11/02/12, 01:57:40 EST

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Best Western takes on business travel

businessweek.com

Best Western International aims to be a new competitor in lodging for business travel with a new prototype dubbed "Atria."

It's a new direction for Best Western, known for catering to mainly leisure travelers in the mid-scale market. And, the new prototype comes at a time when there is increasing competition to customize offerings for business travelers, who continue to be a core client base for the hotel industry.

We want "to be able to effectively compete against the Courtyard Marriotts of the world," said David Kong, Best Western's president and chief executive.

The hotel company said Atria is a response to requests by developers to have an upper mid-scale product in order to be more competitive in their key markets.

Best Western has about 2,400 hotels in North America that are independently owned and operated, and more than 1,700 across the globe. So far, the company is building hotels in San Antonio, Texas, and New Bern, N.C. They are scheduled to open in 2008 and have already broken ground.

Meanwhile, at least seven hotels have been signed and are in different stages of the development approval or financing process, the company said.

For the most part, hotels catering to business travelers offer fewer frills and feature few meeting spaces, big bars or other amenities that are hallmarks of luxury lodging. Kong said the Atria prototypes feature bigger lobbies that are multipurpose and include a bar and larger breakfast area that will be part of the lobby.

"We want to compete for the top half of the mid-scale segment. We're solidly in the middle" now, said Kong. "Atria has been in the making for over a year. We need to do this as part of a comprehensive strategy to win back the corporate business traveler."

That is not likely to be an easy feat for Best Western as they are coming up against more established brands in that market including Marriott International Inc.'s Courtyard and the Hilton Garden Inn, a brand under Hilton Hotels Corp.

"I think it will be difficult. These are very well established, limited service, upscale, business-oriented hotels," said Robert LaFleur, a gaming analyst at Susquehanna Financial Group. "It will be hard to pry (customers) away" from the Hilton and Marriott brands.

The business travel segment is a core market for hotels and accounts for the bulk of their occupancy rates, particularly during week days.

"To me, that's the segment that's always on the minds of pretty much everyone developing hotels, except for resorts," says Tom McConnell, senior managing director at Cushman & Wakefield's hospitality division.

He said business travel is the biggest, best rated and least discounted segment. "The (business) traveler is really the Holy Grail in dealing with any of these chains," McConnell said.

The U.S. lodging industry embarked on a road to recovery in 2002 after it lost ground in the wake of Sept. 11, 2001. Demand, occupancy levels and average room rates have increased significantly, fueled mostly by the expansion in the domestic economy. But, as credit lenders tighten their purse strings, hotel developers are having a tougher time getting financing for new lodging.

At the same time, the industry is cautious amid concerns about the economy and slow down in consumer spending.

Kong noted that a deceleration or slowdown in the economy will first impact the luxury hotel market as consumers scale back on spending. As such, demand tips favorably to the mid-scale hotels.

"We are gearing to capitalize on that shift to the mid-scale" market, he said. "There is definitely a concern of the softening economy."

Nonetheless, he said it's during tougher conditions "when the mid-scale (market) really proves its resiliency."

 Printable Version  | published Nov 20, 2007