Having had to shut down 25-odd hotels in India, Best Western International Inc., the 70-year-old chain that is headquartered in Arizona, is planning to revamp its business. The company that operates under a franchisee-led model has found a new partner to run the business.
The management has reviewed the remaining 10-12 hotels as the firm plans its next phase. The group is scouting for more properties, says the company’s president and CEO, David T Kong.
“We have had success in every territory around the world, except in India … It is not an easy place to build a business. The learning curve is steep for any American company,” said Kong.
The chain was set up after World War II in 1946 when a group of independent hotel owners built a “referral system” over the phone for each other and visitors. They called it Best Western as most of the properties were established on the west of the Mississippi River. By 1963, it became the largest motel chain with 699 member properties. Currently, the group has 4,100 hotels across 100 countries.
Such success evades the group in India.
“You need the right partners … over time, the business has also changed,” said Kong.
Best Western’s previous partner was a successful licence holder in North America, but had little work experience in India. It had just started setting up a team. The idea was to have 100 hotels, as per the company’s plan in 2007, but the Indian partner needed to understand the local market, said Kong.
Also, internet drives most business now. Online travel agents, such as Trip Advisor and MakeMyTrip, account for 25% of reservations. “The internet, which was suppose to cut out middlemen, has spawned all kinds of these agents,” said Kong.
Best Western wants various brands, which cater to various types of customers, and even independent hotels (part of the franchisee) to use its reservation system.
As it grows, Kong says, it wants to have “high-profile hotels, in high-profile cities, where there is a lot of traffic and trade”. It will also set up hotels in popular tourist destinations. In the beginning, the firm would purchase one property in each of these cities. However, they would need more eventually, he said.
Kong didn’t state a number, but said, the firm would target a range of customers.
“India is a huge opportunity,” said Kong. “It is important because of its size, the growth of its GDP, population, educational level, the adoption of technology, inbound-outbound domestic business, and the middle class.”