Case Study

Travelodge Clearwater Central Rebranding as Magnuson Clearwater Central

10 Apr 2017

Thank you for considering us to renew our mortgage with Intervest National Bank. As discussed we wish to rebrand the hotel as Magnuson Clearwater Central. This is a decision we did not take lightly and we strongly believe this will strengthen our position in our market and provide better returns and lower our operating expenses. Below is a summary of benefits:

  • Magnuson Hotels is the fastest growing hotel chain in history founded in 2003 they represent almost 2,000 hotels in North America and the UK. A top 10 global hotel chain, Magnuson Hotels has consistently ranked as the #1 Hotel Company of Inc. Magazine‚Äôs 5,000 fastest growing private U.S. companies. In comparison Travelodge Hotels currently represents approximately 420 properties.
  • Our hotel has been approved with no pip improvements for the Magnuson Hotel brand, this is their midscale brand. Travelodge is close to the bottom of economy brands. As per the attached STAR report we are running YTD occupancy of 72% compared to the economy market average of 69% and our average daily rate is $53.68 compared to our market of $66.32. We have been holding our own in occupancy but are consistently $10.00 below market rates, we will never close this gap with Travelodge as customers expect Travelodge to be one the lowest priced options in their markets.
  • Our property is 4/5 stars on Tripadvisor the #1 hotel review site. Our direct competition is as follows: Days Inn Clearwater Central 3/5, Howard Johnson Clearwater 3.5/5, Super 8 Clearwater 2.5/5, Ramada Clearwater Central 2.5/5, Americas Best Value Inn 2/5. Yet if we price our property above these hotels our occupancy immediately falls because guests believe Ramada, Super 8, Days Inn and Howard Johnson are upgrades over Travelodge.
  • The lower midscale hotels that are 4/5 on Tripadvisor are Quality Inn, Clarion and La Quinta and are averaging $25-$30 per room per night above us. Based on the 28,000 room nights we rent per year a $15 increase in rates equals $420,000 per year in additional revenue.
  • Magnuson Hotels charges a flat fee of 5% of gross room revenue. Based on our 2013 sales our royalty fees would be $62,157.92 on $1,243,158.46 in room revenue looking at our P&L from 2013 we paid $155,348.67 this would have been a savings of $93,190.75 based on 2013 and will significantly increase as we improve revenue under the Magnuson Flag. The Red Roof Inn on Clearwater Beach rebranded as Magnuson Clearwater Beach 3 years ago and has significantly improved room revenue immediately after the switch and informs us the worst year they have had as Magnuson has much higher room revenues then their best years as Red Roof Inn including pre-recession numbers and they have reduced their costs under the new name. They have been so impressed that in February they rebranded their other hotel formerly Travelodge Clearwater Beach to the Magnuson system. They experienced the same trend and have increased their room revenue while decreasing costs. Please give strong consideration to us changing flags as we are certain it will increase revenue decrease expenses and greatly improve the value of this asset.

 



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