Interview with David Kong, President and CEO at BWH Hotel Group®. A discussion with Vanguélis Panayotis, CEO MKG Consulting.
Where Best Western stands with this very special 2020 year?
In terms of hotels that are closed, Europe is probably first because of the impact of the virus as well as the government shutdowns. We have about 20% of hotels closed in Europe at this time. This is regrettable because many hotels are fighting for survival and this shutdown is very bad news. In Asia, about 12% are closed and in the U.S about 3%.
We are fortunate in some ways because we have a very wide range of hotels in our portfolio. We have city center properties, resorts and secondary markets. Those seem to be doing better than urban hotels.
Are there similarities between those crises? Do you see some common points?
I’ve been in the industry for a very long time and I’ve lived through the oil embargo in the seventies in Hawaii. That was really bad because the flights couldn’t go into Hawaii and hotels were running occupancy in the 30% range. But if you look at what we’re going through now and the extent of it, this is the worst the industry has ever seen. In the U.S, we are down by 55%. In Europe, it’s far worse. The history has never seen this kind of downturn which is terrifying and makes you wonder what’s going to happen next and if we can survive.
What about your relationship with your franchisees?
We certainly are in very close contact with all our hotels because we know the tremendous pain and suffering, they are doing right now. Many of them are pulling shifts themselves because they can’t afford people to work in their properties. Many of them have some arrangements with their land institutions but that’s coming to an end. They’re exhausted. The reserves that they many of them had are not in very good shape and they’re very worried about the future.
We have tried to help them in several ways from the onslaught of the pandemic. We provided relief to our hotels in the form of waivers of fees or reduction in fees and also support in terms of new guidance and cleaning protocols. It has changed a lot of things and timely guidance and support for hotels is really important.
Is there anything this crisis has teach you?
All of us had to reflect and be introspective. I think about what we’ve learned through this crisis and I’ve always believed that any hardship teaches you lessons. You become stronger as a result and this crisis certainly has been extremely difficult and painful for me.
I had personally separate from some very long-term associates who have helped build the success of the company and that was regrettable. It was very sad for me and followed me for many months and still bothers me but what I learned is to value people. It’s kind of like friends that pass away. You wish you spend more time with them and value the time that you had with them. I think back to all those associates, about the fact that I had the opportunity to work with them. I really appreciated their work and I feel sad that they are no longer with us, but I’m going to work really hard to bring all them back. I feel like responsible towards them.
We had the great honor to have you as the president of the ceremony of the Hospitality Awards back in 2018. During your speech – that was very vibrant and inspiring – you were talking about disruptions from our industry. Will this pandemic reshuffle some cards?
I think the pandemic has definitely changed the traveler’s attitude and expectations. For example cleanliness or the awareness of those efforts to provide a healthy and safe environment will stay for a long time. I think design of hotels will also change. There was already a trend towards a more minimalistic design, but because of this pandemic a lot of hotels had to declutter the room. And of course, touchless has always been a trend and is now propelled by the pandemic. We are advocating for QR codes so that we don’t have to print anything. People can just scan the QR code with their phone and pull up whatever information they want.
Did you have significant openings despite the current situation?
Best Western itself actually invested in two projects and we broke ground. These two projects are Vib properties. It’s an upscale boutique hotel brand. We broke ground in Tempe, which is next to Arizona State University as well as in Denver which is an exciting up-and-coming area. Both of them are very heavy on the local experience and design centric. We are very proud of these projects and that’s why we invested in them directly.
What’s your ambition for the coming years? Do you have development strategy across Europe?
Europe remains one of our focus areas. We already have a strong presence with all our brands. We have 18 brands and a wide variety of options that we provide to hotel owners and developers. I think we have a very good foundation for which to grow. We have a good reputation, we have the options, and we provide great services. I think they are huge opportunities ahead. At the same time, I think it’s going to take a while for Europe to recover because it’s been set back so much. But within the next few years I think we should be well enough for recovery.
Are there any services or products you were working on that you can talk about with us?
I think we have to be aware of the stage in the life cycle that we are in. Every person, every company has a life cycle. Back in 2019 when we were hitting on all cylinders, we were thinking about innovation in terms of new products services but in 2020 we saw what happened. The bomb fell out and we have been in a survival mode and the life stage that we are in is about conserving, preserving and surviving. As we enter 2021, vaccines will be available, so we’re not going to be in the growth mode but it’s in the recovery mode. We have what we do.
What is your prediction for the recovery? Will they be any discrepancies between regions?
I don’t think I’m going to be able to tell you anything different than a lot of the industry prognosticators. It really depends on the vaccine, how fast it’s rolled out and how many more things become available. The more vaccines are available and effective, the more people will have confidence taking it, the more widespread it will be, the faster will be the recovery. In the US, we call that “herd immunity” which means about 70% of the population would have taken a vaccine or have antibodies in them to protect them. When you get to that stage, things will become normal again, but It’s not a fast process, but a slow process.
At the same time, you have a lot of companies that are very concerned, and they have what they call the “duty of care”. They are afraid to send travelers visiting officers or making sales calls because they are concerned about the health and well-being of their employees. They are not going to be hesitant to do that until they feel good about the situation which means the vaccines need to be widely distributed and adopted. There is going to be a little bit of time before we get to that stage but certainly sometimes next year especially the second half which is still a very meaningful recovery.