changes for western North Dakota and eastern Montana. Lots of people are coming! Western North Dakota now faces a daunting challenge: building infrastructure that supports a new way of life and culture.
Just ask Don Nickell, president and COO of Nakota Development, LLC. The morning Nakota opened their two Value Place extended-stay hotels in Williston in September 2012, “we had people sitting in their cars in the parking lot, waiting for us to open the doors,” said Nickell.
Since then, Williston Value Place hotels have achieved enviable occupancy rates (>95 percent in August). They have also exceeded their competitors’ occupancy % for the past four months, which is a significant achievement given they have 248 rooms versus their competitor’s properties which average only 90-100 rooms.
Nickell is confident more customers are waiting. He’s in good company. Lynn Helms, director of North Dakota’s Department of Mineral Resources, told an audience at the 2012 North Dakota Association of Oil and Gas Producing Counties that western North Dakota can expect about 250,000 additional people settling west of Highway 83 to help produce oil and natural gas.
It’s more than just about oil and gas, however. Housing and lodging are of particular concern. Mike Anderson, director of the North Dakota Housing Finance Agency expects population growth to continue in the state for at least the next 15 to 20 years.
While many thousands of men are today living in temporary man camps, a gaping supply hole remains for those seeking lodging for the many two-to-four-month assignments typical in the Bakken and other shale oil regions. There are thousands of geologists, landsmen, technicians, engineers, field and construction workers and service personnel in need of housing and lodging.
Nakota Development is already two steps ahead in the game; they acquired the Value Place franchise territory rights for North Dakota, Montana, and Wyoming. They promptly built two hotels in Williston and recently completed a third in July in Dickinson. Nakota has also purchased, or acquired options on additional land for future construction. Their construction of another Value Place recently began in Watford City and is expected to open in spring of 2014.
The master plan, according to Nakota CEO Art Cahoon, is to invest an estimated $200 million over the next five years in the development of twenty new extended stay hotels in the Bakken and other developing US shale oil regions. Nakota’s willingness to take the early equity risks and invest millions of their own money to build their first two hotels and complete them on schedule brought Nakota a rare commodity in the Bakken: CREDIBILITY.
Even today, with credit availability increasing, Nakota continues to invest significant equity in each of its hotels. Despite the Bakken’s significant construction and operating challenges, including the scarcity of materials and high labor costs, Nakota has established itself as the gold standard developer and operator in the Bakken. “Current investors, which include all of Nakota’s senior management team, are enjoying very attractive returns on their investment,” said Cahoon.
Value Place is the largest economy extended stay franchise in America. The Value Place Brand comes from the management team that created and developed lodging brands such as Residence Inn (now owned by Marriott), Summerfield Suites (Hyatt) and Candlewood Suites (Intercontinental). In 2011, Value Place was recognized again as a Top 50 Franchise by the Franchise Business Review’s 2011 Franchisee Satisfaction Awards. Value Place was also recognized in USA Today in 2010 as a recession-proof business.