Best Western executives set sights on 3 goals
13 OCTOBER 2014 6:51 AM
Chain officials believe the brand can improve its guest satisfaction scores, customer loyalty and RevPAR.
TORONTO—Best Western President and CEO David Kong has what he calls an “impossible dream.” He, the brand’s executive team and its board of directors also have a strategy to achieve that dream.
“These dreams are intended to give focus to what we do. They define our goals,” Kong said last week during the brand’s annual convention. “I dream we will be No. 1 in the J.D. Power (Hotel Guest Satisfaction Study), have the best loyalty program in the industry and beat Hampton in (revenue per available room).”
He separately addressed each of the goals and how Best Western plans to achieve them:
J.D. Power. Kong said there is a correlation between higher RevPAR and guest satisfaction as measured by surveys such as the one conducted by J.D. Power and scores from the brand’s quality assurance process.
In the most recent J.D. Power guest satisfaction study, the Best Western Plus descriptor ranked ninth, and the flagship Best Western was 13th in the midscale segment.
“Quality matters. When we improve our quality and move up in consumer perception, our success becomes sustainable,” he said. “There is a solid return on investment when we invest in enhancing quality and improving guest experience. As we move up in our rankings, we will see the next big lift in our RevPAR index.”
Kong cited the example of an operator of a Best Western property in Pennsylvania who upgraded the hotel’s breakfast service for a modest investment. As a result, the hotel’s quality assurance score for service improved by 10 percentage points and RevPAR rose nearly 14%.
Best Western Rewards. Kong wants the chain’s share of business from members of its frequency program to rise from the current 37.4% to 50% of rooms revenue. The goal can be achieved in part by encouraging hotel operators and their staffs to enroll guests in the program, he said.
“There are three reasons why hotel enrollment is important,” he said. “First, every program has a natural churn as people stop working or stop traveling, so it’s important to find new members to replace them. Also, it’s reasonable to believe when people sign up as a result of a personal one-on-one interaction they are more committed, more prone to read what the program sends to them and more prone to respond to offers.”
He said high enrollment in the program also puts Best Western in the “consideration set.”
“When travelers have our Best Western Rewards card, they tend to consider us when it’s time to plan travel. And when people begin earning points, they want to earn more points,” he said.
Beating Hampton in RevPAR. While the chain is forecast to reach a RevPAR index of 110 this year, Kong’s sights are on Hampton Inn & Suites, which he said is recognized to have the leading RevPAR in the chains’ segment.
He outlined Best Western’s tactics to help members increase performance, including an expanded worldwide sales effort, and advances in distribution and mobile marketing technologies.
He also urged the members to participate in the chain’s property revenue management program. He mentioned the operator of a hotel in Oregon who used the program to wean the property away from online-travel-agency business and flash sales. According to Kong, through June of this year, the hotel had experienced an 18% increase in RevPAR, double its competitive set.
During a news conference at the convention, Kong and other chain executives discussed several brand initiatives introduced during the event.
Vib (pronounced “vibe”), the new lifestyle product, was the result of a board of directors retreat in June. From there, the management team developed the concept, design and branding in less than 90 days. The success of the product, Kong said, relies on the development and operating efficiencies created by its design.
“This concept won’t work without the lobby,” Kong said. “We can only get away with the small rooms in the product if people are spending time in the lobby, so it must serve as a gathering place.”
The lobby will be designed with a variety of zones for socializing, working, eating, drinking or being alone. The rooms, on the other hand, are small: about 200 square feet, but filled with technology-based amenities, including smart TVs that allow guests to stream content from their mobile devices as well as use mobile devices to control room lighting and temperature.
Kong said because of the small rooms and other design savings, the cost to develop a Vib hotel will be between $60,000 and $70,000 per key.
“The properties will run very efficiently,” said Ron Pohl, senior VP of brand management and member services. “There will be no free breakfast, and the model is built on creating areas of the hotel that can make profit for the owners in addition to rooms revenues.”
The hotels will have coffee and breakfast service as well as other food and drink available during the day. Some operators might opt for a rooftop bar or other high-energy F&B outlet, Pohl said.
Best Western has identified more than 20 markets it is targeting for the new brand, most of which will be executed through new-construction projects. In addition to major global gateway cities, Pohl said other targets include secondary markets such as Seattle; Portland, Oregon; and Austin, Texas.
Pohl expects several deals for Vib to be consummated by the end of the year.
Best Western executives positioned the company’s other new product, BW Premier Collection, as a soft brand for independent properties in primary markets such as New York City, Los Angeles and Chicago.
“We’re looking at independents that want to get away from reliance on (online travel agents) and find another source of revenue and another customer base,” Kong said. “Our competency is to drive a lot of traffic to our website, and many people searching our site are looking in primary locations where we are mostly underrepresented. This idea marries a void in the market with our competencies to create a tremendous business model.”
Properties in the collection will not be members of Best Western, and their owners will have no voting rights. The fee structure differs from some other soft brands.
“There are no fees as such,” Kong said. “Instead we will charge a commission for business booked to the properties. It’s a pay-for-performance model versus a royalty model.”
Editor’s note: Best Western International paid for all travel expenses to Toronto, including airfare, amenities and hotel accommodation. Complete editorial control was at the discretion of the Hotel News Now editorial team; Best Western had no influence over the coverage provided.