Magnuson Hotels reports $1.4 Billion in hotel financing for non-franchised independents.

February 3, 2010

SPOKANE, WA โ€“ Despite a US hotel occupancy crash and frozen global credit markets, Magnuson Hotels, the world’s largest independent hotel group, announced today that nearly 700 hotels signed in the past 24 months have received over $1.4 Billion in non-franchise hotel financing. Of the $1.4 Billion total, more than one-half billion dollars in loans have been issued to hotels shedding costs and converting from traditional franchise style chains such as Holiday Inn, Ramada, Best Western, Comfort Inn, Wyndham, Super 8 and Days Inn.

For decades, US hotel owners seeking to renovate or purchase hotel properties have been refused loans because they were not connected to the brand names associated with major traditional franchise chains. While many hotels were forced to franchise their hotels with major chains, incurring very high costs in the process, hotels remaining independent suffered from lack of operating capital or excessive interest rates, branded as “high-risk” loans without the bank-approved major brand names.

But while lenders tighten credit requirements to comply with heightened regulatory oversight, affiliates of the low-cost franchise alternative Magnuson Hotels are finding it easier to obtain loans. The combination of above-market revenues, lower operating cost structures, seasoned operator experience and higher base equity valuations unencumbered by franchise regulations/costs are resulting in higher retained earnings.

In contrast to traditional franchise hotel chains that are supported by a percentage of gross sales earned by individual hotel owners, Magnuson Hotels offers hotel owners a lower cost, performance-based structure and passes along the savings to hotel guests.

Hundreds of independent Magnuson Hotels affiliates state a major national shift in lending criteria, reporting that lenders are basing hotel loans on the basic fundamentals of cash flow, strong projections and cost control. Further, owners are finding that lenders don’t really recognize a hotel franchise brand as equity on the balance sheet. Instead, franchise costs and encumbrances of long-term contracts are often seen as a liability.

“Speaking for the 1100 independent affiliates of Magnuson Hotels, the US recovery started a year ago,” stated company CEO Thomas R. Magnuson. “January 2010 hotel bookings were 49% above January 2009 and we project per-hotel revenue to continue to rise, resulting in a total year-end portfolio of over 2000 global hotels.”

About Magnuson Hotels, the fastest growing hotel chain in history.
In only seven years, Magnuson Hotels headquartered in Spokane, WA has become the world’s largest independent hotel group, representing nearly 1500 hotels and a combined affiliate base with assets in excess of $5.5 Billion. One of the top 10 global hotel chains, Magnuson Hotels was the #1 Hotel Company of Inc. Magazine’s 2009 annual ranking of the 5,000 fastest growing privately owned U.S. companies. With a four year reservation sales growth of 595%, Magnuson Hotels is listed in the top 100 U.S. business services companies.

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Magnuson Hotels