Executives at Best Western Hotels & Resorts highlighted the company’s performance accomplishments, strategies and goals during their annual brand conference.
WASHINGTON—Best Western Hotels & Resorts has had strong performance through 2019, executives told members at the company’s annual conference, and that success is expected to continue because of the plans they have in place.
During the conference’s general session, President and CEO David Kong said Best Western expects to end 2019 generating more than $3 billion in revenue for its members. That’s thanks in part to its new reservation system, which has improved production as members have already realized more than $2.7 billion in revenue year to date, he said.
When the company launched its new website in 2016, there was a noticeable improvement in revenue generation, he said. The company is on track to generate $580 million in North America and $720 million globally by the end of the year. In North America, total brand contribution year to date is at more than 74%, a record high, he said.
Best Western’s revenue per available room index is at more than 113 year to date, Kong said. RevPAR index declined in 2015 and 2016, but the company tapped into its reserves in 2017 to increase spending on advertising, which began to reverse the slide.
“Then our members approved two sales-and-marketing assessments in two years and we have been on the upswing since,” he said.
The Global Business Travel Association reported that business travel is up 3.1% year to date, Kong said. Best Western’s business travel production increased 10.8% during the same time period. Similarly, the leisure team’s production grew 15% while the industry is experiencing only 3% growth.
“That means we are taking market share,” he said.
Sales and marketing efforts
Signs have been pointing toward a potential downturn, and the best way for Best Western to prepare for a downturn is to ensure the quality of members’ hotels and broadening the customer base, Kong said. Members have been renovating their hotels and keeping them current and relevant, which helps protect them, he added.
Kong said he had been working with the sales and marketing team to develop a plan for growing the customer base. The first step involves finding more customers.
“We need to use new channels to reach new customers to motivate them to stay with us,” he said.
The second step involves improving guest retention through customer relationship management and marketing promotions, Kong said. Next, customers need more reasons to increase their stays and their share of wallet with Best Western, so that requires more targeted promotional offers. The last step involves reactivating customers who stayed with members in the past but have stopped for whatever reason.
“Our sales efforts will be important, and the Best Western Rewards program will play a vital role across all four strategies to help increase our revenue delivery,” he said. “We will be running more aggressive promotions to expand our customer base.”
Best Western Rewards is performing well globally, Kong said. The company has nearly reached the goal it set a few years ago of reaching 50% contribution in North America, and the loyalty program has the third-highest contribution among its competition, he said.
Growth of brands
For those who wonder about the importance of launching new brands, Kong said to think about current consumer trends. Everyone has a favorite combination of coffee types at Starbucks. BMW has multiple different models of cars, and Tide sells 56 different types of detergent, he said.
These companies are protecting their customer base while trying to take market share from their competition, he said.
“The reality is people want options,” he said. “They don’t want one-size-fits-all. Our travelers and developers want options, too.”
The hotel industry has six different chain-scale segments based on different price points, Kong said. Each chain scale has at least four different variations of hotels, such as traditional, extended stay, boutique/lifestyle and soft brands.
“So, now we have at least 24 boxes that need to be filled to offer the prices points, types of hotels and experiences that travelers and developers want,” he said. “As you can see, we need to have brands in most of these boxes to protect our market share and to grow our market share.”
A successful revenue-management program combines system capabilities, analytics and response time, SVP and COO Ron Pohl said. Hotel operators have many demands placed on their time, so they can’t just sit and wait around all day watching for changes in the market, he said.
Best Western’s revenue management platform can do that for its members, he said. On top of helping members respond, it can send email alerts about their competitors’ latest rates.
The company is adding three new alerts to send out, he said. One notifies members when there’s a sudden pickup in the market, such as a concert, that allows members to react quickly and adjust pricing. The second tells members when the central reservation system becomes unbookable and needs to make sure there wasn’t a mistake. The third sends an alert if there appears to be a rate far too low relative to the forecasted occupancy or there was likely a mistake in setting rates.