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Location. Location. Location.

For Tony Wilson, that time-honored real estate slogan is surprising the motel industry as the chairman-CEO of Microtel Franchise & Development Corp. presides over rapid expansion of budget motels with "smaller rooms at smaller prices."

His formula is simple: Find a property in a high-traffic area and sandwich a Microtel in between established chains like Marriott and Red Roof. Microtel holds down costs because it can build on parcels half the size of competitors.

Then, "by utilizing signage to advertise rates, we will `parasite market' people and snare 10% of everyone else's business," the 50-year-old executive says.

Although the company is still small by hotel industry standards, it's growing at a healthy rate. There are now 20 in eight states from New York to Texas and Mr. Wilson expects to "open another 10 or 11 properties in the next 12 months."

Microtel's rates average $34 a night. The budget rooms have queen-size beds, built-in desks, full-size bathrooms and cable. Missing are swimming pools and food service.

In addition, Microtel took a pass on reservations systems that increase costs.

"We came up with a back-to-basics product, eliminating things that customers didn't need and didn't want to pay for," Mr. Wilson says. "The product has worked from the day we created it."

The motels are now running at a more-than-respectable 75%-78% occupancy rate with a 93% return rate. With "parasite marketing" succeeding, Microtel has no consumer media support and has only a small trade ad budget, though Mr. Wilson says that's likely to change when they reach 50 hotels.

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