Magnuson Hotels still has room to grow
March 16, 2006
Tom and Melissa Magnuson used to put a pin in a large map of the United States for every motel served by their reservation system. But as the Magnuson Hotels client base sprawled into ever more cities, they no longer had the time. They handed the chore to their 9-year-old son, but he quickly lost interest. Now, nobody bothers.
From just 12 family- and friend-owned properties three years ago, client numbers have exploded to 450, with the expectation the number could reach 1,000 by year-end. It may be the hospitality industry, but theirs is not a sleepy business.
“It’s like working in a wind tunnel,” says Melissa, with the wind at their backs. The Spokane couple’s timing could not have been better.
They launched Magnuson Hotels just as the Internet emerged as a major marketing channel. The hospitality industry was rebounding from the downturn caused by the 9/11 attacks. And hotel brands proliferated to the point consumers could no longer differentiate one from another.
There are 47,000 hotels, motels, and sundry other lodging establishments in the U.S. Of those, only 7,000 are corporately owned. About half the rest are franchised, half are independent.
Franchisees, Melissa says, benefit from access to chain reservation systems, but they are also slaves to whatever changes headquarters makes in the name of brand uniformity. That might be signage. It might be mattresses, or continental breakfasts. It might be something that makes sense in Nashville, but not in Seattle.
It will surely be costly.
Independent owners can decide for themselves how best to upgrade their operations. But the tradeoff is anonymity. They depend on drive-by traffic, repeat customers, and word of-mouth. They may have a Web site, but with so few visitors search engines pass them by. Tom says Magnuson tries to make sure client properties show up when travelers visit Orbitz, Travelocity or any of the other major reservation-booking sites.
Magnuson gets paid according to how many customers book a room through its computer hub. There are 30,000 rooms on the company’s system. Its success putting heads in beds keeps attracting new properties.
“We are the only complete operating system if you are an independent hotel,” says Tom, who was exposed to the hospitality business as a kid working for his father, Idaho mining magnate Harry Magnuson.
But, as with all businesses, revenues represent only half the ledger. The other side is costs. Magnuson has begun to address that side of the equation as well.
Last week, the company announced a partnership with AgelessCare LLC, a Florida-based company that offers several low-cost medical savings programs. Depending on the fee, participants have access to everything from 24-hour nurse consultations to discounted services from 400,000 doctors, hospitals, pharmacies and other service providers nationwide. Tom likens the product to the familiar Entertainment books that discount restaurant prices.
Ageless President Chris Lang stresses that the product is not insurance. Users benefit by getting the same discounts from providers that insurance companies negotiate. They must pay for the service out of pocket. Providers get immediate payment, instead of having to wait months for an insurance check.
Lang says Ageless plans to offer a true insurance product later this year. When it does, Magnuson will be a subscriber.
Melissa says many hospitality industry workers do not earn enough to buy insurance, but could afford the discount cards. Motel owners who make the cards available may be able to slow costly employee turnover, she says.
Tom says Magnuson may team with other companies to offer clients services like purchasing or credit-card processing, or products like property insurance. Anything that will help independents keep up with chain motels.
Melissa says Magnuson, which employs 14 at its headquarters on East Holland, hasbegun to get inquiries about its services from European hotel owners. So far, the company has held off, but may take the plunge once language differences and other issues can be addressed.
In the meantime, she and Tom run just to keep up. Three years ago, the company was just the two of them working on personal computers in their home.
“We had no idea it would get this big this fast,” Tom says.
There’s not much time to rest.
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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