Beijing – With an office established in China since 2002, Best Western International continues to make serious inroads into developing hotel product for the growing number of Chinese travelers.
Behind the brand’s growth in the region is William Dong, Best Western China president and CEO. A veteran hotelier [Dong worked for Accor for many years], he has seen firsthand the challenges it takes to develop Western brands in China and its neighboring countries. The development company he runs from Beijing office space serves as a master licensee for Best Western. This setup, Dong said, is an effective way to run a hotel business in a country where only the government owns property, and tax and accounting issues can slow down progress.
To date, the Best Western portfolio in China and Mongolia numbers 39 active hotels in 17 provinces. These numbers include three hotels in Hong Kong, two in Macau and two in Mongolia. The brand’s pipeline in the region is 13 hotels, all of them new-build.
Dong said the company’s growth in China is very closely tied to the economic situation in the capital.
“Financing is centrally controlled by the government, so it’s very much related to our development,” he said. “In 2010 and 2011 the government released a lot of funding into the market and for the next two years we had many projects and hotels.” That pace slowed a bit in 2013, when only four hotels came on board.
To date, much of Best Western’s development in China has been concentrated in three major Eastern China regions: Beijing/Tianjin, the Yangtze River Delta around Shanghai and the Pearl River Delta further south. These are the most active regions for all hotel companies in the country. So as the speed of intra-Chinese travel grows, Dong said he wants Best Western to be there.
“We want our future development to have more of an emphasis on Western China,” he said, citing in part oversupply concerns in the Eastern regions. In particular, he pointed to Nepal, Tibet and the Qinghai/Sichuan area in the West, and Taiwan in the East, as future growth spots.
It’s a plan backed by data; most of the company’s guest base is leisure travelers.
“Domestic travelers really are our main business, particularly in the last two years,” he said. “We have seen more and more family leisure travelers too—families that stay from three days to one week, because as the highway system develops, people are driving their own vehicles to tourist destinations within the country.”
Part of what drives that leisure travel boost is the steady growth of Chinese who receive paid vacation time. That wasn’t always the case, Dong said, and he has noticed increased travel corresponding to popular vacation times.
It’s a positive trend because inbound travel to China from international locations isn’t such a rosy picture, according to Dong.
“International arrivals here keep declining,” he said, citing poor currency exchange rates, economic instability and even pollution. As of 2012, China Tourism Academy statistics showed inbound travel to China at .25 percent year over year growth.
On the other hand, outbound travel from China to international destinations is growing, despite the challenges surrounding visa procurement.
“We really see steady growth here; this year, Chinese outbound travelers could reach 100 million and that’s a lot,” Dong said. “Having a presence [with Best Western] here in China will help influence Chinese travelers when they go abroad.”
On the descriptor side, all three of Best Western’s brand types have a presence in China. The company has 30 active core Best Western properties and eight in the pipeline, and nine active Best Western Premier properties, with four in the pipeline. One Best Western Plus is under development.
“We started developing Premier properties around the same time as Europe did, earlier than in the U.S.,” Dong said. Several of those properties qualify as official five-star hotels in China, as determined by the rigorous standards set by the China National Tourism Administration.
Still, the core Best Western property remains the backbone of the company’s expansion in China.
The standards that come with the name are part of the appeal, Dong said, as well as Best Western Rewards. Dong said the loyalty program in particular has grown in the last two years. “Before, most typical Chinese weren’t into loyalty programs but now everyone has the card,” he said. In addition to points counting toward free nights, the Chinese program also offers what Dong calls a local redemption program where guests can use points for grocery store cards or gas cards.
Given the high pace of growth overall in China coupled with a nascent hotel development scene, managing the staffing and operations side of the business can be tricky, Dong said.
“In China, the hotel business as we know it just started in the early 1980s,” he said. “Most had very expensive expatriate staff, and hotels were under management contracts by American and European chains.”
Now, he said, local Chinese have had time to build up the knowledge and experience necessary to run international-standard hotels, and management structures are much better. “Locals have the knowledge to run and own hotels now, and owners are learning, traveling and comparing their options between the brands,” he said.
On the operations side, Dong said training can be a challenge as the company expands. “Chinese staff turnover is very high because people are always looking for new, better jobs,” he said. “Also there’s a language barrier as we enter second- and third-tier cities and country towns.” To address that problem, Dong trains staff managers to work with hotels on QA inspections, operations and property-level training.
Still, Dong said the benefits of branding carry weight in China. “Travelers realize a brand guarantees them something and they want that branded hotel,” he said.