Best Western Fights Back
Best Western is working hard to blunt the effects the industry downturn has had on its members. The chain’s Economic Response Plan is a comprehensive initiative to help member properties save operating costs while boosting sales and marketing efforts. At the chain’s spring district meetings, CEO David Kong and other executives have been outlining their plans and listening to member concerns. We caught up with Kong last week during one of the meetings in Pennsylvania.
What is the current mood of Best Western members?
The majority of them say we seem to be turning the corner. In terms of our reservations delivery, we’ve made a dramatic improvement in the last couple of weeks compared to how we started the year. We’ve seen a strong uptick.
I’ve always thought the stock market is a leading indicator for our business as all the dramatic declines in our industry have been preceded by steep declines in the stock market. The stock market has been pretty encouraging in the past few weeks so our industry may be taking a lead from that.
In general, how are your members coping with this downturn?
Most people in the hotel industry understand the business is cyclical and goes up and down with the economy. We’re in a downturn, but it will go up again, and the future prospects are great. Eventually, we’ll see the same pent-up demand we saw in 2003 that lasted four or five years with double-digit increases in RevPAR. Since supply side is very much in check because of the credit crunch, fewer hotels are being built and less competition is entering the marketplace. We’ll have a situation of rising demand and stabilized supply, and that’s great for our industry.
What has Best Western done to help your members through these tough times?
It’s a multi-pronged strategy. Reservations delivery to our hotels is the most important thing, so we’ve worked very hard to use this crisis as an opportunity to gain market share. We’ve increased our advertising spend by 40 percent compared to years past. We also know people are looking for value so where in the past we typically did about three promotions a year, we’re now doing a promotion every month, which in effect means there’s a special offer in the marketplace every single day.
We recognize that direct sales are more important than ever so we increased our sales team and have more people pounding the pavement, knocking on doors and asking for business. With a combination of increased advertising, more promotions and more sales people, we hope to use this crisis as an opportunity to take market share from our competition.
On the support side, we put together a multi-phase plan to help properties cope with this protracted downturn. Some of our members have weathered downturns in the past and know what to do, but many of them need special assistance. In phase one of this special response plan we collected best practices in things like how to drive local revenue, how to do better yield management, how to be more cost efficient, how to go green and save money and a variety of other topics. We also provided templates that automatically generate 30-, 60- and 90-day action plans based on the best-practice items members want to employ. It makes it easy for them to adopt best practices.
We launched 51 regional training classes that more than half of our hotels have participated in. We’re now bringing the training to our hotels through webinars on a variety of topics, especially on the sales and marketing side. In April we had three webinars, and they’re free to our members. Topics are things like the top 10 things you want to do in sales and marketing in your hotel, how do you get more business over the Internet and other subjects.
The second track of that training involves our revenue managers working one on one with the hotels. They assess market positioning and how rate and inventory are set for each property. We’re proactively setting up meetings with all of our hotels, whether in person or via the Internet, to work with them to optimize yield management. We aim to complete this assessment with all hotels before the summer season starts.
In these kinds of times, what is the advantage of Best Western membership, versus some other kind of affiliation platform?
Because Best Western is a membership association we focus on our members. This is in contrast to public companies, which focus on stock price. We have a different motivation: we want to help members and drive more revenue to their hotels; other companies focus on how to prop up their stock prices. Fundamentally, we look at things differently, which benefits our members. Also, since we’re not-for-profit organization, in a downturn we can tap into our reserves and outspend our competitors in marketing and support. Our fee structure is the most attractive in the industry and every penny counts right now so it’s more advantageous to be with a company like ours.
In a downturn, consumers want the tried and true and proven value, and we’ve always been known for that, which is a great advantage for our brand. In these uncertain times, consumers are looking for brands they trust.
The last thing is that since we’ve been around for 62 years, we’ve weathered 10 downturns and know how to react to situations like this.
Has this meant an increase in applications or interest among hoteliers?
We’re seeing a tremendous interest in our brand, and not just in North America, but worldwide. There’s a lot of interest from conversions in North America. In Europe, we’re seeing some independent hotels that recognize they can’t do it on their own and need a worldwide brand like Best Western for support. In Asia and the Middle East, there’s still some new construction, and Best Western is becoming better known.
What has the so-called AIG effect meant for Best Western members?
It’s been tremendously beneficial. We’ve had several companies that we’ve had no relationships with contact us because of the AIG effect. They say they don’t want to have meetings in fancy resorts.
Can you give me an update on the Atrea project (the chain’s new prototype aimed at business travelers)?
We will open the first in May in Texas and then next in Georgia. We have 28 in the pipeline and several more applications waiting to be approved. Considering we only announced it one and a half years ago, it’s been a very heartening reception.
In North America, which geographic areas hold the greatest promise for expansion for Best Western?
No doubt Texas has been strong the past couple of years and continues to be strong. A huge portion of our applications come from that region and we’ll continue to do well there.
Is Best Western going to hold its conference this fall?
Yes, it will be in Phoenix. We decided as an industry we have to take the lead and do business as usual and demonstrate it’s okay to have meetings. We recently had our governors’ conference in New Orleans, which helped boost that city.
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