Best Western is the world's largest hotel brand, with more than 4,000 hotels in 80 countries. But within that group of midscale properties is a wide variety of hotels with a broad range in prices. To help consumers better understand what they are booking, the company is in the process of categorizing its global portfolio. Hotels Editor Jeri Clausing talked with President and CEO David Kong about the initiative as well as his new role as chairman of the American Hotel & Lodging Association.
Q: I understand you are in the process of creating different tiers for your hotels. Can you tell me a little about that?
A: If you look at Best Western, our strength is really in the diversity of our hotels, the different levels of hotels that we have and the price points. All those things are very positive.
Unfortunately, we haven't explained ourselves properly, and consequently that strength has become a weakness, because consumers don't know what they are going to get and they start losing confidence in the brand.
So the strategy is really very simple: It's just to add a marketing descriptor, a label to the names of our hotels so our customers understand it. So, for example, Best Western would be the first level. And, let's say for argument's sake, the second level would be "Plus." And the third one would be Best Western Premier, which we already have in Asia and Europe.
So there will be three different levels. It's geared after how consumers view the midscale market now. In the midscale market you have products ranging from Days Inn to Holiday Inn Express to Courtyard by Marriott. So there are three distinct [levels], and we want to be able to compete across that spectrum.
Q: Do you ever think about adding another higher level -- for example, some kind of collection? That seems to be very popular right now.
A: We talked about it but decided not to pursue it, because we are a solid midscale player and we want to be true to our brand.
Q: The industry is coming off one of its worst years ever. How have your hotels fared?
A: We fared reasonably well, I think, because Best Western has been around for a long time. It has strong brand awareness, and people are familiar with our brand. Our business has declined like everyone else, but it didn't decline as much as the industry. The industry was down about 17%, and we were down about 12% [last year]. And this year we are really seeing very positive trends.
In the past 12 weeks or so I've seen the number of bookings increase, meaning it's in positive territory compared to last year, and the only thing holding us back is the average rate.
Q: How much is average rate down in your category?
A: It's down by 5 points or 6 points compared to last year, but the rooms booked have gone up. So we are only down about 2% to 3% [in revenue per available room] now for the year. I think that is much better than the industry, which is down about 6% or 7% [in RevPAR].
Q: You are the new chairman of the American Hotel & Lodging Association. That means you are involved in a lot of politics. What are the big challenges for the industry politically this year?
A: The one that is most troublesome to me is the legislation pending [see related story, "Lobby effort divides hotels and OTAs on who pays room"] that is going to make us pay the share of taxes that should be paid by online travel agencies.