There are two things that David Kong, president and CEO of Best Western Hotels & Resorts does not shy away from. The first is speaking his mind. The second is dealing with challenges with simplicity. His philosophy is, if you can’t beat them, join them. At a time when most hospitality chains are wondering how to deal with the onslaught of online travel agencies (OTAs), Kong’s was the first US brand to feature TripAdvisor’s user reviews on their company website. With this one sweeping move, he reassured customers that they can go through user-generated feedback on Best Western’s site before choosing to book a room, whilst giving them the flexibility to directly book rooms from the OTA’s page instantly, showing that his brand is happy to be transparent. These are few ways in which Kong is making the 70-year old brand relevant in a digitally empowered world. And it looks like he is succeeding.
Which are the brands in your portfolio currently?
We have Best Western, our flagship brand, Best Western Plus and Best Western Premier. Three years ago, we launched four other brands. Vib is an urban location boutique hotel brand aimed at tech-savvy, contemporary travellers. We also have Glo for the secondary market. Executive Residency is a extended stay product for business and leisure travellers. We launched BW Premier Collection recently because some guests want to enjoy a lot of respective brand standards with the freedom of flexibility and have advantageous business terms with online travel agent (OTAs). Today, we have about 20 BW Premier Collection in North America alone and 20 worldwide.
Given this diverse portfolio, why did you choose to launch only the Best Western brand in India?
We are transitioning to a new master license agreement in India with Sorrel Hospitality as there had been some challenges with our previous master licensee (Cabana Hotel). Earlier, the brand did not grow in quality or quantity, hence we had to make this change. We are now looking for a fresh start in some ways in India. Through the transition, we have 11 hotels now, but hope to ramp up quickly because of Sorrel Hospitality’s reputation. Its director, Gurmeet Singh Uberai, director, as well as Atul Jain, who is COO of our brand, have a good track record.
Didn’t Best Western earlier have 22 properties in India?
We did have 22 properties in India and are constantly updating it. We were 4,100 hotels 10 years ago and we are still at 4,100 hotels today. People might look at this number and say that the brand is not growing. I would say that our brand is growing tremendously but in quality, not quantity. In the last 10 years, in North America alone we separated from over 1,000 hotels. That’s a demonstration of our commitment to quality. We believe that when you have quality, you have a solid foundation. And when you have that, you can rev up all your engines and go places.
Coming to India, how will you re-strategise your brand after deciding which properties are viable ones and which are the ones you do not want to be associated with?
India is a different kind of hotel market than other countries. In some ways, it has the same challenges as China and South America, where the still in its nascent stage and is growing. India still doesn’t have the kind of saturation as other territories. So, having a good management team in place to
manage the hotels is crucial to protecting not just the reputation of the hotel, but also of the brand. Under the new master license agreement, Sorrel Hospitality will manage the hotels for us. So, some hoteliers may find their role redundant and might choose to part ways. This will bring in a level of standardisation.
Best Western was present in India for almost three decades through its earlier partner. What were some learning that you picked from your last alliance that you can implement to better position your brand in the market?
India is not an easy place to do business. You have to find the right partner who not only knows the local culture and language but also have personal relationships and knowledge about how business is done here. The key learning from the past years is that we can’t just say someone is credible based on what is on paper; they should have the proven track record in India. The second one is that they should be able to invest in the brand, whether it is on social media or sales and marketing, or all those things that make a company successful and well regarded. But you also got to have quality. As I mentioned earlier, if you don’t have quality, it can’t grow successfully. Our brand is really dependent on the experiences that guests staying in our hotel have. This brand image is really in their minds; not what our marketing message says or what our sales person maintains. It is through those experiences that we can build a strong brand. So through Sorrel Hospitality, and through their management services, we think we have a much better chance of succeeding.
The hospitality landscape is getting overcrowded. How are you geared to deal with these changing business dynamics?
You are right; there has been a tremendous growth in terms of number of brands that hotel companies and others have created. I think for a brand to be successful, they need to have a well-defined selling proposition about what the brand stands for. So, if you look at all seven of our brands, they are clearly defined. There is no overlap and they all provide wonderful experiences. There are several brands out there that are not very meaningful because people are not clear what they stand for. Take the example of the biggest mergers in the industry. You look at their 30-odd brands and ask yourself how they are different from one another. I think that’s going to be one of their biggest challenges.
What about the growing influence that OTAs now have in the hospitality business?
I think it is a two-pronged strategy when it comes to OTAs. Firstly, the brand has to think about not allowing them to cannibalise their business, which means your website, mobile app and electronic distribution have to be really strong. Secondly, your loyalty program is the best defense against OTAs because they don’t have it. In our case, we have an award-winning website, mobile app and loyalty program, so we are in pretty good shape in terms of our defenses against OTAs. Another strategy for dealing with OTAs is to focus on the experience you give guests at your hotel. Ultimately, what is the one thing a hotel has that OTAs don’t have? It is the ability to interact with the customers. OTAs can send business to the hotel, but they have no way of interacting with our customers. So, we educate hotels that they have to provide that superior experience because that is what is going to make people come back. So that’s the first prong of the strategy. The other prong of the strategy is about working out the most advantageous commercial terms with OTAs. It is not just in terms of the commission we negotiate to keep it as low as possible but it is also in aspects like last room availability and the ability to sell number rates through the loyalty program, ensuring our brand search terms are protected. That is all part of the negotiating
the most advantageous commercial terms.
So why did Best Western sign up with TripAdvisor for its instant booking tool?
When you are facing a challenge and there is nothing you can do about it, you may as well embrace it and turn it to your advantage. We were the first
US brand to sign with TripAdvisor to feature their reviews on our website because we recognised that three-quarter of people look at TripAdvisor reviews before they book hotels. So if we put their reviews on our website, it provides instant reassurance. Also, people reading about our hotels on tripadvisor.com can make a direct booking on that site rather visiting our website. We were amongst the first brand to embrace their instant-book feature because we felt TripAdvisor has a tremendous following, and when people check reviews, they probably want to check rates.
Do you have any figures on the customer traffic that increased to your company’s site due to this feature?
I can say it has worked out advantageously for us. The TripAdvisor booking isn’t as strong as Expedia and Booking.com, but it is one of the highest contribution from OTA. Also, the conversion rate is an old metric, which is not very relevant today. While you might look at the look-to-book ratio, there are many other reasons that the traffic has increased exponentially. Some of them are driven by affiliate websites that OTAs have, some by OTAs
themselves, others by referrals from different websites.
Then what are the metrics to focus on in the digital platform?
What we need to keenly focus on in the new digital platform is optimise the websites to make it more user friendly. This in turn will drive better conversion. We also use it to analyse people’s behaviour using business analytic programs.
How are you leveraging Best Western’s loyalty program to attract and retain customers?
A lot of people make loyalty programs more complex than necessary. Hoteliers need to understand what is the rewarding part about these programs for guests. The first should be ease of redemption, so we lowered the requirements needed to book a hotel room for free through our program. Secondly, it is about earning opportunity. Hence, we do a lot of promotions that give guests bonus points, so they can rack up their points faster to redeem it. On the redemption side, we partnered with many brands, like Home Depot, Target, Amazon, etc, in the US. So, our customers do not just get free room nights, but also gift cards. We also worked on the backend recognition system and upgraded our property management system (PMS). It tells our associates if the guest checking in is a diamond or a platinum guest and we accordingly give them a goodie-bag to appreciate their loyalty towards our brand.
What percentage of guests checks into your hotels through the loyalty programs?
Right now, the loyalty program contribution is about 40 percent, which is nothing to sneeze at.
Does that number apply to India too?
Well, it’s getting there. The program has different maturity in various parts of the world. In North America, we have had it the longest and that is why we have been more successful. But India, China, South America, Europe, etc, we are ramping it up quickly.
However, isn’t the awareness about your loyalty program low in India?
I would agree with that, but it would change gradually. After all, who doesn’t want the ability to earn a free night or a free gift card? Who doesn’t want to be recognised not just with a thank-you gesture for their business, but with a tangible amenity? Everyone likes that.
