Best Western CEO shares recovery plan

The Best Western 2020 Virtual Convention kicked off with encouraging words from President and CEO David Kong—and plenty of acknowledgement that the company and the industry as a whole are not out of the proverbial woods yet.

“Although we're not able to meet in person, we found a way to connect,” Kong said in his opening statement. “This virtual convention is testament that at Best Western, we will not allow a pandemic to keep us apart. I'm thrilled that many members have registered for this convention and are watching it live to stay connected.” 

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The last seven or eight months have “felt like a lifetime,” Kong said. “COVID-19 has placed a burden on our membership unlike anything else that we've ever seen.” The anticipated summer uptick was not as strong as the company had hoped for, and the upcoming winter is already traditionally slow. “[Paycheck Protection Program] funds ran out with low forbearance ending, and with state taxes due, many of you had to dig deep into your savings, pull shifts and work around the clock to ensure the survival of your business.” 

To provide further relief for owners, the Best Western board and executive team extended the time period for payments before a hotel is considered delinquent and revamped the payment plan to reduce the service fee charge to as low as 3 percent, depending on the payment schedule. The company’s loyalty program free night compensation has been increased 33 percent, while monthly fees will be reduced based on revenue declines year to date. Best Western also will rebate the market and technology assessment increase scheduled for Dec. 1 to fund the current round of member relief, and to address the challenge of dramatically reduced revenue. “We're continuing our austerity plan, and also looking for new ways to reduce expenses,” Kong said, crediting the austerity plan and members who have been able to make their payments on time for the company's ability to balance its finances.

Reasons for Hope

New brands are fueling the company’s growth, making up 40 percent of the pipeline. “Aside from contemporizing and elevating the image of Best Western, they're helping us ramp up our scale,” Kong said. The company now has 200 SureStay properties open in North America, and 150 in international markets. “By the end of this year, we should have over 360 SureStay hotels open globally.”

This growth has not been at the expense of the legacy members, he added, and the company has been “extra careful” about applications since the pandemic hit. “We certainly don't want to add to your stress,” he said. “SureStay and the other new brands have been a big help with our finances.” The company has “always” been fiscally conservative, he added, and entered this year with the strongest balance sheet in the company's history. “At this time we still have a respectable reserve, and we will continue to find ways to help our members through this crisis.” 

Best Western will have “a few more tough months ahead,” Kong predicted, and while 2021 looks to be better than 2020, returning to 2019’s numbers will probably take three to four years. 

“First and foremost, we need to find more business for you,” Kong said of the plan. “We know the corporate segment is challenged and group business probably won't return for a while. We've pivoted, and are now focused on [attracting] companies like Walmart and Amazon that are doing well while also targeting other businesses such as traveling nurses, traveling sports teams and ... construction business.” The company is aiming to improve efficiencies with virtual training for team members, and contactless check-in and check-out and credit card processing. “We'll also be looking at adapting our standards for breakfast, housekeeping and other areas to the new normal,” Kong said.