December 1, 2016
London UK/Spokane WA
Last week saw Thomas Magnuson, CEO of Magnuson Hotels, deliver a compelling speech – ‘Competing in an Uncertain World’ – at the annual Digi.travel EMEA Conference & Expo, held in Athens. Speaking on behalf of hoteliers around the world, Thomas explored the issues faced by hotel owners and hospitality professionals in this current, often highly unstable, consumer market, and offered advice on common problems from his experience working with over 1000 hotels.
Thomas Magnuson, Co-Founder & CEO of Magnuson Hotels
“The desire to run a successful, sustainable business – including the opportunity to grow and develop with a sense of guaranteed security – is the driving force behind the actions of any hotelier or hospitality industry professional. Despite having to compete in this unstable economy, there remain several fundamental ways in which a hotelier can take control and make a profit.
In 2013, an IHG global hotel consensus counted 325,000 hotels (defined as offering 20+ rooms in developed locations). Today, Booking.com states an inventory of 1,073,647 properties worldwide, while Airbnb lists 640,000 hosts.
This rapidly rising supply, combined with a 2016 global growth rate of 2.4%, would suggest that hotel demand is flat. Yet Magnuson maintains there are still ways for a business to grow.
The success of a hotel’s performance relies upon two basic principles – increasing revenue and reducing costs. Both can be mastered through several simple and easy to implement fundamental changes. To increase revenue, focus on generating positive reviews on trusted websites such as TripAdvisor and use specialty (and underutilized) distribution services such as GDS to drive corporate bookings. To reduce operating costs, focus on greater efficiency in technology and energy usage, and repackage debt at longer term.
Magnuson advises hoteliers to manage distribution by focusing on using as many channels as possible and managing them wisely to come up with the lowest overall cost. Aim to sell 50% of rooms evenly across the year via negotiated contracts to corporations, government business and tours – either directly or through GDS. This means that remaining rooms can be sold at a higher rate across the OTA. But, don’t rely upon the OTA during peak times when direct bookings from a simple Google search will provide the bulk of your bookings.
Occupancy trends are another key factor to consider. For hotels located outside major cities, use the ‘Go Big’ model: identify your natural customer and the most unique quality that sets your hotel apart from the others (this is most likely to be a result of location). Are you able create a unique market niche? Even though we work in a mass market that is dominated by mega-brands with giant marketing budgets, any hotel can become the ‘world’s biggest, best or only’ at what they do.
And finally, always be wary of succumbing to big brand franchising that offer big promises at massive costs to an independent business. If you do wish to brand your hotel, explore all franchise alternatives to find one that will support your individuality and celebrate independence.”
About Magnuson Hotels:
Headquartered in London UK and Spokane WA, Magnuson Hotels is a top 10 global chain and markets over 1000 hotels across six countries and three continents. Founded in 2003, Magnuson has become the fastest growing hotel brand in history, adding more new hotels in the last 10 years than 8 of the top 10 chains combined.
About Digi.travel EMEA Conference & Expo:
In its fourth year in Athens, the Digi.travel EMEA Conference & Expo explores not only the traveler trends and technology developments that will affect the travel industry over the next few years, but also discusses the current tools and solutions that travel and hospitality professionals can use to cope with distribution and operating issues. The result is not only a fantastic opportunity to network with top executives of the industry, but also a showcase of the very best results that technology can provide today.