BWH Hotels' Cuculic on the 'story' of hotel growth

PHOENIX - When discussing guest expectations, the evolving journey of hotels, and how they treat guests, especially in a post-COVID world, Larry Cuculic expressed a simple concept: every hotel needs to have a story to tell.

“Every hotel has a story,” said Cuculic, the president and CEO of Phoenix-based BWH Hotels. “And that hotel should tell its story about why it’s a great place to stay.”

Cuculic said that story can often be easy to tell. He mentioned the company’s hotels at the Grand Canyon as an example of an easy story to tell.

“But they all should have and likely do have a story,” he said. “That’s part of what makes a hotel successful, and more and more of our guests are going to be searching for stories when they’re choosing a hotel, [and ask] ‘Why would I stay there?’”

Cuculic was named CEO of BWH Hotels in October 2021 after 12-plus years as the company’s general counsel. “I was fortunate in those 12-plus years that I was able to establish a relationship with our hoteliers,” he said. “We have a unique structure and interact with them quite frequently.”

Cuculic’s legal training and military background are evident in his personality and leadership style, as he often uses words like “purposeful” and “thoughtful” when discussing BWH.

They’re saying they would prefer if we lessened the types of [breakfast] offerings but not the quality of what we offer... The quality will cost them more, but they believe we’ll have a better outcome.

Larry Cuculic

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“You have to be purposeful… You have to stay focused on how you define success and drive to success, and it can’t be an occasional thing,” he said. “You have to be purposeful and focused on doing your best every day.”

BWH has a unique membership model that works differently than the more traditional hotel franchise model. The company’s leadership meets with its board of directors, comprised of hoteliers, each month. Below the board are 225 governors, who represent about 10 to 15 hotels each.

Cuculic said he likes the model because he believes “you must listen to different points of view before you decide a path forward.”

He said a current example is how the company’s members are pushing to change BWH’s breakfast requirements.  

“[Our members’] concept, which is different, is you can have less variety but higher quality,” he said.

Cuculic said the company previously thought that customers needed “X” number of breads, fruits, juices, etc., but members are telling them that a change is necessary in this current inflationary environment, when everything is more expensive.

“They’re saying they would prefer if we lessened the types of offerings but not the quality of what we offer. They’re driving this initiative right now for us,” he said. “The quality will cost them more, but they believe we’ll have a better outcome if we reduce the types of offerings.”

Growth in room nights 

Because BWH Hotels is a nonprofit and not publicly listed, it doesn’t have to share quarterly net unit growth numbers that are integral to driving stock price value for the brand companies. But Cuculic said that doesn’t mean the drive for growth isn’t there.

“I am not a number sharer, but I will tell you that I’ve encouraged the development team to aggressively pursue deals this year,” he said. “It’s important that we continue to grow, and the entire team knows that.”

Cuculic said the drive to grow is integral to BWH Hotel’s success. “I don’t call it pressure. I consider it something we’re focused on achieving,” he said. “Just like hotels need guests, hotel brands need hotels because the revenue generators are the number of hotels you have. So, you have to grow it.”

Cuculic said BWH had a “terrific” 2023, and much of that growth was due to delivering pure room nights to its members. “I wasn’t even accounting for ADR with that,” he said. “We’re continuing to see the room night growth, and then you can use the ADR increase as the multiplier on top of that.”

The company gave back $15 million to its members because of that successful 2023 after giving back $12 million the year before. “We don’t have shareholders. We had a great year, stuck to our budget, and returned fees and assessments to our members,” he said.

The Aiden by Best Western Austin City Hotel in Texas.

Driving conversions

BWH has a rapidly growing base of 19 brands that segment anywhere from economy (SureStay Hotels) to luxury (WorldHotels). Cuculic said the company has historically been strong in conversions that are currently driving much of the hospitality industry’s growth.

“We’ve long believed in conversions; it’s almost as if other brands are now recognizing our historical success in that business platform,” he said. “We compete strongly as a conversion brand in the midscale and upper midscale brands.”

Cuculic said BWH’s Aiden brand of boutique hotels has also been strong in conversions. “It’s taking a hotel that may be an upper midscale hotel and has strong bones that they can invest in it,” he said. “They can turn it into an upscale boutique hotel that provides a rich local experience and then can command an upscale ADR.”

Ultimately, Cuculic said he doesn’t want BWH to grow just for growth’s sake. The company has to be able to tell the story of why a prospective owner would want to join that brand. “They must fit what we want to represent five or 10 years from now, and we need to be confident that we can deliver on our promises to that applicant,” he said. “If you don’t build a brand properly, it will index poorly. Then when you go to develop two or three years from now, you don’t have a story to tell that developer that he or she will be successful making it [one of our brands].”