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Driving Development

Best Western Paves Way For Future Deals During Annual Governors’ Conference

Tuesday, February 14, 2017
Dennis Nessler
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Further accelerating development of its continually expanding brand portfolio— particularly in major urban markets—was a primary focus during the 2017 Best Western Governors’ Conference, which spawned several key initiatives for the membership organization.

Hotel Interactive® exclusively covered the annual event, which took place last week at the Delano Las Vegas and included some 190 Governors who are appointed by the company’s Board of Directors and are on hand to represent members of their region as well as the membership at large.

Best Western President & CEO David Kong referenced progress made during previous events. “The last few meetings have been so wonderful. As a result of all of our discussions we were able to launch several transformative initiatives for Best Western and create a very successful foundation for our future,” he said.

Kong specifically cited the approval of a member fee model and technology assessments as critical measures which were passed within the past couple of years.

Meanwhile, Board Chairman Terry Bichsel helped set the stage for this year’s event by addressing the Governors. “Your senior leadership is here to learn from you and we hope that you can teach us through engagement and represent and be that liaison, and be that advisor, of our members on the ground. In turn, we ask that you have an open mind to key initiatives,” he asked.

And Best Western’s Governors did just that overwhelmingly passing three different ballots that were presented to the group. Ron Pohl, SVP and COO, Best Western Hotels & Resorts, addressed a pair of key development issues in explaining the impetus for the ballots. “We need to move more quickly when we look at the timing and our processes. Developers today expect immediate response and we don’t provide it because of some bylaws that restrict us from doing so. Delays cause a lot of problems…we want to be able to move more quickly,” he said.

In response, some 90% of Governors voted to support a ballot that reduces the time frame for a member to request an impact study from 15 to 7 days, and would allow the Board of Directors to consider an application upon compliance with all bylaw provisions.

Meanwhile, the second ballot focused on incentive deals for developers and the ability to increase fees. “Our key competitors, primarily Choice and Wyndham, are throwing a lot of key money out to developers to do products in these primary markets. If you think about the 5 percent fee structure and if we want to offer key money, how do we ever get key money back with an ROI on it? You need to have a higher fee and that’s what all the other brands do,” said Pohl, adding the company has as many as 5 potential deals for its Vib brand in urban markets that would likely be secured with key money.

Roughly 92% of Governors voted in favor of giving the Board of Directors the authority to negotiate member fees when a development incentive is being offered.

Larry Cuculic, SVP, general counsel, Best Western Hotels & Resorts, introduced the third ballot which pertained to cyber insurance at the property level and what he referred to it as “prudent paranoia.” Cuculic noted, “We are under constant attack from hackers and we need to recognize there is a new shared responsibility.”

Cuculic added that in 2016 the company was forced to disconnect 26 hotels from its two-way system due to cyber incidents. Approximately 97% of Governors supported a proposal requiring all hotels to have cyber liability insurance.

Given the strong support of the Governors, the company anticipates presenting the three proposals to the entire membership for an official vote following its seven District meetings in the Spring.

Best Western, which includes some 4,200 hotels worldwide, has extended its brand portfolio in recent years. Pohl noted the company has a pretty aggressive development plan in place for 2017 and offered an update on each of the flags.

For example, Kong charted the progress of SureStay, a white-label brand which was launched during 2016 and has three tiers ranging from economy to midscale. In addition, unlike other company brands SureStay works through the traditional franchise model and does not invoke the Best Western name in the brand.

“It’s off to a great start, in a couple short months we’ve already approved 29 applications. That’s one of the fastest launches of any brand that I’m aware of. Our goal is to have 100 activated hotels by the end of this year,” he said.

The company added 30 hotels to its core Best Western brand in 2016 and has 43 in the pipeline with a goal of adding another 24 in 2017.

Pohl referred to Best Western Plus, which now has some 817 hotels open, as one of the company’s “fastest growing” brands. The upscale brand, which is predominantly new construction projects, added 50 properties in 2016 and has 101 in the pipeline. The development team is hoping to add 41-plus properties this year.

Best Western Premier opened four hotels in 2016 and now includes 30 properties. Pohl added there are 18 properties in the pipeline and the brand is hoping to add another 18 this year.
Meanwhile, the company’s Glo brand includes 14 properties in the pipeline, a figure the company is hoping to double in 2017.

Best Western opened the first Vib this year in Turkey, and expects to open three more this year. Vib has a current pipeline of some 10 hotels and is hoping to add another 16 this year.

Executive Residency by Best Western is expected to open 12 hotels this year and has a pipeline of 31 hotels. Pohl noted many of these are dual-branded properties with Best Western Plus. The goal is for the company to add another 16 in 2017.

The company’s soft brand, the Premier Collection, gained 11 properties in 2016 and now includes 15 hotels. There are an additional 11 in the pipeline and the company is looking to develop 22 in 2017.

Kong further touted The Premier Collection. “I’m particularly excited about it. This is allowing us to tap into the upper-upscale segment; we’re attracting lot of high quality hotels that no doubt will improve our brand image,” he said.

The company also addressed brand identity and provided updates on progress with regards to new signage showcasing its updated logos. North American properties have been given a deadline of March 31 to sign up for new signage. Pohl pointed out that more than 1,000 hotels have had the new signage installed, while many hotels are in various other stages of completing the update. Conversely 166 hotels hadn’t started the process at all. He added that the average cost of all the signage has been roughly $28,000 per property, slightly less than the $30,000 he originally estimated.

The company also announced mobile and supply side initiatives as well. Best Western is piloting an email application for managing guest expectations and it includes pre arrival emails; semi automated check-in and check-out; as well as guest messaging. Pohl also mentioned the company is preparing for the mid-year launch of its supply platform called BirchStreet. This platform will enable members to shop all of the company’s endorsed vendors in one place. Pohl referred to it as an “Amazon approach to all of Best Western supply.”

Employee satisfaction is another area of focus for the company, which is piloting a tool within Medallia to measure that. The eight-question survey is being offered to all members and comes at no additional cost. “Where Medallia is going with this is they can directly correlate employee satisfaction with guest satisfaction,” said Pohl, who added more than 50 Governors have already signed up for it.

Dorothy Dowling, chief marketing officer, Best Western Hotels & Resorts, revealed a marketing roadmap that focused on continuing to accelerate growth within its Best Western Rewards membership, as well as ramping up AAA and business travel sales.

Dowling also cited shifting demographics of the customer base, noting that single households are on the rise and she referred to a recent Skift study that concluded Baby Boomers have roughly 10 times more money in their pockets than millennials. “We’re going to keep our eyes focused on those boomers,” she said, noting the brand already overindexes with that demographic.
Dennis Nessler    Dennis Nessler
Hotel Interactive®, Inc.
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