Magnuson Hotels relocates to UK to take on Best Western
The launch of Magnuson Hotels into the UK hotel market - with its free membership - could shake up the world of hotel marketing consortia.
Set up by Thomas and Melissa Magnuson seven years ago in their home in the state of Washington, USA, Magnuson Hotels represents 1,200 independent properties in North America.
The consortium is now agressively targeting the UK market, setting its sights firmly on the ground occupied by Best Western, and offering an alternative to what it describes as "financially crushing brand fees".
Thomas Magnuson, a former board member at Best Western, has set up the business in direct competition with his former employer, offering a commission-based deal rather than fees.
Magnuson Hotels allows members to retain full control of their business, inventory and rates, while benefiting from Global Distribution System representation and increased online presence, without any fees or long-term contractual commitments. Members pay Magnuson Hotels a 15% commission for each booking the company delivers.
Now the company is relocating its headquarters to London and has signed up its first UK hotel - the 36-bedroom Popinjay hotel in Rosebank, Clyde Valley (above). It hopes to have between 100 and 150 UK hotels, each with 20-plus bedrooms, on its books by August 2010 and has plans to expand the business into mainland Europe.
The Magnusons believe the scope for growth in the UK hotels market is huge. They quote research carried out by the British Hospitality Association, which estimates that there are around 10,000 non-aligned independent hotels with 12 or more bedrooms in the UK, plus a further 26,000 smaller properties and bed and breakfast businesses.
"In the UK 63% of hotels are invisible to consumers, with no representation on online systems or through travel companies," said Thomas Magnuson. "In some cities, such as Liverpool and Sheffield, this figure is as high as 81%.
"There are many people out there that need help. Hoteliers like us because we simplify the nature of the business, with properties retaining their independence and only paying us when a booking is honoured. In every instance it is a win."
For Ron Morrison, consulting general manager of the Popinjay, it is the opportunity to remain independent while enjoying the benefits of a major GDS system that was the attraction to join Magnuson Hotels.
"The intention is to have a food-driven, cutting edge hotel," said Morrison. "For this reason we left Best Western as it did not fit the individual identity we are after.
"I have seen the rapid growth of Magnuson Hotels in the USA and I believe they can help us here in the UK."
On average, 38-40% of bookings for a 100-bedroom hotel affiliated to Magnuson Hotels in the USA are attributed to the company. And despite the recession, properties signed up to the group recorded a 24% increase in online reservations in 2009, compared with the previous year.
Magnuson Hotels is keen to recruit hotels at all levels of the market, which means it is set to move into an area that is currently dominated by Best Western. The key difference is that all hotels signed up to Best Western have a strong brand identity and pay a joining fee of £1,995, as a well as an annual fee that starts at £8,100 depending on the number of bedrooms and a distribution fee on room sales.
The Magnuson Hotels website specifically targets hoteliers who have become dissatisfied by the Best Western offer.
"Meet the Ex-Westerns, a growing number of owners declaring independence from financially crushing brand fees," it says. "With a back-to-basics mission no different from the Californians of 1946, Ex-Westerns are appearing nationwide, all focused upon receiving more business at less cost."
Chief executive of Best Western GB, David Clarke, said he does not believe that the company's future plans will be affected by the arrival of Magnuson Hotels.
"Best Western is the sixth largest hotel brand in Britain, with 15,000 bedrooms in 280 independent hotels," he said.
"Our membership business model results in lower fees than other similar brands operating internationally. Our marketing plans for 2010 are very exciting and will result in us growing sales and attracting new quality hotels."
Hotel consultant Charles Scudamore, director of TRI Hospitality Consulting, said that Magnuson Hotels does appear to be a very attractive option for small operators who do not have access to a Global Distribution System.
"Best Western currently has a very dominant position in this section of the marketplace and the arrival of Magnuson will provide competition which undoubtedly can only be good for the industry," he said.
Hotel consortia - members only>>
Best Western sells 4,25-plus more hotel rooms this half-year>>
By Janet Harmer
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