Hoteliers can regain industry control

Thomas Magnuson

By Thomas Magnuson, CoStar – Dec 2th 2022

The hotel industry, a realm of constant evolution and challenge, has seen its fair share of ups and downs. From the stability of the pre-2001 era to the whirlwind of changes brought on by global events and technological advancements, hoteliers have been on a rollercoaster ride. Thomas Magnuson, co-founder of Magnuson Hotels, shares insights on how hoteliers can regain control in an industry increasingly dominated by online travel agencies and franchising giants.

The Golden Age of Direct Business

Before the digital transformation, hotel marketing strategies were straightforward and locally focused. Hoteliers would identify potential business within a 50-mile radius, encompassing various sectors such as corporations, industries, and government entities. By fostering direct relationships and offering competitive rates, hotels could secure a stable base of occupancy, laying the groundwork for profitability through partnerships with local leisure attractions. This era was characterized by direct control over guest acquisition, a contrast to the current dependency on third-party platforms.

The Tides of Change: From Stability to Uncertainty

However, the last two decades have presented unprecedented challenges for the hotel industry. The impacts of 9/11, the Great Recession, and the COVID-19 pandemic, compounded by inflation and labor shortages, have ushered in an era of uncertainty. Hoteliers, in a bid to navigate these turbulent times, have increasingly relied on online travel agencies and global franchisers. This shift from proactive to reactive strategies has led to a loss of control over decision-making and revenue generation, prompting a significant transformation in the industry’s landscape.

The Decline of Independent Hotels: A Look at the Numbers

Magnuson Hotels’ research highlights a concerning trend in the United Kingdom, where the proportion of hotels owned by independent businesses is expected to plummet from 78% in 2010 to just 22% by 2026. This decline is a testament to the growing influence of unregistered accommodations and the formidable marketing power of global brands. With the rise of Airbnb and other platforms, traditional hotels face an increasingly competitive market, prompting a need for legislative intervention and new strategies.

The Rise of Fair Franchising and the Call for Action

In response to these challenges, movements such as “fair franchising” have emerged in the United States, advocating for equitable business practices and challenging the financial burdens imposed by franchising fees. Hotel owners, particularly those from the Asian-American community, are voicing their concerns and seeking reforms to ensure sustainability in the face of rising costs and competitive pressures.

Embracing Fundamentals: A Strategy for Regaining Control

In times of uncertainty, Magnuson advises hoteliers to return to the fundamentals. By re-engaging with local markets and leveraging relationships with chambers of commerce and visitor bureaus, hotel owners can rediscover their autonomy. Choosing independent affiliations or alternative franchise models that emphasize uniqueness and profitability over standardization offers a path forward.

Conclusion: The Power of Resilience and Innovation

The journey of the hotel industry is a testament to the resilience and adaptability of hoteliers. By blending time-tested business strategies with innovative technologies, there’s an opportunity to navigate the complexities of today’s market. Thomas Magnuson’s message is clear: the key to success lies in reclaiming control and embracing the unique identity of each hotel. In an era of global travel growth, the potential for success is boundless, but it requires a proactive and determined approach to overcome the challenges of the modern world.