LONDON and SPOKANE, Washington—A hotel-owners-first growth strategy has always driven Tom Magnuson when it comes to his company, Magnuson Hotels. To that end, the company’s latest distribution alliances are designed to deliver benefits to owners and partners around the world through distribution strength, Magnuson said.
“If you look at things constructively and positively, a good operator needs to recognize there are changes on the field; it’s not status quo,” he said. “This is great. There’s a crack in the wall, so how do owners make it through? Astute owners must look at everything to ask how they can compete. They have to differentiate like there’s no tomorrow.”
Magnuson’s answer? “Our response is a global alliance,” he said. In April, the company went live with the first stage of its distribution alliance with partners Louvre Hotels Group and Jin Jiang Hotels. The alliance is resulting in a new website, Magnusonhotels.com, which will act as a distribution portal for Magnuson’s hotels, plus franchisees of France’s Louvre Hotels Group and company-owned Jin Jiang Hotels. The end goal is to list 8,000 hotels comprising 800,000 rooms.
In 2014, China’s Jin Jiang Hotels bought Paris-based Louvre Hotels Group. Louvre operates six different brands around the world, and Jin Jiang has four of its own brands.
Hotel News Now spoke with Magnuson about the company’s latest distribution deal and other ways it’s making partnerships work.
What’s the goal of this alliance with Louvre and Jin Jiang, and what’s the progress?
Magnuson: “We’re building a global grid with our partners to support this massive partnership of 800 hotels. There are a lot of moving parts from the technology perspective, but it was important to build this as a mobile-first platform. That’s what search engines favor, and that’s where business always starts.
“We’re in a phased roll-out to get all the properties listed. The goals are to have all of the Louvre portfolio listed by the end of the year.”
How does the commissions structure work, and what’s the benefit for Louvre and Jin Jiang?
Magnuson: “We have a direct business relationship with our Magnuson affiliates, and with these external partner brands, we function from a business perspective as a metasearch model. We’ve seen this rush to scale, which is the biggest transformational effect in the industry right now. We see things like the Marriott International and Starwood (Hotels & Resorts Worldwide) deal, and that’s a corporate-owned force. The question becomes, how do independently owned hotels compete against that corporate size? So we’re giving benefits of scale, and access to 50 countries plus China.
“We have two rewards options right now (Magnuson’s Star Club and Jin Jiang’s J-Club). Those are big benefits for owners, and another is having a dedicated pipeline to international business. Our biggest international markets—Florida, for example, and several West Coast cities—are absolutely excited about this because they have significant connectivity with Chinese travelers.”
You also recently announced a partnership with the Asian American Hotel Owners Association, in which their independent hotelier members can list their properties on your site and receive other benefits. What’s this all about?
Magnuson: “We’re working with AAHOA to contribute training in technology, revenue management and hotel operations to help their independent hoteliers. A flat fee per booking is the only cost. We are who we are as a company because of AAHOA.”
You’ve said in the past that you enjoy upheavals in hotel distribution. Why is that, and what are some of the current challenges?
Magnuson: “There’s a massive rise in supply going on—look at Airbnb, for example. How do we compete with that? And while there’s an explosion in competition, there’s an implosion in contribution, because in distribution it comes down to basically two big OTAs and Google. If things stay the same, they calcify and it’s difficult for owners. So our response is to create this global alliance.”