Best Western Hotels & Resorts President and CEO David Kong talks about the benefits of scale as the company plots its growth strategy.
LOS ANGELES—David Kong has a goal in mind for growing Best Western Hotels & Resorts, and he said the company’s new brand initiatives will get it there.
The president and CEO of Best Western said the time is right for the company’s SureStay white-label franchise brand, which it launched last fall as a way to affiliate independent economy properties with Best Western’s distribution system, if not its name.
“As we go into a softer period of time where there’s little growth in occupancy … people are thinking about their options,” he said while speaking to Hotel News Now during the Americas Lodging Investment Summit in January. “They don’t want to be overly dependent on OTAs, and they certainly also are concerned about their market share. So SureStay allows these hotels to tap into the Best Western system, our infrastructure and the resources we have.”
In January, the company announced it had approved 30 SureStay franchises in North America and one in Bangkok, Thailand. Under the SureStay umbrella, franchisees can affiliate at one of three levels—SureStay, SureStay Plus and SureStay Signature Collection.
“There’s been a tremendous amount of interest in this brand, and some are already open,” Kong said. “I have no doubt by the end of this year we will have about 100 open.”
Kong said growth is a big-picture trend in today’s hotel industry, particularly as it relates to scale.
“As our industry matures, there’s more opportunity for mergers and acquisitions,” he said. “Think about the benefits of having scale: You have synergies, you have cost efficiencies, and most importantly, you develop leverage with the OTAs.”
He pointed to Marriott International’s acquisition of Starwood Hotels & Resorts Worldwide as a good example of M&A activity leading to influential scale, but noted each company needs to think about the best way to grow.
“In our case, we’re certainly interested in buying some hotels and developing some hotels on our own, but that’s not going to get us the big scale that we want,” he said. “So SureStay is one way we’re getting there, and we will continue to explore other alliances … so we can have mutually beneficial relationships to grow our scale.”
Best Western currently has 4,200 hotels and 293,059 guestrooms open globally.
New brand growth
Kong also shared details about Best Western’s latest brands, which range from lifestyle to soft brand.
“We’ve launched four brands in the last few years because we have a need to broaden our appeal to not just the travelers out there and new travelers, but we also have to broaden our appeal to developers,” he said.
The company’s midscale boutique brand Glo, which launched in 2015, is seeing what Kong called a “very, very strong start,” with 30 deals approved.
Kong said developers are showing interest in the company’s Executive Residency brand, particularly because it can be dual-branded with Best Western Plus. He said the brand is “off to a great start, with 30-some projects in the pipeline.”
Best Western’s soft brand, BW Premier Collection, is especially exciting, Kong said, with nearly 70 projects around the world that have been approved.
“We have some very big convention boxes in there, like a 550-room hotel in Orlando, and we’ll soon be making some announcements for some mega-properties coming into that soft brand,” he said. “We’re very excited about the direction of all these brands.”
Kong linked growth to scale, and scale to leverage, but how does innovation factor in?
“I love innovation, and I like being surrounded by creative people,” Kong said. “But I think what we need to be careful about is not chasing after the latest shiny object, because it may not have a good return on investment.”
So linking innovation to ROI is how Kong finds success, especially in technology innovation. He cited the company’s initiative of using a digital avatar for training, its new digital platform and even the possibilities of virtual reality in hotels as good examples.
“These things are effective because people are captivated by those kinds of experiences,” he said. “That’s innovation with a return on investment.”