Building a Better Best Western
The brand held its annual conference this weekend and its executives shared their continued growth strategy. Here’s how they expect to win market share in 2014.
Monday, October 21, 2013
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There weren’t any earth shattering initiatives coming out of this past weekend’s Best Western International annual conference. And that’s exactly what hotel owners wanted. At this point owners are looking for continued smart management of the brand that keeps expenses in check while giving them the power to raise rates and capture higher market share.
So it’s a more of a ‘steady as she goes’ strategy which was laid down a couple years back when Best Western International introduced hotel descriptors meant to better clarify the segment in which a property falls into. Part of the charm of the brand to consumers has always been its eclectic nature so adding category descriptors has successfully empowered consumers to better understand the quality, services and amenities they get when booking a specific Best Western, Best Western Plus or Best Western Premier property.
“Descriptors has enabled us to establish high quality distribution in gateway areas and everyone benefits from the halo effect, said Best Western International President and CEO David Kong. “They have instilled confidence in our clients and business is being channeled our way. With the lodging industry finally back on stronger [ground] these hotel owners are happy to see the descriptors are driving growth.”
According to Kong Best Western hotels are seeing rate growth faster than hotels within their respective competitive set. The brand has also eliminated nearly 1,000 hotels from the system during the last eight years, which is also giving owners the ability to raise average rates at a faster pace.
To continue growing market share Kong said the company must take business from other hotels since occupancy and demand are no longer surging.
“We must protect our share of the business and put a fence around the guest with superior customer care and give them no reason to leave us. We need to find way to stand out and drive superior revenue
Our industry has become more complex and difficult. What a GM has to do is far more difficult than just a few years ago,” said Kong.
To make this happen Kong said it is the company’s responsibility to deliver “superior support and training” with in place initiatives such as aggregating social media feedback to make it easy for GMs to look at postings and respond daily, help to make property improvements more cost effective by doing PIPs that are strategic and property specific and also create turnkey packages to make PIPs more affordable.
We all know in 2013 renovations are the primary way to lift rates in a competitive market since customers are willing to pay more for a newer product. Kong showed proof for renovated Best Western hotels saying that those that have completed PIPs during the last three years have seen revenue increase on average by $380,000, a 22.6 percent lift.
According to Ron Pohl, SVP of Brand Management & Member Services, completing a PIP will lift a hotel’s ranking on Trip Advisor, which is paramount these days. He said that hotels ranked number 1 in a market book 42 percent more rooms than one ranked at 20 on Trip Advisor.
To make it easier for owners, Best Western has put together room packages to make it easy and more cost effective to change the entire décor of the room in one shot. There are two notable exceptions. The television because the brand just completed having its owners replace all televisions system wide last year and bedding, which is replaced according to lifecycle.
“When we enhance the BWI image it drives revenue profits and asset value for everyone worldwide,” said Pohl. “Continued development is the key strategy for future success and relevance.”
Pohl said during Saturday’s general session in three years the company will have nearly 5,000 hotels worldwide. In 2013 the brand will have added 120 new ones by the time Baby New Year arrives and next year it’s expected that 140 will join the system. Most interesting is that company-wide nearly 40 percent are new construction. Newly constructed hotels are more likely to be built to fit in the Plus or Premier categories, explained Pohl.
Other markets of interest include Colombia, which is seeing very strong business according to Suzi Yoder-MacDonald, VP International Operations, Africa, Europe, Latin America. They have scheduled to open five in 2014 and hope to have a total of 20 there by 2015. In Russia six are open and another six are contracted to open. Yoder-MacDonald expects to see 25 in that country by 2015.
Pohl said there are 35 in the pipeline in China. France has 310 properties and is adding 20 a year while Italy has about 180 and is adding about 10 per year.
Last year the brand introduced an early version of a possible extended stay new construction prototype. The plans have been reworked to value engineer the product to make it more affordable to build while adding kitchenettes to all rooms. Construction is also expected to be simpler.
“This will fill a unique market niche for full or limited service hotels competing in upper midscale extension in the PLUS descriptor,” said Pohl.
Tomorrow we will take a look at what Best Western is up to in regards to sales and marketing.