Hotel Management asked David Kong, the president & CEO of Best Western International, what his predictions and expectations were for the hotel industry going into 2015. Kong was optimistic, and is ready to dive into the coming year.
Hotel Management: How will the hotel industry fare in 2015 in terms of overall operating metrics and profits?
David Kong: We anticipate continued strength in the industry. The rebound of the group segment has helped all chain scales. We are also seeing demand strengthen outside of the top 25 markets. With demand remaining strong, the ADR should continue to rise. The higher ADR should lead to improved flow through.
HM: What specific or significant goals have you set for your company in 2015?
DK: Our goals in 2015 will be to continue our unprecedented success in RevPAR performance. We are implementing a new digital platform to power our Internet and mobile strategies. We recently launched a soft brand “BW Premier Collections” with a pay-for-performance commission-based fee structure. We also launched a lifestyle brand “Vīb”. These brands will help enhance our overall brand image and are a primary focus for us.
HM: What challenges—within the industry or within the world at large—have the possibility to upset the current general optimism within the industry?
DK: Anything that affects confidence such as a pandemic [e.g., Ebola], terrorist attacks or stock market crash could derail the industry’s growth. Our economy and our business are cyclical. Usually the third year of the second term of an incumbent president ushers in a down cycle. We should be watchful of early warning signs.
HM: In 2015, where are you concentrating your company’s growth and expansion?
DK: Our focus in North America will be primary markets such as New York City or Chicago. On the international front, Asia, South America and the Middle East present the largest opportunities for development and also inbound business.
HM: What areas within the hotel industry will deserve the most attention in 2015 that may not be on our radar now? For example: Labor issues, government/economic issues, etc.
DK: Labor-related issues such as local “extreme wage” and the NLRB ruling of the franchisor [McDonald’s]-franchisee relationship are huge challenges. In addition, helping our government understand the value of our industry [we are as big a contributor to the GDP as the farm industry] is important, so they reauthorize Brand USA and extend the Terrorism Risk Insurance program. Lastly, we need to work on stopping the deceptive practices of certain OTAs so they do not hijack our reservations.