Getting high on your own supply

Recent conferences and events have shown us that people are desperate to return to 2019, when everything felt like it was going right for the hotel industry. Even the mammoth amount of supply coming into the market didn’t seem like a concern: demand would simply suck it up. It felt like the overdue downturn would never come. We look back with rose-tinted glasses. Whatever issues we had paled in the face of the human cost of the pandemic and, for hotels, government restrictions which forced many hotels to stop trading entirely. There is now cautious trading and hotels are learning to work with uncertainty. They can look up and start to plan, rather than be reactive. And what they’re seeing still carries shades of the threats we felt in 2019, which linger still. Airbnb has only become stronger during the pandemic, with a market capitalisation of over $110bn and over 5.6 million listings. But it wasn’t seen as the threat it was before the lockdowns, because it was back operating in its leisure heartland, where it came from and where hotels - particularly branded hotels - felt they were safe from it eating their valuable corporate market. The news that Scotland was going to join jurisdictions around the world in potentially requiring hosts to licence their properties was greeted with great joy by hotels, which have long sought for Airbnb and its competitors to be legislated out of existence. Will Airbnb go down without a fight? No. It has an extensive legal team which is happy fighting fire on multiple fronts. When under attack it also dials up its PR machine, warning of lost earnings should it be restricted a negative impact on the hosts and local economies. The hotel sector has not learned from past experience. You can't legislate against change. You can't change evolution. This supply change is a done deal. Uber is a done deal. OTAs are a done deal. Hotels must fight their corners. Rather than hiring lobbyists, getting into letter-writing wars or complaining to their local lawmakers - all of which we’ve seen - they need to work out how to fill their beds while Airbnb’s hosts fill their tree houses, yurts and the house from Home Alone. With the corporate market still uncertain and leisure shaky, we go into each hotel’s market and identify leisure and non-leisure sources 52 weeks of the year - our revenue managers will even go and talk to construction companies. Here at Magnuson we will do the leg work to identify and capture essential travel consumers. We use our local and sector intelligence to convert branded properties from upper-economy to midscale product, raising average rate. Magnuson Hotels are repositioned with revenue strategies based on knowledge of the market, while reducing the cost of acquisition. Hoteliers need to know every aspect of their business and become human Swiss army knives. Because when everything’s got upended, when every sector is upside down, those that are well equipped and can do everything will survive and outperform. No matter who opens up down the road. By Tom Magnuson, CEO of Magnuson Hotels