Best Western CEO Assesses Permanence of Pandemic Changes

Best Western Hotel Group CEO David Kong spoke with BTN senior editor Donna M. Airoldi at the Americas Lodging Investment Summit in Los Angeles in late July about Best Western’s recovery, business travel, corporate travel program changes and current hotel trends that could endure in a post-Covid environment. Edited highlights follow.

BTN: How is Best Western doing?

David Kong: We’re doing well in North America. Canada is still challenged. [Revenue per available room] is still down about 30 percent compared to 2019. In the U.S., we are seeing 2019 levels. The last couple months have been very strong. We are up about 6 to 7 percent in revenue compared to 2019. And our reservation system production is up by about 30 percent. We are seemingly breaking records every day on the bestwestern.com website. The volume has been extremely strong. Our call center, we are ramping up [and] we certainly want to hire more people. Volume is surpassing our 2019 levels.

BTN: Is this due to your position in the marketplace?

Kong: Right now, the recovery is led by leisure, and we are very strong in that space. Our location, price points—they all come into play.

BTN: We know business travel has lagged behind leisure, but where is Best Western with corporate business?

Kong: We’ve done a really good job maintaining relationships with the corporate travel buyers. Whatever business they have, they are trying to channel it our way, so that has been helpful. It’s not just entirely leisure. We are seeing some recovery in the corporate sector as well.

BTN: How is your meetings business doing?

Kong: From our experience, because we book a lot of meetings, I think the meeting segment is coming back stronger than the independent corporate traveler segment. We held a meeting in May, and we normally had about 200 people for [it]. We had only 50, so about one-quarter. Part of that was because of the calendar, and most folks couldn’t come from Canada. Subsequently, we held a series of smaller meetings. Attendance was strong, but less than what we expected. The convention will be in Hawaii this year. Normally, we have 2,000 [attendees]. But we are counting on three-quarters of the people showing up. Registration is strong. There’s a lot of interest. But it’s not 100 percent. [Still,] I think for the meetings segment, it’s coming back first.

BTN: You mentioned you are in touch with corporate travel managers. What is your strategy in working with them?

Kong: Even during the pandemic, we kept in very close contact with them even though they didn’t have much business at that time. We told them what we are doing in term of the enhanced cleaning protocols. We had videos, all kinds of ways to keep in touch. We recently had a very renowned management consulting firm do an engagement for us to look at how we can optimize our revenue engines and improve sales and marketing. We surveyed our corporate travel buyers and corporate travelers, and we got very high marks in how we kept in touch with them and how we helped them. As result of that, their intent to use our hotels has increased compared to before, and I feel good about that. Right now, what I hear from them is primarily around duty of care. They want to be extra careful about the hotels, that they are cleaned, well-maintained and the travelers are safe.

BTN: Did any buyers change their programs?

Kong: A lot of companies actually changed in terms of where they send their travelers. All of a sudden, they have different business opportunities. The sourcing of hotels is now different. Now [they want] chainwides. They’d rather say, give us a dynamic discount, say 10 percent, 15 percent, but it’s for every hotel rather than identifying certain locations and setting a [static rate]. We are finding, number one, it’s far more efficient that way. Now we’re not negotiating 50 hotels. It’s whatever your needs are at this [time] for all hotels in that brand. That’s far more efficient. Secondly, they also realized it made their job a whole lot easier. They don’t have to do 50 [requests for proposals], then wait for the return and manage the system. That is also good when the rate goes down. If you expect rates to go down, having 15 percent is better than a flat rate. They found out that this is a good way to do business in the future. I’ve always said, let’s go the route of dynamic rather than static rates. The pandemic has trained us for that. During the pandemic, rates went down a lot, so people were then having to contact hotels and ask for better rates than the static rates.

BTN: How much demand is coming from large corporates versus small or midsize companies?

Kong: We’ve seen both large and small and midsize coming back. People are interested to get thing going again. They have quarterly business reviews, and it gives us an opportunity to not just meet and talk about the quarter, but also to meet clients. A lot of companies do that. We see that coming back strongly. I wouldn’t talk about just one kind of meeting. All kinds of meetings are different. The meetings business, for sure the interest is there, and it’s coming back. The attendance is about two-thirds to one-fourth of what we used to see. But independent corporate travel, I think it will be challenged for a while because of this hybrid work arrangement and offices not open entirely. Some companies are discouraging outside visitors. Taking clients out on golf events, or to special sporting events, that has not come back yet. Incentive and entertainment is not back yet.

BTN: What operational changes has Best Western implemented that affect the guest experience? What is temporary and what is likely to be more permanent? Let’s start with breakfast.

Kong: First of all, the economy sector we have not changed. There is still one hot item, then the cold items, like breads, muffins, cereals. That hasn’t changed, although there are grab-and-go options. That was necessary, because you really couldn’t put any food out. In the midprice scale, we used to be known for our breakfast. It used to be a lavish display, a very expensive selection of breakfast items. That is not back yet at most hotels. Depending on where a hotel is located and their description, we gave them different options. We no longer do the grab-and-go, we wanted to stop that except in cases where it’s really early in the morning when people want to leave and grab something to go. We still do that after hours.

Normal breakfast hours we basically either are returning to that big expensive buffet, or we dish out the food for people. They order from the menu in advance, or put it together for to-go. It’s a smaller selection, because we have several challenges. First are the state and local restrictions. Second, people’s hesitation about touching serving utensils. Third, staffing is a huge challenge. We need people to cook it and service it and clean tables, straighten up things. The labor requirements are far more extensive than any of the other options I just mentioned. We would like to return to that big breakfast buffet, because right now the average rate is really high. And when people are paying really high rates, they have certain expectations. The breakfast buffet is something that they look forward to. So we don’t want to disappoint them. For breakfast, I think there will be a return to that kind of a set up.

BTN: What about housekeeping?

Kong: Housekeeping, on the other hand, is different. Because there are people like me, I’m still hesitant to have another person come into my room when I’m staying there. I found out that I’m fine without someone servicing the room daily. I can make my own bed, I can reuse my towel. It’s not an issue for me. It doesn’t compromise my experience, and it is a cost savings, labor savings. If you need to have a housekeeper clean the room every day, you’ve got to have a lot more people, you need more staff. We can’t hire the people. I mean we were lucky to have people show up. It’s very tough. We have a standard of every three days we service the room. Every day we check the room. We want to make sure the room is not being trashed or being used for inappropriate reasons. So I think cleaning upon checkout or request is here to stay.

BTN: Technology changes?

Kong: Technology-wise, I think for mobile there will be huge adoption. We all know that we use our apps to order takeout and how easy is in just less than a minute you place the order, pay for it and the food is ready. I think that experience is setting expectations. And people expect that booking a hotel room should be just as easy. You shouldn’t have to key in credit card numbers. We are trying to streamline the whole experience and make it simple and easy. I think because of mobile adoption, there will be a lot more use of texting. The welcome messages, instruction for the guests while staying with us and even after departure a lot of the text, SMS messaging experience will be offered. We are definitely Investing in that area.

Decluttering of the room is also a whole design approach, simplifying everything. There’s less area to clean. It’s more conducive to people’s heightened awareness of cleanliness. Moving away from heavy drapery, scarves on the bed. I think decluttering in general is here to stay as well.

BTN: Anything else?

Kong: One thing we are doing now with our loyalty program, because we always want to make it more rewarding and have instant gratification, is we launched a pay-with-points program. Somebody may not have enough points for a free night. Those points are just sitting there. So we allow that person to use points to pay for the room. Say the rate is $100 and they have 5,000 points, [say] that translates to $25. Then they can basically buy down the rate to $75. We tested it at a few hundred hotels and had much higher satisfaction from our travelers. And the hotels really love it.

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