BWH Hotel Group CEO and Chairman Larry Cuculic joins Yahoo Finance Live to discuss the hospitality industry as travel demand begins to soar, inflationary concerns, travel trends and business outlook amid COVID-19.
Video transcript
AKIKO FUJITA: We are a few months away from the busy summer travel season. Hotels are eyeing a big rebound in travel, and our next guest says he’s also seeing a recovery in business travel. BW Hotel Group – Larry Cupula, President and CEO of BWH Hotel Group, joins us this morning. And Larry, it’s good to talk to you today. We’ve seen a number of airlines report this week, which basically said, look, even with these higher prices as a result of rising gas prices, travelers aren’t necessarily backing off because there’s a lot of pent-up demand. What do you see in the reception area?
LARRY CUCULIC: You see that just like the airlines, we had a very good spring season. And we are forecasting, in line with expert projections, an extremely strong summer season. And first of all, thank you for inviting me to your show as well. When I took on this new responsibility about five months ago, you interviewed me, and I remember it very well. And I wanted to thank you for continuing to follow BWH Hotel Group. But yes, we are expecting an extremely strong summer season.
BRIAN CHUNG: Hey, Larry, this is Brian Cheung here. I mean, we appreciate you bringing the comment. I mean obviously this hotel space is, I’m sure, an interesting time for you to participate in this chapter of the recovery. What do you see on the price side of things? Because that was a big story for hotels and motels during the recovery was not being able to recover volume in hotels. But it seems that occupancy rates are coming back, despite this BA.2 wave. Have you also been able to exercise some price increases to sort of recoup some of the margins?
LARRY CUCULIC: We have absolutely…great question. It is essential that prices increase on average daily. The cost of doing business for our hoteliers is increasing, of course, as well as the cost of the breakfasts we provide, utility costs, insurance costs. And consumers see it in their daily lives. And therefore, we believe that, through a common sense approach, they understand that our hoteliers must ensure that they get a fair and reasonable price for the accommodation they provide.
What makes Best Western, BWH Hotel Group unique is that we have 18 hotel brands in all segments, from economy to luxury. So while rates may increase, as inflation does, we believe we have a hotel that can meet the needs of any traveler across all segments.
AKIKO FUJITA: Larry, we’ve seen business travel a little slower to get back to 2019 levels, but I’ve seen on a personal level more conferences being held in person, more events being planned. What kind of impact has that had on your occupancy rates?
LARRY CUCULIC: Well, I think the American Hotel and Lodging Association and Caliber Labs have both estimated that in 2022 we’ll be back to about 80% of, I’ll call it the business travel segment. But at the same time we see the statistics, and we see them, for example, in our hotel group Best Western Premier, being close to us, I’ll call that 30% year-over-year in the travel segment of business, midweek business. So, in fact, he’s coming back.
About two weeks ago I attended the Asian-American Hotel Owners’ Association annual convention and had thousands of attendees. In a week I go to UHF in Berlin, and again, thousands of participants. There’s this pent-up demand from businesses that comes back. And that’s really consistent with what we’re seeing through experts like Steven, who said that — who recently said that meetings of, I’d say over 100, are going to be up 20% year over year other.
So, you know, he had the biggest… the pandemic had its biggest impact on that segment. And it now has, I think, the biggest opportunity for growth in 2022 and 2023. And that’s what we’re actually seeing.
BRIAN CHUNG: Larry–
LARRY CUCULIC: I’ll do this… oh, go ahead, Brian.
BRIAN CHUNG: Yeah, I was gonna say, I mean, this is the target demo for the new brand you’re launching or re-launching VIB– vib, vibe– is that how you pronounce it? It’s obviously an interesting new format that you’re trying to play with. Who is the target demo for this product? And tell us a bit more.
LARRY CUCULIC: Sure, VIB is boutique-ish–
BRIAN CHUNG: Vibe.
LARRY CUCULIC: Vibe, yeah, like, in a cool vibe. The VIB brand is a boutique brand that we are, I’ll call it a re-initiation, a relaunch. It was–it’s really meant for a lot that has a smaller footprint, but it’s boutique-ish in that it has huge meeting space. The one we opened about two or three weeks ago in Tempe, Arizona has great meeting space. There’s a… excuse me… a bar. It has a coffee bar. He has – we actually entered into a franchise with Cousins Maine Lobster to get road traffic as well.
It’s meant to be a hotel that welcomes guests and gives them that unique boutique-ish experience. We also focus on our soft brands, BW Premier Collection and Signature Collection. And we recently acquired World Hotels. They’re collectible brands that don’t have, I’ll call it the strict brand standards, because what we’re seeing is that customers want that experience, not just a place to stay, but they want that common area, a large hall where they can meet and interact with others and enjoy their condition, not just a commodity.
BRIAN CHUNG: Mm, lobster, that sounds good. I’ll have to go check. Larry Cuculic, President and CEO of BWH Hotel Group, thank you for dropping by, and we’ll see you very soon. Appreciate it.
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