Best Western prides itself as the world’s largest hotel chain, operating over 4,700 hotels worldwide, with more than 2,000 in North America. The hotels exist in almost every major city globally: despite Best Western’s strict rules, the company’s ownership structure allows hotel owners to earn more from the arrangement.
The BWH Hotel Group owns Best Western and two other hotel companies. The BWH Hotel group is a hospitality network that owns the SureStay Hotel Group, WorldHotels Collection, and Best Western Hotels & Resorts.
Let’s look at the Hotel’s origins, ownership structure, and expansion.
Key Takeaways
- Best Western’s founder M.K. Guertin created the hotel chain for members who could keep up with his high standards and expectations.
- The BWH Hotel Group runs Best Western as a non-profit hotel chain.
- Best Western’s appointment of Larry Cuculic as President and CEO was unexpected due to his relative inexperience in the hotel industry.
- Former CEO and President David Kong inspired a period of rapid expansion for Best Western, growing the company from one brand to eighteen brands.
M.K. Guertin formed Best Western after breaking away from United Motor Courts
The invention of the vehicle sparked a revolution in the United States as many people started to prefer cars over trains. The travelers needed places to sleep, leading to the rise of the motel industry.
Motels sprang up along major highways, experiencing success until the Great Depression hit. Trying to promote business, moteliers on the west coast banded up to form the non-profit United Motor Courts.
Members of United Motor Courts would refer customers to other hotels within the chain. Four years after its launch, United Motor Courts had nearly 300 locations along the west coast and across the sunbelt.
Highway travel increased after World War II signaling good tidings for United Motor Courts. However, board member M.K. Guertin was dissatisfied with the group, claiming that United Motor Courts refused to kick out moteliers who failed to meet the group’s standards.
M.k. Guertin left United Motor Courts and, alongside several friends, formed Best Western in 1946. He then embarked on a nearly 5,000-mile mission to inspect motels on the west coast and accepted no reimbursement for his expenses.
Guertin valued quality over quantity – he promptly kicked out motels that didn’t meet his high standards. Five years after its founding, Best Western had expanded to 197 members – and by 1963, it had 699 members, making it the largest lodging organization in the United States.
M.K. Guertin’s dictatorial leadership fueled Best Western’s expansion and ethos but wasn’t popular with the board. In 1966, the board of directors forced Guertin out of Best Western’s leadership structure.
Guertin retired, and four years later, he died. However, Guertin’s standards remain ingrained in Best Western’s culture, as the group will readily kick out a hotel that doesn’t meet its requirements.
Some Best Western owners have tried and failed to turn the company into a for-profit company
Best Western has long resisted attempts to turn into a for-profit company even as its competitors switch to profit models.
In 1949, Best Western partnered with east coast hotel chain Quality Courts to promote each other. (Best Western picked its name because it launched west of the Mississippi River.)
Quality Courts adopted a for-profit franchising model in 1963. Rather than follow suit, Best Western ended its partnership with Quality Courts and entered the east coast market as Best Eastern – but it would eventually drop Eastern for Western.
When accepted into the Best Western group, hoteliers pay a licensing fee and a membership fee, allowing them to keep most of the profits. The thousands of Best Westerns worldwide contribute fees into the millions of dollars – the company generated $247 million in revenue in 2019.
In 2021, Best Western’s over 300,000 rooms generated $6 billion in revenue. The non-profit model has shown success for more than seven decades. It encourages hoteliers to join with a genuine promise to keep most of their profits while benefiting from the Best Western brand.
Nevertheless, there have been attempts to turn Best Western into a for-profit company. In August 2018, the company filed paperwork with the SEC outlining its plans to adopt a for-profit system.
The association planned to offer 55 million shares worth of common stock, with existing members earning approximately 25,600 shares each. Hoteliers joining after the conversion would receive around 12,800 shares.
For the conversion to go through, Best Western owners had to agree on a proposal giving power to the board of directors to ax any members who didn’t enter a franchising agreement before the deadline.
Via a vote, Best Western members rejected the for-profit idea. A statement from the company read:
“Best Western Hotels & Resorts asked its North American members to consider converting the company’s organizational structure from a membership non-profit model to a for-profit company with the members becoming the shareholders. Through membership vote, the decision was to not adopt the proposed conversion.”
Current CEO and President Larry Cuculic took over from David Kong in December 2021
Following David Kong’s retirement, the board voted to promote Larry Cuculic to CEO and President. In an interview with Skift following his retirement announcement, Kong said he’d forwarded three names to the company’s board for consideration, but few expected Larry to be on that list.
Dorothy Dowling, the company’s chief marketing officer, Mark Straszynski, the chief financial officer, and Ron Pohl, the COO, were considered frontrunners.
However, the board picked Larry Cuculic, a senior vice president and general counsel for the company for 12 years but lacking hotel industry experience beyond his time at Best Western. Cuculic released the following statement:
“I am fortunate to have the support of our Board and one of the most successful senior executive teams in the industry. I am excited and look forward to working together with our Board, our members, my colleagues, and our corporate associates to usher BWH Hotel Group into its next chapter.”
The board decided to appoint Larry after an eight-month process that included interviews with 24 external and three internal options. The board unanimously agreed to appoint Larry.
“All the qualities that we were looking for we found in Larry and I have no doubt – and the whole board has no doubt – that we have made the right decision,” Ishwar Naran, board chairman of BWH Hotel Group.
Following his appointment, Cuculic made six promises to members, including a commitment to drive more revenue to hoteliers. “As they say in the military, that’s our mission – why we exist and what we can never forget,” he said.
Former CEO David Kong diversified Best Western from one brand to eighteen during his tenure
“During my tenure with the organization I have had the great privilege of working alongside David Kong and witnessing the remarkable impact he has made on our company and the industry as a whole,” Larry Cuculic said. “I can only hope to live up to the legacy David is leaving behind.”
David Kong is arguably Best Western’s greatest CEO: When he took over in 2004, Best Western had one brand; when he left in 2021, Best Western had eighteen brands.
Kong added nearly one brand in every year of his tenure, leading Best Western’s expansion into the luxury (WorldHotels) and Economy markets (SureStay) – and facilitating growth in the Upscale sector (Sadie, Aiden, Glo, Executive Residency).
Larry knows that it will take a mammoth effort even to get close to Kong’s achievements. Thankfully, he can rely on Kong’s support. David Kong said:
“I am pleased to be passing the reins of BWH Hotel Group to my long-term colleague, Larry Cuculic. He is conversant in many areas of our company and is well liked and respected throughout the organization. Larry is the ideal candidate for the role of President and CEO.”
