Of the 10 brands Best Western Hotels and Resorts has debuted over the past six years, newer brands (like the boutique flavored Vib and Glo) comprise 40% of the current pipeline with the goal in 2018 to bump that up to 50%. HOTELS spoke with Best Western COO Ron Pohl to get the lowdown on the company’s plans for brand expansion.
HOTELS: How differentiated is each of these newer Best Western brands? And does it even matter if each is successful and find their audience or is this more about keeping pace within a very fast evolving marketplace?
Ron Pohl: We think the perfect number of brands is 10, but we actually added an 11th, which is our Best Western Signature Collection. We know that there are an awful lot of brands out there today, and is there customer confusion? I think there is. So when we looked at it, we took the approach of: there’s upscale customers, there’s upper-midscale, there’s midscale. And then the types of customers that fall into that are potentially extended stay customers. So the range of brands is important to appeal to a wide variety of audiences. Similar to BMW, they started with three car series: the 3, 5, and 7, and now they have 1 through 7 including three lines of SUVs.
I see our industry very similar to that, and we’ve kind of taken that approach with price points and what customers are expecting today to try to fill out the grid where all of those different consumers are. Our key focus is, what does the next generation of travelers look like and how relevant does Best Western need to be as it relates to that? So, you know, our Best Western Plus and Best Western Premier, those are brands that are well-recognized throughout the world, but we also want to make sure that with Vib, with Glo and with independent hotels today, which are increasingly popular because of the experience side not being cookie-cutter, that travelers are looking for that type of experience but want the confidence of a brand behind it.
H: How do Vib and Glo fit into that?
RP: When we looked at Vib, we knew that that was a unique, boutique-type product in the upper-midscale that didn’t exist and is intended for primary urban markets. And then, via developers wanting that product in suburban locations (and we didn’t really feel the product would fit and be successful), we worked with a focus group of developers to create Glo. It was intended for today’s connected traveler but also the next generation of travelers or the younger generation of travelers. So very specific in target marketing and where we wanted to go with both of those that are a huge component of our pipeline.
What’s important is that the two brands align with each other. You want to make sure they are of an equal or similar product quality so you’re not confusing the customer as to what they’re getting in the public space, the breakfast, the fitness. So you’ve got to have a very focused approach on how you let those brands interact, but at the same time, it’s very appealing to a developer to attract those two different markets, and it’s very attractive to a customer to be able to have a choice.
H: How much development are we going to see in India and China, and which brands?
RP: We’re certainly focused on global growth, both in North America and Asia. China is a market where we’ve done very well in the upscale and luxury end. The mid-market hotels in China are where the opportunity really lies and so, whether it’s Best Western Plus, whether it’s the Glo product, any of those are really where we’re focused for China. And the same is true with Thailand. The other opportunity we still have there that’s at the high end is the soft branding with the BW Premier Collection. We are seeing interest in China of connecting to a brand. Though China loves brands, they like to see that confidence, but in Thailand there’s also the opportunity of connecting to Best Western through the soft brand that doesn’t need a big sign on a building and that’s also very popular.
We opened our first SureStay hotel in Thailand just a little over a month ago, you know, brand new construction, and again, it’s a segment in both of those countries and surrounding countries that there’s not a lot of new mid-scale and upper mid-scale development. It’s always been a lot of high-end luxury type properties, and we believe that there’s going to be very strong growth in both of those regions.
H: And what about India?
RP: In India we signed on with a new master licensee two years ago, Sorrel Hospitality, very experienced operators in that country. Since joining, they’ve opened an additional 14 properties. We expect another 12 to 14 will open in 2018, and they have about 18 additional properties in the pipeline. So India is a very key focus and we have an operator there that is very familiar with development, and it’s all about relationships when you get involved in some of these countries, especially India and China. The India market is similar to China in the fact that they have some wonderful high-end properties but their middle class has never really had those type of hotels that were affordable for them to visit.
H: What does expansion look like in China and Thailand, and do you have any sense of the amount of development you’re looking to do there?
RP: For Thailand, we signed 18 deals this past year. Indonesia, we’ve got 14 hotels there today. There are 14,000 islands in Indonesia, so there’s all kinds of opportunities there. We expect to do another dozen deals again in Indonesia, and we’ve got a great operator on the ground there that not only invests, but manages most of the hotels that we have in that country. China has been a little bit slower. We opened four properties this year in China, but I would expect that, again, we’ll be well into the double digits of what the growth will look like in 2018.
H: CEO David Kong has said that it’s not so much about necessarily creating thousands of hotels under each brand as much as it is having the solid mother brand that allows for customer loyalty. What’s going to make the Best Western brand strong moving into 2018?
RP: Well, we’re a strong brand. We see opportunity in driving our corporate segment business. We’ve owned the leisure market in North America: 65% to 70% of our customers are leisure. And that’s why we have such a focused approach for primary and secondary markets with Premier and Vib, most importantly because customers are saying, we need more inventory in these markets because we want to book you and we like your products. So we’re very focused in North America to drive corporate.
When we get into Europe and Asia, it’s pretty well balanced that we get recognized as both a corporate and leisure brand. So we’ll continue to emphasize that, but again, when we get into the Asian countries, it’s less about the Best Western Premier growth. While we always want that, it’s more about moving the brand down to the upper midscale and midscale where we need more inventory because that’s how their economies are evolving.