Interview: Best Western International CEO David Kong

San Diego - Three years since its introduction, Best Western International's descriptor program, in which select hotels are labeled "Plus" and "Premier," has produced tangible corporate sales results, according to CEO David Kong. The program also has helped Best Western grow, enabling the 4,200-hotel chain to reach markets it previously had trouble entering, he said. In an interview here with Business Travel News lodging editor Michael B. Baker during the Global Business Travel Association's 2013 annual convention, Kong also spoke about the brand's progress in global expansion and keeping up with mobile booking trends.

What impact has the descriptor program had on corporate business?

We launched it because [although] we felt our diversity was a strength, to consumers, when they don't know what to expect, it's not a good situation. With the descriptors, we're better able to convey to the consumer the type of hotel they're choosing and thereby set the expectation with a much better chance of meeting it and exceeding it. I see a tremendous uptick in the corporate business. Corporate buyers have more confidence in the brand because they can match their travelers with the type of hotel that we have to offer through the descriptor program. At launch, we had almost 800 Best Western Plus hotels, and we've grown that and have almost 900 in North America. We have about 1,200 Best Westerns and 25 Best Western Premiers. Around the world, we have about 150 Best Western Premiers, so we have a critical mass.

What's really encouraging is that the Best Western Plus and Premier descriptors are enabling us to break into markets that were difficult for us in the past. Just a couple of months ago we opened a Best Western Premier in New York City, near Herald Square, and that's been a wonderful success. We just opened the Best Western Premier in Haiti, which also got a lot of interest. We had a lot of inquiries from the development committee, because they've seen these stories now.

Have you added sales resources as a result?

We consciously increased the number of sales folks that we have because we see a wonderful opportunity to use descriptors as an attraction in the managed travel space. We saw a wonderful opportunity to increase our sales presence and generate more business to hotels.

What's Best Western's development outlook?

Development is quite strong, now that the economy is rebounding in the United States in particular. We're seeing a return of new construction, and there's much more interest in lenders financing different projects. We expect to activate about 120 hotels this year. From next year, we expect to see a great uptick, because we're approving more projects as we go, either being constructed or being converted.

In terms of development internationally, Europe is a very mature market and is still somewhat challenged in terms of the economy, so it's not a strong market that we look to. In Asia—not necessarily China and India, because they're strong anyway, but other countries, such as Indonesia, Thailand and Myanmar—they present opportunities. In Indonesia, we have four or five in the pipeline. South America dipped a little bit with the economy but is coming back strong, Brazil in particular, with it hosting the 2014 World Cup. We have 30 hotels right now in South America, and we expect to have 20 built in the next 12 months or so. Africa is strong, particularly West Africa. Russia and the CIS countries also are strong. We have about 12 hotels in that territory now but will have another 10 in short order.

How well is Best Western known in some of these markets?

Branding is not the same story around the world as in the United States. In the United States, 80 percent of hotels are branded. Around the world, it's the other way around: Only 20 percent of the hotels are branded. That is changing very fast. A year ago, 12 percent of hotels were branded in some parts of Europe, and now it's getting up to 20. More people are embracing that concept. The downturn of the economy especially gave motivation to hotel owners to find an edge in what they can offer, and the global loyalty programs, sales and marketing and distribution all are compelling to these smaller operators. In general, especially in Europe and some of the more mature markets, they are reluctant to put a big Best Western sign on top of the hotel because it's been in their family a long time and the family name is there. You go to China, Asia, Russia and those emerging markets, they're building a lot of new hotels and embrace the branding. It's not unusual to find a gigantic sign on top of the building that says Best Western. They recognize that they're investing money to be with Best Western, and they want to fully leverage what the brand brings, which is international reputation and travelers.

How is distribution changing?

BestWestern.com is about 49 percent of total reservation production, and it's been that way for a couple of years now. It is very strong. Voice [via telephone] has started inching up. Some people might think that's strange: It's had a trend of going down, so why is it up in the last couple of years? Our presumption is that a lot of people search on their mobile devices, but because it's too cumbersome to make a booking on the mobile phone—punching in your address [and other information] takes way too much time—they just click the call-to-book button and talk to a live agent and make that booking. We're working toward making it much simpler to book. Our goal is to be like Amazon: one click. What can we do to have the information that can facilitate that? Logging in with your Facebook login, for example, and because of that login it pulls in address information so you don't have to key that in. Having the best available rate anywhere, better than the web special for that night, would obviate the need to review the rates and compare prices. Whether it's through a partnership though Google Wallet or MasterCard PayPass, or whoever else comes up with an ingenious invention to enable to mobile booking to be like that, we would love to partner with them.

Mobile is the future. You can get a new phone in two years, so there's a built-in market for new invention, and we all want to do more with our phones. You already see it with the Google Glass. What powers that? Your phone powers that. Apple is looking at the watch. What powers that watch? The phone. That device is going to be more important, so our job is to make it easy to do business with Best Western. If that's a trend, we have to be ready for it.

Have you seen any shift in amenities demanded by business travel buyers?

Free, reliable, fast Internet access is probably number one, and not just for business travelers. Related to that is breakfast being included in rate. There's a whole movement toward health and wellness, so fitness centers and having healthy varieties on breakfast, like gluten-free and lactose-free products, is important. Entertainment has dropped quite a bit. Most people bring their iPad, and having fast, reliable high-speed becomes even more important.

What are your thoughts on tiered pricing, in which higher-bandwidth users are charged while lower-speed access is free?

I can see why some hotels do that. It's important that a few users who hog the bandwidth don't compromise the experience for other people, and if they have tiered priding, they can accommodate both sensibilities.

Has loyalty program membership been growing?

We've seen a dramatic improvement in loyalty programs over the past few years. It now accounts for 38 percent of our business. We still have some room to grow. Loyalty programs are becoming more important these days. We know how hectic it is to travel, and after all that work and being away from family and friends, it is important that you can be rewarded with these points and take your family on vacation in Italy or Paris or Sedona. U.S. News and World Report ranked Best Western Rewards as the number two loyalty program in the whole world. They ranked our program better than Hyatt's, Starwood's or Hilton's and all competitors, except Marriott, which was number one. If you look at the points they gave us, it's almost the same as Marriott's, so it's really gratifying to see that. They rank it based on how many stays you need to have; what redemption, whether it's free nights or merchandise, you have to offer; locations you can redeem at, which in our case is 4,200 hotels; and they also look at customer service and a bunch of other things.