Best Western International CEO David Kong recently spoke
with BTN hotel editor Michael B. Baker about the chain's recently introduced
descriptor program, corporate demand and the impact on groups from the BP oil
spill in the Gulf of Mexico.
BTN: Now that
travel buyers are about to begin sending out requests for proposals for next
year's hotel programs, do you expect much pickup in corporate demand?
David Kong: If you look at our reservation
system, it's picked up in double digits in the past three months. First it was
10 to 11 percent, then it was 13 percent, and in the latest one, it's up to a
16 percent improvement from last year. Granted, last year was not a stellar
year, but that kind of increase is phenomenal. I see a definite uptick in
demand, and with that, hopefully the rates will firm up. That's yet to be seen,
but the trend is very encouraging.
BTN: Did trading
down from upscale to midprice continue during the downturn?
Kong: There's
always some of that going on, people who felt the need to be more responsible
and don't want to look bad, thinking of midscale brands like Best Western to
stay in. For a while, upper upscale hotels were discounting their rates so much
they were almost comparable to the midscale hotels. In January of this year,
there was a big story about them leading the recovery, but most of that was
built on the heavy discounting, which is not sustainable. That type of
discounting is just going to kill the business at some point. As the economy
improves, that situation will improve and return to us being a more viable
business.
BTN: Why was the
descriptor program introduced?
Kong: The
descriptor program is about leveraging the strength of Best Western by
describing our hotels to the consumers. For a long time, we haven't really been
able to capitalize on our immense distribution network with different types of
hotels and locations and price points. People always complain about being
confused about what Best Western stands for, whether we're upper midscale or
lower midscale or middle midscale. They're just not sure what you're going to
get. This program clarifies everything and enables us to instill confidence. It's
an important undertaking. We went through two months of allowing hotels to
decide where they want to be. We have had 34 applications for Premier and about
850 for Best Western Plus hotels. We have about 2,200 hotels in North America,
so the balance would stay on to be Best Western.
BTN: Does each
have a different set of brand standards?
Kong: Correct.
They are different design and brand standards that would apply to things like
the weight of the towel, the thread count of the pillows, bathroom amenities
and design requirements like the size of the TV. Premiers would need 42-inch
TVs, where Best Western Plus would need to have at least 32-inch flat-panels.
People sometimes are confused that we want to launch a new brand. That's not
what we're doing. We have all these hotels, and basically, we're just
clarifying through descriptors of what these hotels stand for. In the future,
Best Western will still be marketed as Best Western, and each of these
descriptor levels will be marketed under the umbrella of Best Western. Every
one of these hotels will have to deliver the same high quality of cleanliness
and upkeep and customer service. The product experience might be different, but
everyone has to deliver on the brand promise.
BTN: What about
properties that don't apply?
Kong: They would
stay on as Best Westerns. At any point, all they need to do is ask for a design
visit. By complying with the design requirements, they can be eligible for Best
Western Plus or Best Western Premier.
BTN: Was part of
the impetus for this confusion from corporate clients?
Kong: We've
talked to a lot of our clients in that space. They have different levels of
people in the company who would use different levels of hotels. We have
technicians that go out for a couple weeks at a time for whom Best Western is
perfect because of more value orientation, while higher-level people might want
to stay at a Best Western Premier or Best Western Plus. Now that we can
describe the hotels, we can give them a list of each of the three levels to
match their travel needs more properly. They envision being able to use the
hotels more frequently as a result.
BTN: When new
properties are built, will their level be determined at the onset?
Kong: All the
properties in the pipeline have been asked and approached as to what level they
want, and we give them the corresponding property improvement plan, whether it's
conversion or construction. They've all been approached and selected which
level they want.
BTN: Where are
you seeing the most growth now?
Kong: For a
while, Texas was leading the pack, but now it's pretty spread out. Just looking
at all the applications we received of late, they're really well dispersed
throughout North America. Right now, Asia is still the hot market. In China,
the major cities are not seeing a huge development pipeline, but the secondary
cities, which might have 10 million people, are seeing huge upticks in the
number of applications we receive. Korea, Japan, Thailand are also pretty
strong, and Vietnam. The Middle East was very strong up to the start of the
year, and then it started to slow down. South America is good. It took a little
bit of a breather, and is coming back pretty strong. Europe is weak. I don't
see much growth there. We just had an international meeting in Marrakech, and
North Africa is very strong, and West Africa and South Africa are strong.
BTN: Does the
descriptor program apply internationally as well?
Kong: We have had
Premier in international for a long time. By next year-end, we will start
seeing the Plus descriptor in international locations.
BTN: Have you
been heightening enforcement of brand standards?
Kong: We took a
bit of a breather, because everyone was in survival mode. We have to be more
sensitive to their needs. Now that the economy is rebounding, we're definitely
enforcing the brand standards more. We never let up on quality assurance. It
was more on the design requirements. We had a bedding requirement and postponed
it, but for the most part, hotels are really in compliance. We didn't
compromise in terms of cleanliness, upkeep and customer service.
BTN: Have you
removed many properties from the system?
Kong: The last
six years, close to 600 hotels were separated, but we've slowed down.
BTN: Have you
seen much of a return in group travel?
Kong: Not a huge
uptick that we can see. The booking window is definitely shorter, and it's not
returning to the previous levels. Unless it's the essential meeting, companies
are still playing it conservatively.
BTN: How big of a
concern is the oil spill in impacting group demand?
Kong: I'm
concerned about the oil spill. Those hotels have gone through a lot, through
Katrina and other hurricanes, and we have the economic downturn, so I feel bad
that they have to put up with another challenge. We are looking at revising
some cancellation policies, because we want to give confidence for people to be
able to make reservations. We're also looking at how we can work with online
third parties and also some regional travel bureaus on how we can properly
promote those locations, especially Florida.
BTN: Have you
seen many cancellations as a result?
Kong: There was
initial panic, but it's kind of picked back up. What's encouraging is that
people who have made reservations feel like they should support these
locations. If the beach is not what they expected, they go do something else in
the area, but they're not cancelling as much. I find that to some extent
inspirational that they want to support the folks in that area.
This story originally appeared in the July 12, 2010, issue
of Business Travel News.