Magnuson Hotels co-founder and CEO Tom Magnuson is “superstitious” about setting growth numbers for the company’s portfolio of branded and independent hotels.
But Magnuson said it’s safe to say there has been a lot of interest from hotel owners who are exploring conversion opportunities to support and elevate their properties coming out of a historic crisis in demand for travel and hospitality.
Magnuson founded the brand company with his wife 20 years ago with a mission “to help people,” he said, and it has done so through two other major economic crises prior to the COVID-19 pandemic — following the terror attacks of 9/11 and the Great Recession.
“When we first started, my desk was in my 5-year-old son’s bedroom, next to his bunk bed. We had 12 hotels; they were friends and family. We built a technology platform that was a central reservations system — the first company to bring that technology to independent hotels,” Magnuson said in an interview with Hotel News Now during the recent Asian American Hotel Owners Association conference in Baltimore.
From there, the company — “a franchise, but it has no sign,” according to Magnuson — grew by word of mouth.
Picture it: “There’s a seaside inn with 50 rooms in Oregon, and there’s a Hilton and a Marriott and a Best Western across the street. We’re going to put you on the same platform those guys are on, but you don’t have to have a sign,” he said. “We started that and how to grow? We took care of people.”
Magnuson tells a story about an Asian-American hotel owner who in the early days of the company reached out for help. He had bought a property near the airport in Nashville.
“He said, ‘I gotta light it up in 30 days, and I don’t want to franchise.’ Being entrepreneurial, I said, ‘Of course we can do that.’ We did, and he went from 171st ranking to top five in the area in 60 days,” Magnuson said.
There are hundreds of such stories to tell — one for each of the several hundred branded and independent hotels in the Magnuson Hotels portfolio.
“Most of our business over the years has come through referral. Through those downturns, there have been times when I’ve literally worked 18-hour days, seven days a week, when the phones wouldn’t stop ringing. It mainly happened after 9/11; and between 2008 and 2010, we doubled in size. We just thought the wings were going to fall off a few times,” Magnuson said.
As for the current crisis, brought about by the COVID-19 pandemic, Magnuson said he expects it to “not be so chaotic,” adding that his “vibe” tells him the impact will be “slower and longer.”
‘Amplifying Who They Are’
As travel and hotel demand ramps back up, a lot of owners continue to struggle to keep their hotels open and operating amid rising costs. For some branded hotels, part of the problem is that costs deferred during the height of the crisis, such as for property improvements, are now coming due.
“Our fees are different; our fee structure and our model is simpler than some of the traditional franchises, so we do see interest from hotels that are coming to the end of a 10-year term that are now required to PIP [undergo a property improvement plan],” Magnuson said.
“If I own a midscale hotel and I want to rehab, I’m probably going to have to spend $2,000 just on each guestroom. I’ve got a 60-room hotel; that’s $120,000. … How do I do that? We look at the situation and go, ‘Actually you’ve got like 4.3 out of 5 stars — really good reviews. Your place is in really good condition. You just need to restructure your market base. You don’t need to do this [PIP].’ These are the kinds of situations that we see most often in our rebranding.”
Magnuson Hotels helps these owners by “amplifying who they are, not by telling them who to be, and giving them the strongest support and technology so they can flourish in their local market,” he said.
Restructuring a market base might mean that the owner of a hotel across the street from a convention center, which in the past was a primary demand driver, has to pivot to other sources of demand until events come back.
“Typically, if you’re a convention center hotel, you just make bank all the time, because there’s so much business and you’re just there. The past two-and-a-half years, that inherent business is no longer. So what do we do? We dig deeper,” he said.
For the Greenleaf Hotel, part of the Magnuson Independent Collection, in Long Beach, California, “we looked at Long Beach Harbor, and how many energy companies and how many suppliers are coming in, how many defense contractors there are; and we find out there’s lots of business that goes 365 [days a year] and has nothing to do with the convention industry.”
This essential business “is the invisible segment that keeps the wheels turning” for a hotel, and identifying and capturing that demand “is a very deep, hands-on, proactive approach,” Magnuson said.
“The concept that’s being promulgated by the major brands is ‘let me put up the sign, plug in a bunch of [online travel agencies] and the business will come,'” he said, adding that instead, his company’s concept is: “Go get it.”
As a result, the independent hotels in Magnuson’s Collection achieved revenue per available room in 2021 that was more than 40% higher than 2019, “which was the biggest year in history,” he said.
‘Area of Greatest Need’
Not every hotel is a good fit for the Magnuson brand, he said, but the company has been working to make its services available to more hotel owners — including in the past year registering as a franchise in all 50 U.S. states.
“There is a mutual responsibility. We can only help hotel owners that are willing to help themselves, and while we do not have [brand standards], we do have metric standards,” he said, noting that he might tell an owner: “Come back and see me when you are 3.5 out of 5 [stars in reviews] and I can see that you’re willing to take the first step forward with some accountability for your service, cleanliness and some reasonable property things.”
Magnuson said the company is focusing efforts to grow its hotel portfolio primarily in the U.S., which he said “is the area of greatest need.”
“We’ve been in the [United Kingdom] for 12 years now. We’ve done well in the U.K. We will see the U.K. [portfolio] continue to grow,” he said. “U.K. occupancies are traditionally much higher [than in the U.S.]. So even though the U.K. has been through COVID and the U.K. is starting to restabilize, it’s performing overall at a much higher level.”
In the U.S., the company has a strong presence in Texas, with 29 Magnuson branded hotels, and Florida, with nearly 20 branded.
“Obviously those are very high-performing markets, so it’s better financially for a company to serve those kind of markets… but that would not preclude us from being there for people who need us in other markets,” Magnuson said.
*This article is written by Robert McCune and originally published on Hotel News Now.
About Magnuson Hotels
Magnuson Hotels is a global flag which offers a variety of routes to market for owners, both branded and unbranded, at a fraction of the cost of traditional franchises, underpinned by the Magnuson Cloud, a comprehensive technology solution which includes global distribution. Magnuson Hotels never requires renovations, but insists upon an aggregate review score to meet guest expectations. Learn more at www.magnusonhotelsworldwide.com.
Magnuson Hotels press information and images:
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Thomas Magnuson
Chief Executive Officer
+1 509 994 2048
Magnuson
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