Real Estate

Magnuson Hotels Brand Flourishes in Crises by ‘Helping People’

BALTIMORE — Magnuson Lodges co-founder and CEO Tom Magnuson is “superstitious” about setting development numbers for the corporate’s portfolio of branded and impartial lodges.

However Magnuson mentioned it is protected to say there was lots of curiosity from resort homeowners who’re exploring conversion alternatives to help and elevate their properties popping out of a historic disaster in demand for journey and hospitality.

Magnuson based the model firm together with his spouse 20 years in the past with a mission “to help people,” he mentioned, and it has completed so via two different main financial crises previous to the COVID-19 pandemic — following the fear assaults of 9/11 and the Nice 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 mentioned in an interview with Resort Information Now throughout the latest Asian American Resort House owners Affiliation convention in Baltimore.

From there, the corporate — “a franchise, but it has no sign,” in response to Magnuson — grew by phrase of mouth.

Image 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 mentioned. “We started that and how to grow? We took care of people.”

Magnuson tells a narrative about an Asian-American resort proprietor who within the early days of the corporate reached out for assist. He had purchased a property close to 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 mentioned.

There are about 200 such tales to inform — one for every of the roughly 200 branded and impartial lodges within the Magnuson Lodges 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 mentioned.

As for the present disaster, led to by the COVID-19 pandemic, Magnuson mentioned he expects it to “not be so chaotic,” including that his “vibe” tells him the affect will likely be “slower and longer.”

As journey and resort demand ramps again up, lots of homeowners proceed to battle to maintain their lodges open and working amid rising prices. For some branded lodges, a part of the issue is that prices deferred throughout the peak of the disaster, akin to for property enhancements, at the moment are 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 mentioned.

“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 $1.2 million. … 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 Lodges helps these homeowners 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 mentioned.

Restructuring a market base would possibly imply that the proprietor of a resort throughout the road from a conference heart, which previously was a main demand driver, has to pivot to different sources of demand till occasions come again.

“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 mentioned.

For the Greenleaf Resort, a part of the Magnuson Unbiased Assortment, in Lengthy Seaside, 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 important enterprise “is the invisible segment that keeps the wheels turning” for a resort, and figuring out and capturing that demand “is a very deep, hands-on, proactive approach,” Magnuson mentioned.

“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 mentioned, including that as an alternative, his firm’s idea is: “Go get it.”

Because of this, the impartial lodges in Magnuson’s Assortment achieved income per out there room in 2021 that was greater than 40% larger than 2019, “which was the biggest year in history,” he mentioned.

Not each resort is an efficient match for the Magnuson model, he mentioned, however the firm has been working to make its providers out there to extra resort homeowners — together with previously yr 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 mentioned, noting that he would possibly inform an proprietor: “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 mentioned the corporate is focusing efforts to develop its resort portfolio primarily within the U.S., which he mentioned “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 mentioned. “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.”

Within the U.S., the corporate has a robust presence in Texas, with 29 lodges, and Florida, with practically 20.

“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 mentioned.

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