Best Western Hotels & Resorts’ newly announced acquisition of Sweden Hotels greatly increases the company’s footprint in Scandinavia, and company officials said similar purchases could spur growth in other parts of the world.
PHOENIX—Best Western Hotels & Resorts officials say the company’s recent acquisition of Sweden Hotels offers a blueprint that could be replicated to spur greater international growth.
The buy, which adds 59 properties to the company’s existing 76-hotel portfolio in Sweden, firmly entrenches Best Western as the largest brand family within that country.
Ron Pohl, SVP and COO for Best Western, said similar deals already are in the works.
“We see it as a global initiative,” he said. “Scale is critically important in today’s hotel environment. (It’s helpful) being able to partner with and acquire hotel chains that may fit into the Best Western brands, whether it be Best Western or SureStay brands.”
Pohl said the deal came together through the efforts of regional master franchising company Best Western Hotels & Resorts, Scandinavia, and that company’s CEO Johan Kukacka. He noted other master franchisors have been encouraged to seek similar deals.
The importance of scale
Pohl said other moves in the industry have made things like the Sweden Hotels purchase, for which Best Western wouldn’t disclose a price, a necessity instead of a luxury.
“For the last year, we’ve been talking about Marriott-Starwood,” he said. “We’re looking and identifying countries and what brands are there and how we can grow in each on a smaller scale like this. There may be other (chains) with 100 to 200 hotels. If it’s aligned with the midscale to upscale (segments) where most of our inventory sits, those can be attractive to us.”
Pohl noted international growth is taking off for Best Western, and the company’s number of properties internationally is getting close to the roughly 2,000 in North America. He said the international pipeline has already surpassed the numbers seen domestically.
“Combined there are about 500 hotels in the pipeline,” he said. “Of those, 230 are in North America, and 270 outside of North America.” That number does not include the 59 hotels acquired in the Sweden Hotels deal.
Appeal to owners
The next step, Pohl said, is connecting each Sweden property to the best brand within Best Western’s portfolio, since there are no plans to keep the Sweden Hotels identity. That process, which will involve the owners of each property, will continue through 2019.
In the announcement of the deal Wednesday, Best Western officials identified the deal as a chance to grow the presence of its private-label brand SureStay, which operates under the name Sure Hotels in Europe.
Pohl noted it’s possible some owners won’t be interested in working with Best Western given the change, but he believes there’s a lot of compelling reasons for them to stay on.
Best Western is now the largest brand operator in Sweden, with 135 properties, and one of the largest in Scandinavia overall.
Owners “are viewing this as a positive move with the strength of our website, distribution and the Best Western Rewards program,” he said.
He said many of Sweden’s owners are expected to react favorably to the flexibility Best Western offers. He noted that in Europe it’s important for each hotel to keep a unique identity in addition to the brand flag, and that fits with Best Western’s general modus operandi. That’s also appealing from a guest perspective, he added.
“Consumers see (individual hotel identities) as a positive,” Pohl said. “It’s not a cookie-cutter approach.”
Pohl said the purchase unlocks some loyalty potential for the region and Best Western overall. The company’s loyalty program is now approaching 30 million members, he said.
Having 59 additional hotels in Scandinavia “to earn points, and having some resorts to redeem, is what every frequency program is looking for,” he said. “I think it’s great, and the customers we’re able to attract (who) can earn in our program is a benefit. Today, loyalty programs are as important as ever, if not more so with the growth of (online travel agencies). That’s especially true in Europe, where a lot of business is generated through (OTAs). If we can growth the rewards program and offerings, I think that’s critical.”