012 | The 12-Year Journey to the Top 10 with Magnuson Hotels CEO Tom Magnuson

Tom Magnuson is Co-Founder and CEO of Magnuson Hotels Worldwide – a top 10 global chain, and the world’s largest independent hotel group. Magnuson markets over 1000 hotels across six countries and three continents, and they’re the number one conversion brand in the market, with over 400 Best Westerns, 250 Wyndhams and 200 Choice franchises that have made the switch.

LL012-Tom_MagnusonTom began to learn the hotel business at the age of 8 after his father inherited a 44-room Stardust Motel in small mining town Wallace, ID. Tom helped with the family business doing everything from making beds and cleaning toilets to cutting keys. However, this second generation hotelier did not intend to follow in his father’s footsteps, rather his dream was to become a world famous drummer. After nearly 20 years of success pursuing his dream in Boston and Los Angeles, his father asked him if he’d be willing to return to Idaho to help sort out the family businesses so he could retire. By that point, the family’s portfolio had grown from the 44-Room Stardust Motel they began with, to include a 9-room Bed & Breakfast, a 63-room Best Western, and a 160-room University Inn Best Western in Moscow, ID. Over the next several years, Tom continued to hone his skills in operations and served on the Board of Directors for Best Western. This experience allowed him to learn how the back of the house worked from the corporate perspective, including GDS, reservation services, brand support, and brand management.

In November of 2000, Tom attended the Best Western International Convention and listened to countless hoteliers share their grievances during an Open Forum session with the leadership and Board.  After hearing the commonalities in their complaints, and the dismissive, canned responses from the leadership, Tom remembers a poignant thought he had … “Someday some company’s going to come along and give these people a serious alternative, and if they do, it’s going to be a major shift. I didn’t know at that time that it might be us.  It was only 3 years later that we came up with this company.”

In 2003, Tom co-founded Magnuson Hotels with his wife, Melissa. Back then, Magnuson was run on two iMac computers out of their 5-year old son’s bedroom in Spokane, WA. Tom struck a deal with UNiREZ, a GDS company in Texas, to provide smaller properties like his family-owned Stardust Motel access to the same GDS (Global Distribution System), travel agents, and online distribution channels that the big franchise companies offered their licensees. The modest company started with only 12 hotel clients in the Northwest. “It was like hitting a live wire,” said Tom, and by December of 2003, Magnuson’s customer base had grown to 100 properties using their service. Their philosophy was simple – do what you say you’re going to do.

Tom’s approach to prospective hoteliers wasn’t about the technology (e.g., the features of his service), rather he simply focused on the benefit his service would provide – helping the hotels raise their occupancy percentage by selling unsold rooms. He kept it simple, which allowed less technically savvy hoteliers to understand how his services could help them be more profitable.

In 2006, Magnuson Hotels introduced three hotel brands to serve three tiers in the market, including:

  • MAGNUSON GRAND HOTELS – upper midscale hotels & resorts
  • MAGNUSON HOTELS – midscale hotels & resorts
  • M STAR HOTELS – upper economy hotels & resorts

Tom says the Magnuson model has changed significantly today, but at that time (in 2006), the introduction of the brands was really about listening to our customers.

[spp-tweet “‘…the introduction of the brands was really about listening to our customers.’ ~Tom Magnuson”]

Resources & Links

Tom Magnuson

Magnuson Hotels Worldwide

In the news

Asian HospitalityGlobal growth with ‘a stroke of a pen’ – Magnuson Hotels agrees to align distribution system with French, Chinese companies

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Magnuson Hotels Worldwide is the #1 Hotel Company of Inc. 5000 List of America’s Fastest-Growing Private Companies.

Magnuson attributes its simple standards, low fees and owner freedom, to being the number one conversion brand in the market – with over 400 Best Westerns, 250 Wyndhams and 200 Choice franchises that have made the switch.

When asked what led to the rapid growth of the company, Tom shared that they identified a clear need, they offered a clean, fair solution, and they operated at as low cost as possible. To do that, they outsourced IT, so as the (technology) world changed so fast, they didn’t have to put all their money into IT to keep up. They also utilized on demand services like reservation systems and Sales Force for their client services and sales management.

[spp-tweet “@MagnusonHotels is a top 10 global chain – and the world’s largest independent hotel group.”]

Personal habits that have contributed to your success

Tom confesses he’s been accused of being excessively disciplined and organized. He openly shared that he and his wife Melissa were working really hard and felt like they had to do everything. They finally came to the realization that they had built a great team, and they needed to step back and allow their coworkers to move forward and own the show.

Are leaders born or made?

Tom struggled with this question and confessed he really doesn’t know, but he does believe that we are all formed by our circumstances, by our adversity – that what doesn’t kill you makes you stronger. He added that somewhere, somebody has to have a heartbeat to do more, to wake up every day and be a hopeless optimist.

Advice for improving ADR, RevPAR, or profitability

Focus on the right things, including having friendly staff, clean rooms, and keeping exteriors looking good. A nice lawn, flowers and great lighting outside of your property tells people that you’ll take good care of them. Tom said the economic downturn in 2001, and again in the fall of 2008, has led many owners to focus excessively on cost. Magnuson advises people to focus on net profit – and make sure you’re not tripping over dollars to save pennies. Keep TripAdvisor scores up, be nice to people, engage in the community.

[spp-tweet “‘80% of any hotel’s core business is going to come from the community.’ ~Tom Magnuson”]

Parting advice

Whatever you do, stand tall for something. In a crowded, overdone world, you can be the biggest, best or only at something if you just think creatively.

[spp-tweet “‘Whatever you do, stand tall for something.’ ~Tom Magnuson”]

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Thanks for Listening!

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Until the next …

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