London UK/Spokane WA -- In panel comments this week at London's Hotel Distribution Event, Magnuson Hotels CEO and co-founder Thomas Magnuson stated the recent push by major hotel brands to use frequent guest rewards programs to drive direct bookings may be ineffective and costly to hotel owners.

Asked to comment on how hotel franchises are coping with the rising cost of online booking and customer acquisition costs, Magnuson stated, "I'm very concerned about the war profiteering of the brands' consumer rewards programs and 'go direct' efforts. What is presented as a strategy to reduce OTA costs ends up costing a 100 room hotel 1/3 of their franchise fees, up to $100,000 per year." Magnuson added that this amount is twice that of usual reservation fee costs.

Magnuson referred to a recent study published by CBRE that says in self-managed and franchised hotels, the greatest share of franchise fees received was from hoteilers paying to use chain brands' frequent guest loyalty programs (30.7%).

Magnuson questioned the effectiveness of the initiative, adding that "While most of the major brands have made big news about direct booking campaigns, there has been a 40% drop in direct bookings in the last five years."

The panel was moderated by Andrew Sangster, Editorial Director, Hotel Analyst and also included Simon Teasdale, Managing Director, Lapithus Hotel Management and Geneviève Materne, Regional VP of Distribution Strategy, EAME SW Asia & Asia Pacific, Hyatt International.

About Magnuson Hotels

Magnuson Hotels was founded in 2003 as the world's first independent hotel chain. Today, over 2000 hotels across North America and Europe have increased revenues via the Magnuson Independent Hotel Group and the Magnuson Hotels Fair Franchise Brand:

For more info:
www.magnusonhotelsworldwide.com
[email protected]

Thomas Magnuson
Chief Executive Officer
+1 509 994 2048
Magnuson Hotels