Today's Hotelier - October 2016 - 21

For the hotelier, the advantages of making a conversion are still significant, Kong said. For instance, many hoteliers are facing significant upgrade costs demanded by Best Western and other hotel groups in catch-up repairs and improvements leftover from the Great Recession. The hotel industry, in general, cut owners slack on standards during the economic downturn, but in 2012 decided that it had to put a stop to any potential slide to protect the brands, Kong said. Properties were assessed, improvement plans were developed and owners got their deadlines. Some were facing greater costs than others, but the average cost for repairs and upgrades was in the high six figures. "We had the worst downturn that the industry has seen in 2009, and a lot of hotels were still reeling from that in 2010 and 2011," Kong said. "I think all the brands were taking it easy on the hotels because we wanted them to recover." SureStay offers a hotelier who doesn't think the market can justify the costs of the upgrades, the opportunity to down-scale to another price point. It is the first time Best Western has offered a migration route for members to an economy product. And SureStay will offer different price points for its own range of brand options, Kong said. * SureStay Hotels - economy segment * SureStay Plus Hotels - lower midscale segment * SureStay Signature Collection - soft brand in the midscale segment Moreover, despite the branding shroud separating SureStay from Best Western, the new franchisees will still be able to leverage much of the behind-the-scene marketing and logistics infrastructure as well as purchase and commission arrangements that Best Western provides. "There is tremendous synergy," Kong said. "It is a win all around." Best Western also expects to be able to offer SureStay owners better fees - royalty, marketing etc. - and more support. While hotels will still be required to meet strict standards regarding customer service and unannounced inspections, they won't be required to meet certain Best Western design requirements, Kong said. He noted that this should give SureStay owners a sharp edge over many of their economy-brand competitors. He said many economy and lower-midscale brands don't provide the same support to drive revenue or optimize the return on investment for their owners as the new-kid-on-the-block will bring to the table. "SureStay aims to redefine the game by leveraging Best Western's proven and award-winning revenue engines," Kong said. "Scale matters." To further sweeten the pot, Best Western is offering an incentive for the first 100 hotels that sign up in the form of no royalty fees for the first five years during which Best Western will be trying to grow the chain, Kong said. "And 100 percent of the money we collect through sales and marketing will be spent on sales and marketing efforts," he said. "We don't really intend to make any money for the first three years. We are interested in building a quality core group of hotels... we hope these hotels will become our advocates and our best salespeople in the marketplace." They expect to roll out 150 SureStay hotels over three years, beginning December 1, with some coming from existing Best Western members and recruited from other chains as well as independents. While all properties initially will be conversions, Best Western plans to start a construction program in the economy model. Eight-hundred hotels in all are expected within a decade - a number that appears conservative when one looks at the growth of Best Western Plus over five years. Of special interest to AAHOA members, Kong noted that the SureStay model was incorporating AAHOA's 12 points of fair franchising (www.aahoa.com/home/advocacy/ franchise-relations/points-of-fair-franchising) into the franchise agreement. For example, SureStay will offer: * Fair and reasonable early termination provisions. Specifically, there are "windows" at which a hotel can leave with minimum consequences if we are not meeting its expectations regarding revenue delivery. * Areas of protection that protect the hotel's right to compete. TODAYSHOTELIER.COM | OCTOBER 2016 | 21 http://www.aahoa.com/home/advocacy/ http://www.TODAYSHOTELIER.COM

Table of Contents for the Digital Edition of Today's Hotelier - October 2016