Best Western's membership votes down for-profit conversion

In a grand opening event, hotel owners Frank Day and John Gatto, welcomed local media and dignitaries including Colorado Springs Mayor, John Suthers, to celebrate the occasion.
Best Western Hotels & Resorts is a privately held company with more than 4,500 hotels, including the Best Western Plus Executive Residency Fillmore Inn in Colorado Springs, Colo. Photo credit: Best Western Hotels & Resorts

Best Western Hotels & Resorts' North American members have voted down converting the company from a membership nonprofit model to a for-profit company. The company's 16 brands comprise more than 300,000 guestrooms in more than 4,500 properties.

“Best Western Hotels & Resorts asked its North American members to consider converting the company’s organizational structure from a membership non-profit model to a for-profit company with the members becoming the shareholders. Through membership vote, the decision was to not adopt the proposed conversion,” the company said in a statement. "We will continue to focus on driving superior revenue to our member hoteliers and providing exemplary service to our guests."

The company originally filed an SEC Form S-1 in August 2018 outlining its plans to convert to a for-profit corporation, subject to the approval of its members. The filing, which required members to submit a ballot by Sept. 26, would have resulted in all members who had outstanding interests as of Nov. 30 having those interests converted into common stocks on or around Dec. 1. In the filing, the association planned to offer 55 million shares of common stock following the transition.


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According to the filing, Best Western planned an offering of 55 million shares of common stocks. The company planned to issue each member approximately 25,600 shares. Franchisees who joined following the conversion would have received approximately 12,800 shares.

The filing included a proposal to amend the company’s bylaws to allow the board of directors to terminate the membership of any member who did not enter a franchise agreement by Oct. 31 and have a property open by Nov. 30. If this proposal did not also go through, the conversion would not have gone through either.

When Hotel Management originally reported on the possible transition in October 2018, President/CEO David Kong was asked, with this scenario in play, if the company’s newest brands would be franchise opportunities. He replied, “This is still part of Best Western so for now, it would be the membership association model. For now.”

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