At the Asian American Hotel Owners Association annual convention in Philadelphia last week, Magnuson Hotels unveiled its 2014 brand collection. The company has approximately 150 hotels in its branded portfolio, which includes upscale Magnuson Grand Hotels, midscale Magnuson Hotels, and economy M Star Hotels, and also represents more than 2,000 independent hotels in the United States and the United Kingdom. The new brand platform encompasses an all-in-one flat fee structure, an integrated technology platform, and flexible design. “People knew our brands before but they really didn’t know the strength of this platform,” CEO Tom Magnuson said. Here are more details on the launch:
What’s noteworthy about the new brand collection?
We’ve been test marketing our brands for five years and making them available to people but never really marketing them in a platform sense, as the larger franchises do. What we found is that we didn’t want to come to branding from a perspective of assuming what people want. Too many brands decide what they think consumers will want and what hotels should have. Ours is based upon knowing what consumers want and what is a supporting ROI platform for the owner. Those are our two focuses.
What does the new fee structure include?
It’s going to be simple all-in-one flat fee that includes the entire platform of brand, design, consumer marketing, technology, and reservations.
How will the launch help grow the company in the next year?
Primarily from a conversion perspective. We know clearly that Magnuson is a conversion brand. We’re operating in a no growth economy. Globally, we looked at a 2.5 percent rate increase last year offset by a 1.8 percent or so inflation—that’s a wash. Then you add in your rising operating costs. For a hotel to stay competitive, you’ve got to keep the cash flow coming. So with a fee structure that’s almost one-third of other franchises with an as good or better platform, that opens up a lot of cash flow for owners. We’re clearly a lower cost conversion brand in a no growth environment. In these kinds of markets, owners don’t have to give up their profitability. They just need to look more closely.
What role does technology play in the new platform?
We’ve got our own technology that we developed, which allows us to do things faster, better, and cheaper than other companies. One complete platform rather than several different platforms for the owner makes it easy to find out what’s working, what’s not, and what to do about it. So the technology is huge.
How about design?
The property design perspective is something that’s unique in that we’re going to utilize our brand elements to support hotels rather than dominate them with a standardized approach. So for a fairly traditional hotel, with lots of mahogany and wood, we might opt for the more stately and conservative classic look. Or maybe a hotel wants to reposition more as a boutique type; we can support that with a little more edgy, contemporary feel. It’s really about supporting the hotel brand rather than the other way around.
Despite this flexibility, there are still certain standards owners have to meet to remain a part of the system?
Exactly. Our brand compliance is going to be consumer driven, not corporate driven. And how that’s working is, for each one of our brands, we’ve built a new division that aggregates consumer data from over 100 different sites on a daily basis. We balance that data out and give that to the hotel owner, and if our hotel owner maintains an average 65 percent approval score, which is pretty strong, they’re going to get a 10 percent brand fee rebate back every six months. If they get up to 70 percent, we’re going to give them 15 percent back.
As most hotels have basically the same amenities and structural things because we’ve kind of gotten commoditized over time, what’s going to allow hotels to really stand out as a great brand performer are those ones that focus on cleanliness and being friendly. If the property has good service, good facilities, Internet, and breakfast, if it’s really nice and clean, those are the levers that drive customer satisfaction mostly. Those are easy fixes.