PHOENIX—Best Western Hotels & Resorts has acquired WorldHotels, which represents a collection of approximately 300 independent hotels and resorts worldwide. As a result of the deal, the hotel chain now has brands in every chain scale segment. The deal’s financial terms weren’t disclosed.
“With WorldHotels primarily focused on individual business and leisure travel, we saw an opportunity for member hotels to benefit from Best Western’s scale, distribution expertise and member-focused culture, while simultaneously allowing ALHI to concentrate on our core competencies within the MICE space,” said Josh Lesnick, president and CEO, Associated Luxury Hotels International (ALHI), which owned WorldHotels prior to Best Western’s acquisition of the collection.
Lesnick and David Kong, CEO of Best Western, have known each other for nearly 30 years, having worked together at Hyatt Hotels Corp. Prior to Best Western’s acquisition of WorldHotels, the two executives caught up to discuss how the industry had evolved over the years. It was during this conversation when they broached the topic of how important it is for scale.
“We’d been looking at how we can grow through merger or acquisition—in addition to just organic growth efforts,” Kong said. “They’d been looking at how they could be optimizing the benefits to WorldHotels, so one thing led to another.”
Eventually, discussions began on how the two companies could mutually benefit from a deal. These conversations lasted for about four months before Best Western and ALHI announced the acquisition.
When asked if Best Western had been looking at other players before its acquisition of WorldHotels, Kong said: “No. This was a very good fit for us. It’s just very appropriate for us.”
Prior to Best Western’s acquisition of WorldHotels, the hotel chain’s portfolio was incomplete. Even though, over the past several years, the 70-year-old company has transformed—growing its portfolio to a total of 13 hotel brands—there were still some missing pieces.
“The upper-upscale and luxury segment was where we didn’t have anything, so WorldHotels helps us complement that suite of options that allows us to be more relevant to big travel buyers,” Kong said.
“As you could imagine, a big company has different travelers,” he said. “You have the C-suite travelers who might want stay at the upper-upscale and luxury segments, but then you also have a lot of other travelers, whether they’re doing training or installation, who want to stay at the midscale or lower segments, so we now have a complete portfolio for them to select from—that makes us much more appealing.”
Best Western’s only option to enter the luxury and upper-upscale segments was to go the acquisition route; building brands from the ground up was out of the question. “It would be nearly impossible for us to grow [them]organically because people don’t think of Best Western that way,” he said. “We have Best Western Premier, which is our upscale brand, but to go above that would be tremendously difficult.
“WorldHotels has been around for a long time, almost 50 years,” Kong noted. “It’s got an established name, and it’s really got 300 hotels in premier destinations, so it’s much easier this way.”
Even though Best Western as a chain doesn’t have much experience in the upper-upscale and luxury segments, its executives do—some of whom came from Hilton, Marriott and Hyatt, where they oversaw portfolios in both segments, according to Kong.
From the get-go, Best Western’s leadership team decided to treat WorldHotels as an entirely separate division. “They will have their own identity,” he said. “We’re basically preserving everything about WorldHotels.”
Geoff Andrew, current CEO of WorldHotels, is staying on board for the foreseeable future. Best Western doesn’t expect to make any changes to the WorldHotels team.
“[WorldHotels’] structure remains the same,” Kong said. “All the contracts remain the same. Everything is just status quo because what we want to do is supplement the efforts of WorldHotels. We want to drive more revenue to those hotels, and we want to help them save some money through our scale.”
“The move was made to enable ALHI to focus 100% of our resources and investment on our core strength and industry-leading team of 78 sales professionals in the billion-dollar meeting, incentive, convention and exhibition market segment,” Lesnick said.
The acquisition assists Best Western with not only generating new revenue streams in other market segments but enhancing Best Western Rewards, the hotel chain’s loyalty program.
“For the loyalty program, having a lot of locations, price points and redemption options is also tremendously important to enriching the program, so for a loyalty program, that’s a huge opportunity,” Kong said.
Best Western has plans to leverage its loyalty program platform to develop a distinct loyalty program for WorldHotels, which currently doesn’t have a typical loyalty program in place. “We really have the whole platform—all of the technology, all of the earning redemption options,” he said. “We have redemption partners throughout the whole world, so we want to leverage that platform and basically create a sister program.”
WorldHotels’ rewards program is going to have its own identity. “The card, for example, will say WorldHotels, with that logo, and the WorldHotels rewards website would be branded accordingly, as well as the app that we would launch eventually, so all these things are going to be WorldHotels-centric,” Kong said.
Best Western expects to launch the WorldHotels program in June 2019. Before rolling the program out, there’s going to be a period of educating properties in the WorldHotels collection on loyalty.
“We have a fair amount of education that’s required for the WorldHotels folks to begin understanding the importance of such a program,” he said. “Then we can launch that program, and then it’s a matter of helping them understand how to leverage the whole program, in terms of enrollment and driving business.”
Educating owners associated with the WorldHotels collection on the benefits of the acquisition as a whole is where Best Western hopes to gain approval from owners.
“They stand to gain a lot through this merger opportunity, but the challenge that I see is some of them might think, ‘Well, I don’t want anything to do with Best Western,’” he said. HB