Industry Update
Press Release 6 October 2010

Magnuson follows independents to mainstream

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Courtesy of HotelNewsNow.com 04 October 2010 9:04 AM

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Independent hotels are moving from fringe to mainstream and Magnuson Hotels is along for the ride. The franchise-alternative signed 800 member hotels during the past 30 months and now represents 2,000 independent hotels in North America and the United Kingdom.

“I think it’s pretty evident from our growth that the independents are moving mainstream from this concept that’s been around for decades of, ‘Well, what are they? They’re fringe,’” said Thomas Magnuson, CEO and principal of the Spokane, Washington-based company.

Magnuson’s growth has garnered recognition in “Inc. Magazine,” as the No. 1-ranked hotel company with success attributed to low cost and ease of use for members. Partner hotels pay a 15% commission only on bookings processed through Magnuson’s distribution network, with no agreement term.

Thomas Magnuson, CEO and principal of Magnuson Hotels, discussed the company’s partnership with Expedia during a general session at the 2010 Lodging Conference.

Magnuson’s reservation system will expand later this month when the company launches Magnuson Direct, a channel that connects member hotels directly to the Expedia family of online travel agencies, as well as Sabre Hospitality Solutions and Travelport.“We built it all on Open Travel Alliance specification,” Magnuson said. “We can interface directly with any of the key channels. The first one is now we’re going straight to the whole Expedia platform, and therefore their related sister companies. This allows us to work on our behalf of our owners for full capabilities with all promotions, all the opportunity that the power of Expedia can provide.”

Loyalty? What loyalty?

Though many within the industry might regard openly embraced relationships with OTAs as something of a faux pas, Magnuson said it’s a welcomed necessity in today’s price-driven marketplace.“There really isn’t any loyalty. It’s a buyer’s market if you are a traveler,” he said. “… We believe that rather than loyalties driving business, it’s distribution. … Obviously those hotels who do the best and have the best ratings, they’re going to get the most loyalty and they’re going to be able to do it without paying for some expensive loyalty program.”

The partnership with Expedia will prove especially beneficial for member hotels, Magnuson said. “Now these independents who only a couple of years ago had no chance of surviving this crisis are operating at the same power level as (Choice Hotels International) or (InterContinental Hotels Group),” he said. “It’s leveled the game.”

Growth abroad.

“We hadn’t anticipated it, but we think that this can be even bigger than the U.S.,” Magnuson said of the company’s expansion into the U.K. There are approximately 10,000 hotels in the U.K., he said. Outside of London, there are approximately 9,000, 63% of which are not bookable by travel agents or major OTAs.“They’re having a three-year occupancy decline, cutbacks in government spending,” Magnuson said. “There’s going to be a crunch,” one which the owner is hoping will lead to more interest. Magnuson hopes to attain 10% market share before the opening ceremony of the 2012 Olympic Games in London.

“Granted 10% of 10,000 isn’t the same as 4.2% of 45,000 (in the United States), but we think it’s going to be a huge opportunity,” he said.

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