New Kind of OTA

At The Lodging Conference in September, Tom Magnuson, CEO of Magnuson Hotels, announced a new venture and quickly had attendees at a briefing excited. That’s because Magnuson is now also heading up Global Hotel Exchange, a new independent, online travel agency, which promises to offer hoteliers cost-free distribution and the ability to avoid ever-rising fees and commissions.

“Global Hotel Exchange is the emergence of a no-cost, OTA-level representation for hotel owners,” Magnuson said in a subsequent interview with Lodging. Expected to launch in January, the new venture is a freestanding entity. Magnuson said he established the entity out of growing concern for his fellow hoteliers in today’s world of multiple, and sometimes expensive, distribution channels. Magnuson said he is first and foremost a hotel owner and he’s seen the degradation of market conditions for hotel owners. Global Hotel Exchange is designed as a growth vehicle for hotel owners.

The new OTA will appear similar to those that hotel owners are already familiar with, but it is designed to give hotel owners control over their rates and inventory. “They’ll be marketed worldwide through a lot of lower cost channels such as Google and social media,” Magnuson said. “The main thing is hotel owners will really take back control of their margins and their pricing.”

The system operates with market-based pricing. “Owners know their own markets,” Magnuson said. “Hopefully that will bring some clarity to consumers who are overwhelmed by information that they don’t really need.”

“One of the benefits we’re hoping to introduce with market-based pricing is for someone to just understand, relatively speaking based upon history, what they should be paying for what they’re looking for,” he continues. “We’ll introduce a simple 52-week historic rate range.”

With no fees and no middleman, one might wonder what’s in it for the Global Hotel Network. “My feeling is simply that something has got to be done to bring profitability back,” Magnuson said. “Why we’re doing this is it simply needs to be done.”

Magnuson said that the venture is not about making lots of money. He says the company will make a little bit of money, but not a lot. “But if it’s a good idea, hopefully it will go somewhere,” he said.

To succeed, the network will need volume. Magnuson said that the company already has sufficient inventory to get started and hotels—ranging from branded properties to independents—have shown great interest since the initial announcement.