INTERNATIONAL REPORT— During the Best Western Hotels & Resorts (BWHR) Virtual Convention held at the end of October, the company offered its members an update on its efforts to succeed during the pandemic, and revealed a plan to continue to help them get through this challenging time.
“This convention is a testament to Best Western’s resilient spirit and our ability to rise above our challenges and embrace new opportunities,” said Peter Kwong, board chairman, BWHR. “It is a testament to the fact that our spirit of family is greater than our adversity, and nothing, not even a global pandemic, will divide us. Best Western has not only prevailed, but we are in a strong position to lead the recovery. While I think most of us will agree that 2020 is the toughest year we have faced together, it has demonstrated the strength of our brand and members. We have each had to share our stress and anxieties, but we have never given up or lost hope that we will cross this bridge and reach the other side.”
David Kong, president/CEO, BWHR, agreed with Kwong, and revealed how the company has already helped its members and will continue to do so. “This pandemic has been incredibly challenging for all of us,” he said. “It has upended our way of life. From the onset, our goal was to share the pain and help our members survive. I am proud of the relief we provided our members March through May.”
The company reduced a number of fees and suspended some brand requirements. “At that time, we estimated these relief efforts would cost our company about $30 million,” he said. “In order to fund this swift and comprehensive membership relief, we implemented an unprecedented austerity plan, which included company-wide pay reductions, separating from a significant number of our associates and dramatically slashing expenses. These decisions were painful and regrettable, but we needed to ensure the ongoing viability of our company.”
The continuing difficulties affecting the company has made it necessary to expand on its efforts to help its members. “The last seven or eight months have felt like a lifetime,” said Kong. “COVID-19 has placed a burden on our membership unlike anything else that we have ever seen. We were all hoping for a strong summer, but regrettably, the recovery was setback by a resurgence of the virus and new restrictions by state and local governments. Our fall business has been compromised by a weak corporate segment, and the winter months are traditionally slow for most of our hotels.”
Addressing the membership, he continued, “As PPP funds ran out, with loan forbearance ending and real estate 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. Recognizing the upcoming months will be very difficult for most of our members, your board and most of our executive team put together a relief plan. We are extending the time period for payments and reducing the service fee for payment plans to as low as 3% depending on the payment schedule. We are increasing Best Western Rewards free night compensation by 33%. We are reducing your monthly fees based on your revenue declines year-to-date, and we will be rebating the marketing technology assessment increase scheduled for Dec. 1.”
To fund the current round of member relief and address a challenge of dramatically reduced revenue, Kong said the company is continuing its austerity plan and looking for new ways to reduce expenses. “Because of this austerity plan—and thanks to our members who have continued to make timely payments, despite their personal challenges—we’ve been able to balance our finances,” he said.
Company performance
Year-to-date, the company has had 15 hotels leave the Best Western brand, compared to a total of 48 in 2019. “We do anticipate, with the pandemic, that number will increase a bit as we end the year,” said Kong. “Of course, we are doing our best to help our members get through this difficult period.”
Although the year was hard for the entire hotel industry, Best Western execs did have some positive news for the virtual attendees.
Kong revealed that despite the pandemic, the company’s RevPAR continues to be strong.
“So far this year, we have activated over 240 hotels across the Best Western, SureStay and World Hotel brands around the world, and we project another 100 by year end,” said Ron Pohl, SVP/COO. “That represents one new hotel opening every day. In North America, we’ll open 170 hotels this year—one new hotel every two days. 2021 will continue our growth, projecting more than 250 hotels opening around the world.”
Brad LeBlanc, SVP/chief development officer, BWHR, reported that following a successful development year in 2019, with 175 signings, the company expected 2020 to its strongest year ever. “We were off to an incredible start,” he said. “We had 67 executions by March 1, and a really deep pipeline. When COVID restrictions hit, like the industry, we slowed, but we still stand at 98 signings this year.”
2021 will bring a slowdown in new construction across the industry. “On the new construction front, don’t expect new construction to return in any meaningful way in the next 24 months,” he said. “The supply and demand pipeline will have to normalize. Most of the rooms that are under construction that are in the deep stage pipeline, most of them will complete. But many in the early-stage pipeline…will collapse. Conversions will remain strong. BW core and BW Plus will continue to see strong demand.”
Kong reported that 40% of the hotels in the company’s pipeline come from its newer brands, including SureStay, Aiden and Sadie. “This really speaks to why we launched these brands,” he said. “Aside from contemporizing and elevating the image of Best Western, they are helping us ramp us our scale.”
We Care Clean partnership
The company also revealed during the conference that it expanded its relationship with P&G Professional, the away-from-home division of Procter & Gamble, for its We Care Clean program.
The program will now include Microban 24 Professional to its cleaning protocol. Starting this fall, all 2,300 Best Western-branded locations across the U.S. and Canada will have access to Microban 24 Professional, adding an extra layer of protection for hotel guests.
“Now more than ever, there is nothing more important than providing a safe and clean home away from home for our guests, and creating a healthy environment for our hotel associates,” said Pohl. “We are constantly working to enhance our cleaning protocols, and we are proud to bring an added layer of protection to our hotels through this partnership with P&G Professional.”
All Microban 24 products are on the EPA List N, which is a list of products for use against SARS-CoV-2, the virus that causes COVID-19, and Health Canada’s guidelines for inclusion on List of Disinfectants with evidence for use against SARS-CoV-2. Powered by Microban antimicrobial technology, Microban 24 Professional products have the capability to continue killing 99.9% of bacteria for up to 24 hours, even after multiple touches, according to P&G Professional. HB