■ ➔ pulse Limited-service supply growth, 2010-2014 SLOW GAINS.. HotelManagement.net Vol. 230, No. 7 | June 3, 2015 The Leading Hospitality News Authority Since 1875 TRENDS & STATS. Limited-service love affair The appetite for limited-service hotels among investors across the capital spectrum continues. PAGE 17 SPECIAL REPORT. Top design companies A look at the top design firms serving the hospitality industry by a range of data, such as revenue. PAGE 26 ROUNDTABLE. Midscale roundtable See what happens when top midscale execs meet in a room to talk about hotels in the segment. PAGE 34 ■ ➔ inside this issue A Questex Hospitality Group Publication 2014 0.2% 2013 0.2% 2012 0.1% 2011 -0.6% 2010 1.3% Source: PwC Still living out the American dream | See page 22 Best Western’s DAVID KONG ONE –on– ONE By Bruce Serlen CONTRIBUTING EDITOR NEW YORK – With the industry posting record- breaking performance metrics heading into the sec- ond half of the year, a highlight of the 37th Annual NYU International Hospitality Industry Invest- ment Conference being held here May 31-June 2 is likely to be appearances by two industry veterans whom conference chair Jonathan Tisch describes as “legends” —Marriott International Executive Chairman J.W. Marriott, Jr., and Wynn Resorts’ Chairman & CEO Stephen Wynn. Tisch will sit down with Marriott on the confer- ence’s second day for what has become one of the conference’s signature events, the “Beyond the Board- room” session. “Bill is somebody who very much has a sense of where the industry is heading, having By David Eisen EDITOR-IN-CHIEF LONG BEACH, Calif. – e Asian American Hotel Owners Associa- tion, whose some 14,000 members by most estimates represent around 50 percent of the hotels owned in the U.S., held its annual convention here at the Long Beach Convention & Entertainment Center with the “Power of Progress” its guiding tagline. Discussion at this year’s convention, not unlike in the past, trended toward how AAHOA members can make more money and what NYU CONFERENCE PREVIEW Hotel industry weighs in on state of affairs Attack on franchise model a chief concern for AAHOA membership See NYU Conference | page 77 See AAHOA convention | page 80 SEE PAGE 17 FOR MORE TRENDS & STATS MEMORIES PHOTOGRAPHY MEHUL PATEL The 2014-2015 AAHOA officers were led by immediate past chairman Pratik Patel, at right. Jimmy Patel, with mic in hand, will be succeeding him. The conference’s transactions panel will look at recent deals, such as the $360-million, Q1 sale of the Montage Laguna Beach in California. MONTAGE LAGUNA BEACH C2201_R56148_HM_060115_1.BK.indd 1 5/12/2015 10:42:48 PM
Transcript
■➔ pulseLimited-service supply growth, 2010-2014
SLOW GAINS..
HotelManagement.netVol. 230, No. 7 | June 3, 2015
The Leading Hospitality News Authority Since 1875
TRENDS & STATS.
Limited-service love affairThe appetite for limited-service hotels among investors across the capital spectrum continues. PAGE 17
SPECIAL REPORT.
Top design companies A look at the top design � rms serving the hospitality industry by a range of data, such as revenue. PAGE 26
ROUNDTABLE.
Midscale roundtableSee what happens when top midscale execs meet in a room to talk about hotels in the segment. PAGE 34
■➔ inside this issue
A Questex Hospitality Group Publication
2014 0.2%
2013 0.2%
2012 0.1%
2011 -0.6%
2010 1.3%Source: PwC
Still living out the American dream | See page 22
Best Western’sDAVID KONG
ONE–on–ONE
By Bruce SerlenCONTRIBUTING EDITOR
NEW YORK – With the industry posting record-breaking performance metrics heading into the sec-ond half of the year, a highlight of the 37th Annual NYU International Hospitality Industry Invest-ment Conference being held here May 31-June 2 is likely to be appearances by two industry veterans whom conference chair Jonathan Tisch describes as “legends” —Marriott International Executive Chairman J.W. Marriott, Jr., and Wynn Resorts’ Chairman & CEO Stephen Wynn.
Tisch will sit down with Marriott on the confer-ence’s second day for what has become one of the conference’s signature events, the “Beyond the Board-room” session. “Bill is somebody who very much has a sense of where the industry is heading, having
By David EisenEDITOR-IN-CHIEF
LONG BEACH, Calif. – � e Asian American Hotel Owners Associa-tion, whose some 14,000 members by most estimates represent around 50 percent of the hotels owned in the U.S., held its annual convention here at the Long Beach Convention & Entertainment Center with the “Power of Progress” its guiding tagline.
Discussion at this year’s convention, not unlike in the past, trended toward how AAHOA members can make more money and what
NYU CONFERENCE PREVIEW
Hotel industry weighs in on state of affairs
Attack on franchise model a chief concern for AAHOA membership
See NYU Conference | page 77
See AAHOA convention | page 80
SEE PAGE 17 FOR MORE TRENDS & STATS
MEM
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PAT
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The 2014-2015 AAHOA of� cers were led by immediate past chairman Pratik Patel, at right. Jimmy Patel, with mic in hand, will be succeeding him.
The conference’s transactions panel will look at recent deals, such as the $360-million, Q1 sale of the Montage Laguna Beach in California.
David Kong’s life story is a veritable instruction manual about how to make it in America. A tale of hard work and pluck and the drive to succeed. It’s an immigrant
tale, not unlike so many others: the determined, gritty young man rewarded by reaching the pinnacle of his profession. � at’s David Kong, the president and CEO of Best Western International, the iconic hotel brand, which was founded in 1946 and celebrates its 70th anniversary next year.
Kong’s beginning, naturally, starts elsewhere—in Hong Kong, where strength of character was learned at a very young age from an obvious source: his parents.
“We weren’t born with a silver spoon in our mouth, so we had to work really hard to get to where we are today,” said Kong, who also has three successful brothers. (His eldest brother, Peter, was the president of global components at Arrow Electronics, one of the largest electronic companies
in the world.) “Growing up I saw how hard my parents worked. � ey really taught me the value of work ethic.”
Kong’s father embodied that paradigm. He worked, by Kong’s account, six-and-a-half days per week, but that small sliver of respite his father did have proved to inspire Kong’s future career plans.
It was during these times, on Sunday afternoons, when Kong’s father would take the family out for a meal at one of Hong Kong’s hotels, where, back then, many of the nicer restaurants were located. � ose occasions, dining within the belly of these urban hotels, was where Kong got the itch to pursue a life in hospitality. “� at whole experience really intrigued me and motivated me to begin a career in the hotel industry,” he said.
But this is an immigrant’s tale, and immigrant tales begin one place and jump to another.
MOVING FORWARDIn 1970, at the age of 18, Kong moved to Hawaii to pur-sue a degree at the University of Hawaii—and while Ha-waii was and still does have a very high Asian population, Kong still felt the role of the foreigner and convinced him-self he’d need to work that much harder to get ahead.
His � rst exposure to the hospitality industry came at the Hilton Hawaiian Village, where he was a dishwasher and a busboy, then “somebody took a chance on me,” he said, and he was promoted to waiter. F&B, not surprisingly, is where Kong made his initial mark.
Consider alcohol sales, an area in hospitality he knew could be lucrative. Unfamiliar with terminology and Ameri-can brands, Kong took to studying up. Naturally, the best place for this was the liquor store. So, as a college kid, instead of trying to buy it, he studied it. “I knew immediately I had to really learn all these labels [and recipes] so I wouldn’t look
like a fool,” he said. “I’d study all the liquor that they carried on the shelves and tried to memorize everything. � at began my progression of wanting to move ahead. I � gured if I was more knowledgeable than anybody else, then I can move ahead.”
From Hawaii, Kong made his way to Dallas, where he was working in food and beverage for Omni Hotels. He was so impressive that before long he was to be promoted to resident manager at an Omni hotel in San Francisco. It was also at this time that his wife, who worked for Hyatt Hotels, told him that the Hyatt Regency Dallas was looking for an assistant F&B director and was interested in Kong. One quandary: � is would be a step back not only in title, but pay, too. It would also prove to be an in� ection point for Kong. “I decided that if I was going to make the hotel industry my career, I had to be with one of the most progres-sive companies, which Hyatt was at that time.”
He got the job, bit the bullet and, in doing so, took a huge pay cut. Kong’s tough decision was in� uenced by his brother, Peter, who, as an electronic engineer, didn’t become successful overnight. “He was � oundering for a long time,” Kong said, explaining that his brother, who at the time was living in Toronto, had worked for big companies, but wasn’t really getting ahead.
J u n e 3 , 2 0 15 | H o t e l M a n a g e m e n t . n e tPROFILE
See David Kong | page 24
AT A GLANCE.
BEST WESTERN INTERNATIONALHeadquarters: PhoenixStructure: Membership organizationPortfolio: 3,915 active hotels worldwideWebsite: www.bestwestern.com
Best Western’s DAVID KONG
This CEO is still living out the American dream
ONE–on–ONE
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Best Western International announced its lifestyle Vib brand in 2014. The brand currently has two signed deals in Miami and Chicago. Pictured here is an exterior rendering.
The Best Western Premier Miami International Airport Hotel & Suites opened in 2010 and is two miles from the airport.
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Then, he had the opportunity to move his whole family to Singapore. “It launched his career,” Kong said. He became very well known and sought after as an Asia expert, who could read and write English and understood the culture of Asians. “It taught me that sometimes you have to make sacrifices to move your career ahead,” Kong said.
His star rose at Hyatt, where, as GM of the Hyatt Regency Oak Brook, outside Chicago, he introduced such seminal ideas as the 100-percent satisfaction guarantee. This was in 1989, “before Hampton, before Holiday Inn Express, before anybody even was considering doing satisfaction guarantees,” he said. “A service guarantee is a powerful sales-and-marketing ploy because it gives people reassurance and comfort, and it’s a very powerful way to change the culture of an organization.” It proved to be a hit with guests and also employees, who felt empowered.
“Our revenue went up and then our profit went up and, of course, our employee engagement scores went up,” Kong said. “That was my claim to fame at Hyatt.”
BEST DAYS AHEADKong’s ingenuity ultimately bumped him up to the corpo-rate level at Hyatt, where he stayed for 10 years. In 2001, he joined Best Western International, where he initially filled a few executive positions. Three years after joining the company, Kong fulfilled his American dream, becom-ing president and CEO. He was ready, and ready to shake up the status quo.
“When I first joined Best Western, I just thought that the brand had so much potential that it wasn’t tapping,” Kong said. “We were sitting there looking at brands like Holiday Inn Express and Hampton becoming stronger by the day, but we were not reacting to it. We were just business as usual and not recognizing that we were losing market share.”
Once Kong took the reins, his focus was on two areas: one, improving the brand’s image (Best Western separated
from around 1,200 hotels in a decade’s span) and, two, revving up the company’s revenue engine by concentrating on electronic distribution and Best Western Rewards, the company’s loyalty program.
Seven years after becoming CEO, Kong unveiled what likely will be his legacy. In 2011, Best Western, for more than 60 years a single-brand operation, announced its descriptor program, which tiered properties into three categories: Best Western, Best Western Plus and Best Western Premier. The program was many years in the making, Kong said.
“There was a consumer confusion problem,” he said. “Sometimes they’d stay in a really nice Best Western, get really happy, and then go stay at another Best Western and get disappointed because their expectation was not met. We knew we had to solve that problem.”
The descriptor program, as Kong told it, was as much a customer initiative as it was an owner retention direc-tive. Best Western is a member organization, with each property independently owned and operated. “Some of the high-quality hotels were thinking about leaving because they didn’t want to be associated with some of the other hotels,” Kong said. “We knew if we lost those hotels, we would dwindle down to maybe even the economy
segment. It would just be a downward spiral. We had to correct that. It now has put us in a much better position to compete.”
Kong wasn’t finished retooling Best Western. Last year, the company launched a lifestyle brand and soft brand, Vib and BW Premier Collection, respectively. The former was created to tap into new developers, enhance the image of the brand and serve as an incubator for new ideas. “We knew we had to go and tap into a different set of developers if we wanted to move ahead,” Kong said, adding that the lifestyle segment is contemporary and relevant with today’s customers. “It is one they are interested in.”
Kong referred to the BW Premier Collection as a dif-ferent consideration. “We had a lot of hotels, independent hotels, that didn’t want to meet the requirements that we have for Best Western Premier,” he said. “Yet they are look-ing for that alternate source of distribution. We saw that opportunity and we also saw the opportunity to introduce a new funding model.”
Kong views other soft brands not as the competition, but, rather, the online travel agents. “Why would these independent hotels want to look for an alternate source of revenue?” he asks. “It’s because they don’t want to be rely-ing on OTAs. That’s why we did our fee model based on a percentage of revenue that we deliver and not on a royalty base on total rooms revenue.”
BW INTO THE FUTUREBest Western will hold its convention in October, and a new logo is in the offing—the current iteration having now been around for some 20 years. “Our logo is really good in a sense that it’s very prominent and noticeable,” Kong said. “It’s also very familiar, so it’s not an easy de-cision to just change it for the sake of changing it. We’ve done a lot of great things with the descriptors and that re-ally needs a brand identity to help convey that we’re a con-temporary relevant brand.”
Best Western is also six brands now. “We need a logo that’s going to separate these brands, convey that they’re different, but at the same time make it seem like we’re one cohesive family of brands,” Kong said.
What the logo might look like is still under wraps, but in this day and age, there are many more considerations to bear in mind, such as, “How do you make our logo stand out on an Apple iWatch?” Kong asked. “The whole world is moving to mobile, so we have to prepare for that.”
The lobby of Houston’s Best Western Plus JFK Inn & Suites. Best Western International launched its descriptor program in 2011 to better differentiate its hotels and resolve consumer confusion.
The Best Western Plus Arlington/Marysville, in Washington, puts guests in the heart of the Great Northwest.
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