IHIF: Best Western's David Kong says OTAs are less of a threat than Airbnb

(David Kong)

BERLIN, Germany — As IHIF 2017 wrapped up in Berlin, Questex Hospitality Editor-in-Chief David Eisen sat down with David Kong, CEO Best Western Hotels & Resorts, to talk about why online travel agencies are less of a threat than Airbnb, where the investment hotspots are and the benefits of using social media to promote a brand identity. 

Video is below, along with some highlights from their conversation.

1. Use social media to attract customers and build your brand

Last month, we looked at how Best Western was leveraging Facebook to attract new business—a logical choice, since users spend an average of an hour per day on the site. “Nowadays, when people’s attention spans are so short and there are so many messages bombarding them all the time, to find a channel that reaches them—and that they will pay attention to—is very important.” 

2. OTAs are indispensable… 

Initially, Kong acknowledged feeling some resentment toward the online travel agencies. “Are they really creating more business for us or are we paying more for the business we were going to get anyway?” Kong asked rhetorically. “More and more, I think people are coming to the realization that they are actually an indispensable distribution partner, and it behooves us to work with them to grow our market share and to have win-win relationships.”

3. …and are less of a threat than Airbnb

Airbnb is taking up “a huge share of supply in major markets,” Kong said, which puts pressure on occupancy and, by proxy, room rates. When hotels partner with OTAs, he said, it’s a channel shift: “You switch from a brand channel to a more expensive OTA channel that you pay a commission on,” Kong said. “With Airbnb, it’s a share shift. You lose the business. You no longer have the business. It is a threat that cannot be underestimated.” 

4. Secondary and tertiary markets are golden opportunities

If investors only focus on building upscale and upper-midscale hotels in primary markets, Kong said, they will miss out on some great opportunities. “There’s a whole wealth of opportunity that exists in the secondary markets, especially, and in the midscale segment,” he said, and noted that Best Western was considering buying midscale assets and then selling them for a profit to create momentum. “It’s a wonderful investment opportunity that we are considering ourselves.”

5. Think globally, develop locally

The U.S. remains “a wonderful investment opportunity,” Kong said, thanks to overall economic stability. “Look at all the markets that went through the last downturn—they all came back,” he said. 

Internationally, he said, Asia’s growth is “limited” due to a range of factors, but remains a “fantastic” investment opportunity. South America, the Middle East, Africa and some of the former USSR countries are also attracting interest. “We’re seeing growth in that segment as well,” Kong said, but emphasized that the U.S. is still the company’s top market, followed by Europe. 

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