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HAWKINSVILLE, Ga.— What is the secret to building the world's largest hotel chain under a single brand name? If you ask its new chairman, the answer is putting its hotel owner-operators in charge instead of Wall Street investors as its competitors do. "At Best Western, our hoteliers – not stockholders – define the future of our brand," says Best Western International Inc.'s new chair Dilipkumar Patel.
With the 1990 purchase of his first hotel in Montezuma, Georgia, CEO Dilipkumar Patel launched Peach State Hospitality, which has since developed 32 branded and independent hotels in Georgia and Alabama. A Best Western member for more than 17 years, Patel was also chairman for the Asian American Hotel Owners Association (AAHOA).
In an interview with Blue MauMau, Mr. Patel speaks about the specifics of Best Western's licensee-led corporate governance model. Its members do not and may not "own" the nonprofit organization. Its Articles of Incorporation provide that capital stock may not be issued nor may any of its members receive a pecuniary gain or profit from Best Western. If Best Western were ever to be dissolved, the remaining assets of the corporation will be distributed to a nonprofit educational or charitable organization. Each hotel owner is considered a member under the brand's bylaws with equal say about the future of the brand.
Stanley Turkel, hotel consultant and author of Built to Last: 100+ Year-Old Hotels East of the Mississippi, explains, "You can bet that the professional investors will make decisions that will maximize their returns without regard for the franchisees. Best Western owner-operators will establish policies that maximize hotel occupancies and average daily rates."
Insiders say the hotel owner-operators receive a much deeper understanding of the hotel business and the inner workings of the brand. It builds a network of leaders. Moreover, industry analysts say Best Western's hotel owner-operators receive some of the biggest marketing bang for their buck in the industry. Hotel consultant Turkel estimates that hotel developers in the industry first look for a premium Best Western next to a highway. If Best Western is no longer accepting applicants in the area because there are already too many, then developers look elsewhere. "Everything else is more expensive and far less fair," says Turkel.
Blue MauMau: Tell me about how the board of directors at Best Western International is set up.
Patel: At Best Western, our hoteliers – not stockholders – define the future of our brand. Best Western is a membership organization. Across North America, the membership consists of seven "geographic" districts. The board of directors is comprised of seven hotel owners serving staggered terms. This structure ensures the interests of our hotel owners are always balanced with the evolution of the brand. In addition to the hotel-owner-based board, owners also approve major decisions and bylaw changes through a ballot voting system, and we have regular feedback forums and advisory committee programs.
BMM: Are the directors of Best Western's board voted by the full body of Best Western's hotel members? And then the directors in turn vote on a chairman? Are there term limits?
Patel: Best Western member hotels in North America fall into one of seven geographic districts. The members of each district elect a board director to represent them for a three-year term and directors are generally limited to two terms.
Each fall the seven board members elect board officers to serve one-year terms. The officer positions include chairman, vice chairman and secretary-treasurer.
BMM: What are the advantages and disadvantages of having a board of directors that are hotel licensees (owner-operators) compared to your competitors?
Patel: Best Western's structure ensures owners and the brand are aligned at all times. The brand encourages open and honest dialogue and provides numerous opportunities for members' voices to be heard. The biggest advantage is that our policies undergo rigorous scrutiny and have hotel owner support before being enacted. It allows us to move purposely to enhance both our brand and its hotels. Leveraging the thoughts and opinions of 2,200 hotel owners in North America can take time, but the results are always well thought out and supported by the membership.
BMM: What do you plan to accomplish during your time as chairman?
Patel: Best Western's recent successes are noteworthy. We've achieved record RevPAR performance. We have the fastest website in the industry and one of the fastest growing loyalty programs – Best Western Rewards. Over the course of the next 12 months, I want to ensure we have policies in place to accelerate the programs driving our current and future success – most importantly, driving revenue to our hotels and ensuring the quality of our hotels and guest experiences. More than a series of new programs, you can expect the board to be focused on executing on our plans to ensure Best Western hotels have the tools and resources needed to achieve more than their fair share of success. We will encourage all of our hotel owners to look at their individual hotel's performance and leverage the Best Western programs that can ensure their success in 2014 and beyond.