Amid Turbulence, BWH Looks to SMEs to Help 'Stay the Course'
BWH Hotels CEO Larry Cuculic discussed the company's focus on supporting hotels and driving revenue amidst economic uncertainty, noting success in leisure travel and resilience from small and medium enterprises. S
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BWH's Larry Cuculic talks...
With more than 4,200 hotels worldwide, Best Western parent BWH Hotels has watched closely the turns of the global economy and U.S. economic policy this year, and though government and some business travel has softened, demand from small and midsized enterprises remains solid, CEO Larry Cuculic told BTN managing editor Chris Davis last week at New York University's annual International Hospitality Investment Forum in New York. Cuculic also talked about the real effects of inflation, the status of hotel staffing and the effect of economic turbulence on long-term planning. BWH SVP and chief development officer Brad LeBlanc joined for a discussion of development. Edited excerpts follow.
BTN: There's been lot of moving parts so far this year. What's topping your list of priorities now?
Larry Cuculic: Supporting hotels and driving revenue to hotels. When there's turbulence in the economy and consumer confidence, I think our focus should be on the success of our hotels, and that's driving revenue to them and supporting them, because businesses love consistency. They love knowing what the future holds, and when there's that uncertainty, what you need to do is support their confidence in the market. And you do that by driving revenue to them and encouraging them to leverage the programs you've put in place for them, like revenue management and guest management systems, and create that confidence that they're going to do well, and they will.
BTN: How has that gone in this market?
Cuculic: Well, we're outperforming the market. We're indexing above the industry [in revenue per available room], and I think that's a result of several things. We're a very strong leisure brand, and so if you see a drop in business travel or government travel, it's less impactful on us. We're not heavily reliant on any one channel or any one delivery system. We have that balance that I think is important for us.
BTN: What's your current assessment of how the market stands right now and what the effects of everything that's happened might be?
Cuculic: The University of Michigan on [May 30] announced their most recent consumer confidence index, and it was the first time it stabilized in 2025. That's a good thing. I think it shows that consumers are now recognizing that this too shall even itself out over time. You just have to give it time. I think consumer confidence is now recognizing that you have to believe in the long term, not just short-term daily bits of news. Consumers are resilient. Consumers will always want to travel. And stability I think is returning. Even between, say, the beginning of April to the beginning of June, you're seeing a difference.
SMEs don’t cut as quickly as the large corporations might, because they’re still doing business the way they have to do business. The small and medium enterprise business has not been, I think, as impacted as large corporate business travel.”
BWH's Larry Cuculic
BTN: How about your hotels? How have they been reacting to all of this thus far, and has that changed over the last two months or so?
Cuculic: No, I don't think they have. Every spring we go out to our members, our hoteliers, with regional meetings. We had regional meetings in late April and May in Vegas, Chicago and Myrtle Beach. And they're all positive. They really are. There's positive sentiment, and again it goes back to: If our sole mission is driving hotel success, if you drive revenue to them and support them and create programs where you can help them operationally and operate more efficiently, their sentiment is positive.
BTN: How has business travel and government travel looked for you in 2025 so far? And what's your outlook?
Cuculic: Government travel of course has decreased, and that's not because of our brands, it's because the government has decided they're going to cut back on travel. The government is not any different than any business: One of the easiest things to reduce expenses on is travel. … We've seen a decrease in government travel just like everyone else.
When there's noise in the economy, I think CEOs likewise can turn conservative, and they have. But again, it doesn't impact Best Western Hotels as much as it might others, because while we have that as a strong base of business, it's not the vast majority of our business. When that weakens, it impacts us, but not to the effect it does others.
The other thing is, we've been focused on small and medium business enterprises through our Best Western Business Advantage program. They don't cut as quickly as the large corporations might, because they're still doing business the way they have to do business. The small and medium enterprise business has not been, I think, as impacted as large corporate business travel.
BTN: You're seeing a difference in approach between SMEs and large corporates now?
Cuculic: That's right, because a lot of [large corporates] are dependent upon government business, right? The large corporate industry relies on government, and if they're wary that government spending's going to go down, they may become more conservative before small and medium enterprises that are focused on more of a niche business.
BTN: Is this something you see as temporary, or does the change in business travel and government travel demand affect your strategy for the rest of 2025 and beyond?
Cuculic: We've not seen anything that has changed our long-term strategy, including 2025 strategy. We are staying the course. It has not impacted us such that we need to change how we're conducting business, although we will make sure we're staying strong and connected in the small and medium business enterprise.
BTN: Do the changes in economic policy change anything in terms of growth strategy?
Brad LeBlanc: On a macro level, no. … We have 18 brands, and all 18 of those brands can't be firing engines at any given time. But that's the great news about a brand family: We have brands depending on what that mindshare is currently, and that mindshare is driven by the economic environment that's operating. If debt is readily available, new construction will take a front seat. If it's not, conversions will take that front seat. So we see the opportunity despite the circumstances and the noise.
BTN: How does that translate on the micro level?
LeBlanc: You drill down into what brands are active, what segments are active. Certainly, extended stay outperforms everything else. The majority of rooms under construction in this country today are extended stay, two to one over everything else. So we have to make sure that we're servicing, we're building, we're putting those in the right markets and we're following developers to that goal, which is to grow their company.
BTN: Staffing has been a key concern since the pandemic. Is that still a primary concern for Best Western?
Cuculic: I think hoteliers always have concerns about labor, quality of labor and the price of labor. Government policies related to labor have all put pressure on the labor industry, but our hoteliers have adapted. When they come to a [Best Western] meeting, they don't say that labor is their No. 1 concern. Keep in mind as well, our hotels are independently owned and operated. They're primarily small business operators. I think they have found that if they establish themselves as an employer of choice in their community that they will get the labor that they need. It's about not just hiring people, but it's about being a part of a community.
BTN: What is their No. 1 concern?
Cuculic: By far, operating costs. Labor might be a part of that, but then they also have inflation on food products. Inflation affects things like electricity and energy, paper products, distribution costs, insurance.
Insurance was a big one. We launched a property insurance program. We're the only brand in the industry that has a program where we insure the properties themselves. We heard a lot from our hoteliers about the cost of insurance, especially in the Florida or California areas where you had wildfires and hurricanes. We now insure the properties themselves through a program where we help underwrite the insurance that they obtain themselves. And hoteliers absolutely love it. You're talking about saving $30,000 or $40,000 a year on insurance because we are the insurer.
BTN: There's not much you can do about inflation, but are there other initiatives at the corporate level you can take?
Cuculic: Sure. We launched a guest management platform that interacts with the guest: If the guest needs something, it notifies the front desk or housekeeping, they can deliver it, boom, check it off. So interactions with the guests have become easier. It also allows for pre-check-in, which takes pressure off the front desk. It's all those little operational things that can help alleviate labor costs as well.
Last year our members voted to leverage our buying power through endorsed supplier programs for all of our breakfast items as well as operating supplies and equipment. So we're leveraging our buying power and any of the savings go back to our hoteliers, and we're leveraging a relationship with Amazon as a buying partner. We don't require that you buy a specific brand of water, but we specify the quality parameters associated with it, and Amazon helps us by going and figuring out what's the best product at the best price.
