Owners say Best Western’s Premier descriptor is generating outsized returns within their competitive sets.
REPORT FROM THE U.S.—When RB Hospitality acquired a convention hotel in Oshkosh, Wisconsin, nearly two years ago, President Rich Batley never would have considered flying the Best Western flag. That is, until the Phoenix-based membership company rolled out its tiered descriptor program.
The initiative, which saw the introduction of Plus and Premier designations to differentiate product types by quality and amenities, not only sought to make Best Western’s commercial offering easier to understand for guests, but it also promised owners the ability to justify higher rates in the process.
Batley bought into the premise. After a 15-month renovation, RB Hospitality debuted the Best Western Premier Waterfront Hotel & Convention Center.
“Our philosophy has always been to be the best in the marketplace, and our properties are the best in our markets and are rated No. 1 on TripAdvisor,” he said. “If Best Western hadn’t created the Premier designation, we would have gone with another brand because we wanted to have an upscale brand for this location.”
The hotel has been open for only four months, so it’s still early to tell if the Premier flag is generating a higher return on investment. “We fully believe it will,” Batley said.
His confidence is rooted in experience. The Oshkosh property is the second Premier hotel the group has opened. The first, the Best Western Premier Bridgewood Resort Hotel in Neenah, Wisconsin, has generated healthy returns in the two years it has flown the Premier designation.
Premier picks up steam
Similar examples abound across North America, where Best Western introduced the Premier descriptor in 2011.
“Best Western Premier was launched internationally approximately 10 years ago and now offers 125 hotels throughout Europe, Asia and the Middle East. Due to this success, we saw similar demand and opportunity in North America and therefore launched it two-and-a-half years ago,” said Ron Pohl, senior VP of brand management and development for Best Western International.
Premier is now the fastest-growing of all three Best Western tiers. During the next 18 months, the brand will increase its footprint by 25% to 187 Premiers based on projects in the global pipeline.
Additional growth will come from Best Western owners who “tier up” their existing hotels with the necessary capital investment, Pohl said.
“Internationally, we have some fantastic locations in Seoul, Bangkok, Kaula Lampur, Beijing and nearly all the (Association of Southeast Asian Nations) countries,” he said. “Within North America, our growth is in primary and destination markets and cities in both Canada and the U.S., such as Calgary, Manhattan, Miami, Harrisburg (Pennsylvania) and resort locations such as Napa (California), Sooke (British Columbia, Canada), Orlando (Florida) and Haiti, to name a few.”
One of the more recent additions was the Best Western Premier Herald Square in New York. It also happened to be the first in the Big Apple.
“Being a Midtown Manhattan hotel we were already planning on building the hotel to meet and exceed the minimum requirements of a Premier, so it only made sense to target that descriptor,” said Jaz Patel, principal with LeTap Group LLC, which developed and operates the hotel. “Plus we were excited with the opportunity to be the first Premier in New York.”
Open for only three months, it is too early to tell whether the hotel will exceed revenue expectations, but the Premier descriptor already “does well” against LeTap’s other midscale flagged hotels, he said.
More established Premier hotels are yielding strong returns, sources said. The descriptor outperforms its upscale industry competitors in revenue per available room, Pohl said.
“We are very pleased with our rate and revenue performance and continue to outperform our competitors,” he added. “Our data indicates that our Premier properties’ revenue growth is outpacing our Plus and Best Western properties. This is actually a great benefit for all Best Westerns, as upscale brands typically have a higher RevPAR premium, and we are seeing a halo effect with our Premier hotels—boosting image and revenue for all Best Westerns.”
Peter Chiccarine, who is co-owner of the Best Western Premier Eden Resort and Suites in Lancaster, Pennsylvania, confirmed Pohl’s claims.
“Our RevPAR is up substantially since our conversion. Our hotel has been a strong performer in the Lancaster County, Pennsylvania, market for decades. However, the Premier descriptor gave us that new and improved look and feel, and our strong cash flow has allowed us to continue to improve our facilities and service levels to continue to outpace our competition,” he said.
The property consistently has outperformed its competitive set, which includes a 300-room, full-service Marriott, a Hilton Garden Inn, a Marriott Courtyard, a Hampton Inn and a Country Inn & Suites, Chiccarine said.
“We are the leader in RevPAR within the set by a wide margin,” he said.
Jay Singh, CEO of Paradigm Hotels Group, which owns the Best Western Premier Ivy Hotel Napa, said returns were slow to ramp up when the descriptor program first rolled out.
“However, it has since caught on with the consumer and is currently meeting and somewhat has exceeded my expectations,” he said.