For hospitality’s global reach, it’s all about the brands

LOS ANGELES – When evaluating a brand’s ability to work both in the U.S. and globally, Best Western Hotels & Resorts President and CEO Larry Cuculic said it’s important to be purposeful and stay true to those brands, but it’s also important to ask why a hotel would want to join one of those brands.

“I always ask the team, ‘Why would that hotel join our brand?’” he said. “Are they joining the brand for the right reasons? And can we make them successful and add value to those hotels?”

Cuculic said because Best Western has 19 brands, that development philosophy is important so that the brand’s DNA stays true no matter where it’s located.

“When you have that diversity of brands, you have to stay true to each of those brands,” he said. “And if a developer says ‘I want to be this brand,’ and you don’t think that’s going to work, our development team knows to say, ‘No, we think this is what you should be. That’s how you’ll be successful.’ You have to be collaborative but purposeful.”

Cuculic said Best Western bought the luxury brand WorldHotels in 2019 but has been very selective as it has developed it.

“Because you have to build a brand that others want to aspire to join,” he said. “You can’t dilute the value of that brand.”

Cuculic was part of a “Boardroom Outlook: Global Reach” panel on the second day of the ALIS conference. It featured Omer Acar, CEO of Raffles & Orient Express; Geoff Ballotti, president & CEO of Wyndham Hotels & Resorts; and Jolyon Bulley, CEO, Americas of IHG Hotels & Resorts. The panel was moderated by Mark Ownes, vice chair and hospitality practice leader of Colliers.

Location, location, location

Acar said when developing a presence in the U.S. or abroad, finding a great location is the first step.

“It’s first identifying that great location,” he said. “It doesn’t have to be popular. It could be a very isolated area, but it’s [based on] demand… There are opportunities everywhere, and today, many travelers are willing to travel far to experience something unique.”

Acar said when thinking about development, Accor is trying to look into the future.

“We are always talking about experience. We are also talking about habits,” he said. “Because we can talk a lot about new hotels and brands, but they will ultimately be executed by general managers and hotel teams. What we do is we think about where we are living five years ahead. Where are we in 2028 and 2029? What will be our challenges? What will be the technology? How are we going to get ready for that?”

Acar said offering different products, services and experiences for different developers is at the company’s core.

“We want to cover that 360-degree experience, and that’s why we have so many different segments,” he said. “We want to be a one-shop for all. You can come, and we can give you wellness experiences, or we can give you food and beverage experiences. And at that point, you have an opportunity for developers to get excited.”

‘Thoughtful development’

Bulley said the concept of purposeful development resonates with him.

“We say thoughtful development, and that’s making sure that we reach that conversion for guest demand and owner returns,” he said. “We’re constantly optimizing the lifecycle for the cost to build, cost to open and cost to operate so that we don’t detract from what the brand is. The guests understand and can rely on the brand, but we also focus on the owner’s return.”

Bulley also said operators providing incentives play a larger role in today’s challenging credit market.

“I think the most frequently asked question at this conference or lately is this key money question,” he said. “We will deploy that type of balance-sheet investment — whether it’s preferred equity, or loans, or key money — in the most strategic locations where we like our brands positioned and where we can make a big difference for an owner in regards to getting the capital stack available to invest in a hotel.”

Gaining market share

For Ballotti and Wyndham, it’s about continuing to gain market share.

“It’s really about the health of the brand and how the brand is performing from a RevPAR index standpoint,” he said. “We’re very focused on, more than anything else, making sure that our brands continue to gain market share, year in and year out.”

Ballotti said the company’s pipeline is at an all-time high, with most of the growth coming in the midscale and upper-midscale segments.

“A lot of it is new construction. I know there’s a lot of concern about financing, but new construction projects are happening, and transactions are beginning to pick up,” he said. “Our growth and focus has been in the midscale and above in terms of both pipeline growth and unit growth both domestically and internationally. Internationally it’s been that high single-digit growth consistently for the last 15 quarters that gets back to the strength of the brand’s performance.”