Best Western spends $43M to boost its market share

By Colleen Isherwood
Editor

HONOLULU, HI—While most companies respond to a volatile economy by tightening their belts, Best Western is doing the opposite by spending an unprecedented $43 million in marketing dollars this year to combat an uncertain future.

“This economic softness is an opportunity for us to take market share from our competitors,” said David Kong, the company’s president and CEO at Best Western International’s annual conference in Hawaii on Oct. 20. “If we advertise more, and do a better job in providing a superior guest experience, we will have an even stronger brand to build from when the economy rebounds.”

Research has shown that in the past, the worst thing you can do is discount and cut rates, and that occupancy drops don’t necessarily cause RevPAR to drop, Kong added.

“From now through the summer season of next year, we will be significantly stepping up our advertising spend every month. In 2008 alone, we will be spending over $43 million in advertising. That’s dramatically more than what we have ever spent,” he said.

The glass is still half full, Kong pointed out. Best Western has been around for 62 years and has weathered 10 recessions. Mid-scale properties have proven most resilient in a downturn. Because of tight credit, there is less competition coming into the market. Generation Xers are increasing their travel spend, while boomers are taking more leisure trips. North America is still a great value internationally, and millions of Asians are coming here.

“Best Western will continue to grow and prosper... because we are the owners of this company,” chairman Dave Francis told the convention. Over the last few years, more than 500 properties have exited the Best Western system.

“These properties left because their owners would not meet our minimum standards. We are however replacing these properties with committed owners and product far superior to those they replaced.”

Best Western is adding hotels at the rate of 150-180 per year, mainly new construction and CAA/AAA three diamond properties. The company currently has 180 hotels in Canada. Internationally there are more than 4,000 hotels in 80 countries.

“I’m convinced the values that have made this organization prosper and thrive for over six decades will serve us well through these tumultuous times and continue to provide us with the platform to succeed in the future,” said Kong. “While other brands are focused on setting themselves apart based on a product experience, Best Western wants to differentiate itself by providing superior customer care and connecting emotionally with our guests.”

Citing the North American advertising campaign portraying its members as heros, Kong added: “The pride of ownership makes our brand special and our people make it authentic.”

During the last several years Best Western has gone from strength to strength.
Reservations delivery is up six per cent, and Best Western expects to end the year with $1.2 billion in revenue.

In Canada the RevPAR is $105, up 24.8 per cent year to date.

Best Western is one of only two preferred suppliers to the Automobile Association (CAA/AAA) in the mid-scale segment. The average AAA rate is $105, while Best Western’s own average online reservation rate is $100.

The company’s Gold Crown Club International (GCCI), recently renamed Best Western Rewards, now has nine million members.

And the company’s ratio for counted complaints is down an impressive 53 per cent.
In addition, by the end of the year Best Western will have 145 hotels in Asia, and was chosen by TTG Asia as the best mid-scale hotel brand for the second year in a row.

‘I Care’ makes a difference

Ron Pohl, VP brand management and member services, attributes much of Best Western’s recent success to its ‘I Care’ program, launched in 2007.

I Care is a two-day course with separate training for front-office, housekeeping, maintenance, restaurant and banquet staff.

Pohl said that more than 1,200 properties have completed this voluntary program, and there is a 92 per cent satisfaction rate among participants at 70 hotels that participated in a pilot program.

“The program encourages them to go that extra mile,” said chairman Dave Francis in an interview with CLN. “If someone asks where to find Japanese restaurants and there are 30 in the area, say: ‘These are the ones I would recommend.’”

Regional service managers see a measurable difference in the customer service scores before and after the program is implemented.

Co-branding with Harley

Co-branding is another huge strategy for the company—with Harley-Davidson, Nascar and CAA/AAA all major partners, said Dorothy Dowling, senior vice-president, marketing and sales.

“We have multiple marketing solutions for our membership, most based around the highways and byways of North America.”

Regarding co-branding with Harley, she said, “There are 100 great rides every motorcycle enthusiast wants to do. When we looked at what the rides looked like and where our hotels are located, it’s an almost perfect match.”

In addition, Harley owners are affluent, sophisticated buyers who are mutually supportive. Hotels participate by offering security for the bikes, the ability to park the bikes outside their room, facilities to keep the bikes clean and concierge service anticipating their needs. The co-branding on the Harley website is critically important. Best Western also offers Ride Rewards, with rewards that appeal to the riders.

Troy Rutman, director of external marketing noted that there are now 1,500 properties in the Best Western system that have the ‘rider friendly’ designation. “Harley is a cult brand —there’s a new, state-of-the-art museum in Milwaukee, and their anniversary celebrations are coming up. There’s a lot of heat with Harley, and we are deepening the relationship,” he added.

“The partnership with CAA/AAA is a big deal because they are the largest travel buyer in North America, Dowling said. “They are extremely well-regarded.”

Atrea hotels online in ‘09

Atrea is a prototype introduced by Best Western last year. It is a design for builders, which is more appealing to business travellers and Gen X travellers, Rutman said. “There are more social areas in the lobby, multimedia for business use, and it commands a competitive rate.”

To date, 25 owners are committed—largely because Best Western is offering high-end hotel design that is less expensive to build than the competition, said Rutman. “Half the people have never been with Best Western before. It’s the right product at the right price and it opens up markets we couldn’t touch before. It’s the next phase of evolution.” The first two Atrea are set to open in San Antonio, TX and Conyers, GA in January. The first Atrea in Canada are slated for locations in Alberta and Grimsby, ON.

Best Western Rewards
In response to a single owner who commented that Gold Crown Club wasn’t the best name for the company’s reward program, Best Western has changed the name of its loyalty program to Best Western Rewards—and is rolling out an ad campaign to inform loyalty customers of the change.