What to do about “the shift.”
September 4, 2009
We’re all owners, doing whatever it takes to keep our hotels/motels alive so travelers can have a comfortable place to sleep. Most owners only expect to make a fair living for our families, pay our employees, and run a place we can be proud of.
Every day the news changes. Newsweek says “Recession Over!” But just when yesterday’s news announces positive economic growth, the next day’s news announces the biggest US Gov tax drop since 1932. How are we all going to survive the biggest occupancy crash ever, and the largest supply increase in history?
It’s the biggest occupancy crash in history. 64% historic level for 50 years -10% drop 2009 YTD -15% new supply. Largest in history. =39% new US occupancy level
Corporate franchise greed driving the largest hotel supply increase in history? 750,000 new US rooms flooding an already depressed market. More than a 15% supply increase, even though US room supply already increased 50% since 1987. Hotel chain executives have a standard chuckle response, “It’s not oversupply, the US is underdemolished!”
Underdemolished? Tell that to the family who owns one of the 8000 midscale limited service US properties that are between 10-19 years old, yet a long way from the average demolition age of 35 years. A child could be born, grow up and go to college in the 20 productive years left on these hotels.
Sell unrealistic dreams to drive corporate franchise revenues at the expense of the little man? Wasn’t there a Countrywide Home Finance Mortgage Company that did that?
There are no more cycles. Here’s what to do about “the shift.” Increased supply, decreased demand, what can owners do? There are no more cycles, no upturn next quarter, next summer, in sight that can overcome “the shift.” However, owners can make money if they face reality with fast action, and take control.
- Take action now, or you will become an unfortunate statistic.
- Cut non revenue producing costs-franchise fees are the largest.
- Go for the business that is in your town; implement market share warfare with Magnuson Hotels.
- Sell your entire inventory; you can’t sell yesterday’s room.
- Don’t have an inferiority complex with rates.
- Use Priceline and Hotwire, they are your best online channels now.
- Online renovation with new images-cheapest and most effective marketing you can do.
- Maintain your online quality rankings with Tripadvisor, etc. 70% of all online bookings start with reviews.
- Reposition with a no-cost Magnuson brand and receive brand rebates; all direct hotel revenue is royalty and commission-free.
- Pay your travel agent commissions and you will be rewarded with an increase in corporate and government business.
Start today with an absolute refusal to accept losing.
In more than 1000 cities and towns across North America and Europe, hard working hotel owners are rising up, shifting the power from the few to the masses. For the first time in history, lower operating costs and freedom from chain control are enabling independents to outlive franchise competitors at a 45% higher level.
We understand the battle each owner faces, because we’re owners too. While traditional franchise hotel chains are in the brand business, Magnuson Hotels is just like you—in the hotel business. What matters most is selling as many rooms as possible at the lowest cost.
For every hotel and motel owner out there battling to survive, we raise this flag for you. Together, we are Magnuson Hotels, the world’s largest independent hotel group.
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.