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Building Out Best Western

Company Continues Focus On Expansion Following SEC Filing

Monday, September 10, 2018
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By Kerry Medina

In early August, Best Western International Inc. filed SEC Form S-1 with the intent of becoming a for-profit corporation through a merger with its wholly owned subsidiary, with plans to subsequently offer 55 million shares of common stock expected to be issued on Dec. 18 or thereabouts.

But when Hotel Interactive® spoke with David Kong, Best Western’s President and CEO, a week after the filing, he was entirely focused on the expansion that preceded the SEC filling. The company has grown its stable of brands by nearly 65 percent since 2015, adding eight new hotel chains to a portfolio that, three years ago, only consisted of Best Western, Best Western Plus and Best Western Premier.

“To protect market share, we need products that appeal to our current customers, but we also need to reach customers who haven’t used our products before,” said Kong, adding that attracting new customers is a matter of recognizing that travelers have different occasions to travel. “It’s not about creating something in a vacuum, but looking at what’s going on in the industry and what consumer preferences are,” he said.

Among the new labels are urban boutique brand Vīb (as in Vibrant), which made its U.S. debut this past August in Missouri with the 92-room Vīb Springfield, replete with eight gaming stations, an onsite electronics shop and the brand’s signature fireplace. Similarly, the new GLō brand is the company’s answer to midscale, boutique-style accommodations in suburban and secondary markets.

However, today’s traveler also has a keen interest in independent hotels if the company’s three new soft brands are any indication. The new BW Premier Collection by Best Western targets the upscale and upper-upscale segments, while the BW Signature Collection by Best Western focuses on the upper-midscale space and SureStay Collection by Best Western is aimed at the upper-economy and midscale markets.

In fact, the SureStay Hotel Group, which also includes the new classic economy SureStay Hotel by Best Western and premium economy SureStay Plus Hotel by Best Western, marked 189 properties worldwide in July, less than two years after the brand’s launch. The rapid growth is attributed to a competitive fee structure compared with other brands in the upper economy and lower midscale segments and access to the Best Western brand, according to the company.

“I think we’ll continue to grow at a very fast pace with SureStay,” Kong said, noting that the cycle is currently more conducive to conversions, especially in the economy sector, than it is to new construction, which is why Vīb, and GLō have been slower to ramp up.

Kong explained that “at this time in the cycle, new construction is very slow going because land is expensive, financing is hard and construction costs in general –and labor especially—are high.”

The hotel group also marked its entry into the extended-stay space with the 2016 launch of Executive Residency by Best Western. According to Kong, the upper-midscale to upscale hotel already has about 50-dual branded hotels in the pipeline and 10 more as stand-alone properties.

But Kong’s ambitions for the company don’t end with the roll out and ramp up of these eight new brands. He’s also casting an eye to the top 50 markets, as defined by STR, where the hotel group wants to achieve greater penetration for greater visibility. Kong also pointed out that locations in these destinations will also satisfy more existing customer demand and enable the company to reach more new customers.

Yet, that isn’t to say that Best Western is without locations in major global markets. Last November, the company debuted Experiences by Best Western Rewards, another means for its 32 million-plus loyalty members to cash in points for travel to Walt Disney World in Orlando, Grand Canyon National Park, New York City, Paris and Las Vegas. Kong views the program as aspirational for existing members and motivational for potential members. “It also showcases the locations and experiences that guests can have when staying at our properties in these locations,” he added.

As Best Western continues on its expansion path, the hotel group is touting another year of record RevPAR Index, which Kong credits to more investments made in sales and marketing as well as technology, elaborating, “fundamentally, it was also driven by the core brand strategy of customer care that builds a loyal customer base.”

Part of that customer service program included enhancements made to the Best Western mobile engagement platform, including a messaging platform where the hotel group communicates with guests after they’ve made a booking. Such communication includes sending them room upgrade options and suggestions for amenity purchases, such as an in-room bottle of wine upon arrival. According to Kong, the tool is reflective of the company’s customer base, “which is a good cross-section of all generations and income levels.

While the mobile platform has been delivering room revenue, the Phoenix-based hotel firm is also funneling funds into other guest-facing technologies like tokenized credit card transactions that better protect guest data since the brand is no longer storing it.

Additionally, the Best Western Virtual Reality Experience has evolved since its initial unveiling in 2016 to six-second virtual reality videos of hotel interiors using Google Street View. While it’s not yet available for all hotels—although that remains the end goal—those that are available can be viewed on YouTube and Google, which Kong said also improves the brand’s Google content rating. Best Western is also working with IBM Watson to test Artificial Intelligence (AI) in creating vacation packages.

On the back end of the business, a training avatar was launched to improve the skills and services of front desk staff. As an acknowledgement of today’s more informed and thus, more demanding guest, the training program is intended to deliver “superior guest experiences,” as Kong described it, by employing avatars that play the role of difficult guests. The new training exercise complements a new front end reservations system that Kong explained will streamline the booking experience for guests.

Still to come are further enhancements to the Best Western Rewards program and potentially more new brands. “New construction is difficult at this point in the cycle and so we have to look at conversion and repositioning opportunities,” Kong said, hinting “so there will be an announcement at the upcoming Lodging Conference.”

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