An annual meeting broke out at a music festival headlined by Best Western Hotels & Resorts’ employees in Nashville.
David Kong, president and CEO of the Phoenix, Arizona-based company, called the annual get-together of Best Western owners and operators a sort of family reunion, and there were elements of that, especially if your family tends to throw impromptu talent shows: Between the general session speeches was singing and a piano performance performed by Best Western employees from around the country.
Some news broke out, too: The company is introducing Experiences by Best Western Rewards. Loyalty program members can use points on hotel packages that include experiences such as trips to Orlando for Walt Disney World or Paris for a culinary focus.
Kong told the audience that Best Western Rewards is contributing close to 44% of gross room revenue, “within striking distance of being the best program in our industry,” he said. The loyalty program, which is expected to top 33 million members by year-end, a 14% increase, will deliver more than US$1.7 billion in revenue to North American hotels and is “driving an average of US$850,000 in revenue per hotel,” Kong said.
Bulking up
For CEO Kong, the biggest priority for the 4,100-property company is to scale up.
“You see the industry consolidating, and the players gaining strength in their scale, and that scale gives them such huge competitive advantages,” he said in an interview with HOTELS. “With so many hotels all over the world and so many locations and so many choices, we’re still having to find ways to grow our scale.”
The company has introduced 10 brands in the past six years, and those newer brands comprise 40% of the current pipeline; next year, Kong is aiming for 50%.
“Imagine if we didn’t have that. So as these new brands gain their footing and momentum, we’re going to see even more interest in them, and that’s going to be a growth engine for sure for us,” he said.
“We pay attention to politics, we pay attention to threats to our business,” added Terry Bichsel, Best Western board chairman, in an interview. “But clearly the competitive environment, and our ability to compete on a scale basis, those are the two top concerns and threats.”
Key initiatives to grow scale in the coming year came from Ron Pohl, senior vice president and chief operations officer:
- Expanding the development team and increasing the pipeline
- Focusing on primary and secondary markets to attract new customers and corporate travelers
- Continued growth in Europe and Asia, particularly India, China and the ASEAN regions
- The development of a 138-room flagship hotel at the company’s headquarters in Phoenix that will represent each brand; construction will start early next year
Booming brands
As a company that has introduced the lion’s share of its brands within a decade, Kong does not think brand proliferation is an issue.
“That’s why the mother brand is so important. The loyalty program is a huge driver of that,” he said in the interview. “But it’s the brand name itself, isn’t it? Because that brand exists in the mind of consumers, and how they think of the brand is vitally important.”
He put differentiation in perspective. “How many hotels is Avid going to have? How many hotels is Vib going to have? It’s not going to be thousands because these are such unique niches of our industry. But it’s the option that the mother brand provides,” he said. “It’s not like everyone travels for the same reason, so by offering all those choices and options, we become more relevant. So ultimately I want to make sure the Best Western brand is really strong, because that’s what’s going to drive the traffic.”
More details on the brands:
Vib: There are 18 approved applications for the “urban market hotel”; in North America, properties in Staten Island, New York, and Springfield, Missouri, will open in a few months.
Glo: The midscale boutique brand has 30 in the pipeline and three under construction.
Executive Residency: The extended-stay product has 42 approved applications, mostly dual-branded with Best Western Plus, Premier or Vib; two are open, four under construction.
SureStay: The economy brand introduced last year now has 25 open locations and 19 more in the pipeline.
BW Signature Collection: The soft brand announced last month has four approved applications.
International visitation
Marriott International CEO Arne Sorenson recently commented that comments that language and policies from the Trump administration are helping pushing international travelers north to Canada. Is that a concern for Kong?
“For sure, international arrivals to this country have been compromised somewhat,” Kong said. “I’m not sure there’s a cause and effect, but it’s down this year.” He added, “It’s natural for some people to be offended by that, and therefore they stop coming to the United States because they are offended by that.”
In terms of other economic factors, Kong said that the stock market is a leading indicator of how the country is doing as a whole, and “this year the performance has been actually quite good. It’s better than most people thought. I think most companies are up about 3% in RevPAR. We’re up about 4%, which is really encouraging. We’re seeing some strength in occupancy as well as average rate. Most people only saw that in average rate.”
He continued, “I can’t say we’ve seen a dramatic decline in revenue as a result of the new administration. I think some of the things being proposed – new legislation relating to tax reform, that might be very good for business, and I think that’s driving the stock market. And if the tax reform, at least if the corporate tax goes through, there might be another way to high performance in store for us. So I’m encouraged with that. Overall, I don’t think it’s really hurt us in a bad way.”
Notes
Some other interesting details from the general session:
Technology: The company has been testing a messaging platform for customers with 300 hotels that includes mobile check-in and check-out. It’s also integrating the voice-controlled Dot to “better connect with guests,” Kong said.
Marketing: The company is creating up to 10 videos per hotel property that will be integrated into Google’s search results and Google My Business, to highlight areas of the hotel with image and voiceovers. They will be available by the end of the year, SVP and Chief Marketing Officer Dorothy Dowling said.