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BWH Hotel Group announced Monday that President and CEO David Kong will be retiring at the end of the year. His successor will be announced at the company’s Annual Convention on Oct. 7.
The longest serving CEO of any major hotel company, Kong transformed Best Western over his 17-year tenure, growing the company from one brand to 18, covering nearly every segment of the industry, with 4,500 hotels in 100 countries. He leaves as the hospitality sector faces a rocky recovery from the COVID-19 pandemic, following its worst year in history.
In an exclusive interview with Yahoo Finance, Kong said he chose to step away at the "peak of his career," with Best Western’s business on firm footing.
“Last year was the most challenging time for just about anybody's career, and we've not only survived it, we've excelled. The company actually did extremely well. We didn't have to tap into our reserves at all, in fact we added total reserves,” he said. “[I am] leaving the company in great hands and a great state.”
Kong’s rise at Best Western represents one of the great success stories in the industry. An immigrant from Hong Kong, he arrived in the U.S. as a young adult with "no friends, no connection, and no money." He began his career in the hospitality sector as a busboy and dishwasher roughly four decades ago, only to rise through the ranks at BWH Hotel Group over Kong’s 20-year career with the firm.
Under his leadership, the company has seen record EBITDA growth, and seen its cash reserves and net equity grow 10-fold, according to BWH Hotel Group.
“[My story] speaks to the dynamic opportunities this industry offers. It really empowers bold dreams and enables people to pursue those dreams without hesitations,” he said.
Yet, that same industry faces a largely uncertain path, as the highly infectious Delta variant slows the rebound in travel activity. Hotels saw revenue drop 90% at the height of the pandemic, forcing Best Western to temporarily close hundreds of locations. A recent survey by the American Hotel and Lodging Association (AHLA) pointed to a dramatic increase in the number of travelers rethinking or canceling their plans, while business travelers are scaling back their travel plans.
‘The hospitality industry needs to reinvent itself’
The industry has also struggled to build up its staffing, as furloughed employees look to jobs in other industries. The leisure and hospitality sector added zero jobs in August, according to data from the Department of Labor. AHLA reports one in five of the nearly half a million hotel jobs lost during the pandemic will not return by the end of the year.
Kong said many employees laid off by Best Western’s hotels have gone on to seek higher paying positions at tech companies like Amazon (AMZN) or Google (GOOG). Entry-level talent the hospitality industry once relied on, is being ‘siphoned off’ as a result of the pandemic, he said. And Kong expects that migration to continue.
“The hospitality industry needs to reinvent itself in the way that we compensate people in a way that we pay, and the way that we provide benefits to be more competitive,” Kong said, “Right now we’re just not competing with the same industry for the talent but we're competing with other industries.”
Traditional hotel names like Best Western have also faced significant challenges from disruptions brought on by Airbnb (ABNB). Since 2018, U.S. travelers have spent more money on Airbnb rentals than hotel stays, according to Second Measure. Airbnb’s recovery in the pandemic has outpaced that of hotel chains, with long-term stays fueling the gains as more consumers seek out new ways to work from home. While Kong has previously highlighted the inequities he sees in the services and safety offered by Airbnb stays compared to traditional hotels, the executive said he increasingly sees the two business models co-existing, with enough customer demand to fuel both sides.
“In the long run, I think we will each find our space. There are people that are reluctant to stay with Airbnb for a variety of reasons, and more comfortable with the amenities and the safety and security that hotels provide,” Kong said. “In the end, I think things will work out, but I welcome competition. I think the industry wants it, and it's a way for all of us to provide a better experience, and improve the guest experience.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita