How Tom Magnuson helped turn a ghost town into a boom town

(Digiphoto)

It was late 1989, and I was 32 years old and at the slow end of a decade of grinding against a brick wall called the Los Angeles recording industry. Punk rock, glam rock, seedy clubs, Chinese restaurants and bowling alleys—that was my life. I’d been playing drums in bands five nights a week since I was 15, but like the classic Jethro Tull song, I was "too old to rock and roll, and too young to die."

So I did what any rock-and-roll guy with dreams of stardom would do: I spent two years studying for an MBA. But the last thing I thought I’d ever be doing was moving from sunny L.A. to my old home town of Wallace, Idaho, to help my father run the family hotel business.

Wallace used to be The Silver Mining Capital Of The World. When I was a kid, I hung out with my dad and Texas billionaires, such as the Hunt brothers. However, by the late 1980s it had become a ghost town—one of the first U.S. casualties of globalization and falling silver prices. The town that once had more millionaires per capita than any other place on earth had become lifeless, cobwebby and barren with a population of just 1,000 people, half of whom were unemployed.

Our Stardust Motel had originally been built on Interstate 90, but in 1993 the highway was moved and business dropped by a shocking two thirds. By the end of 1994, I’d been back home four years, with no economic progress. When I asked Marty Marshall, a former professor of mine, for help, he said: “Your problem is you don’t think big enough.”

Light Bulb Moment

My wife, Melissa, and I thought we’d tried everything to market the town, but one winter’s day in December 1994, there looked to be one more lucky strike left for Wallace.
I was filling up my car at the local Exxon station, next to the highway exit, when I noticed a few snowmobilers filling their trucks. I asked the station owner: “Where do they ride? Are there maps?”

He replied: “There are no maps. They just go out in the woods and find their way!”

The next day, Melissa and I found that although U.S. sales of snowmobiles were increasing by 20 percent a year, there were very few places for snowmobilers to ride, and much less where they were warmly welcomed. We went down to my godfather’s drug store to research some popular snowmobile magazines, and found a few ads proclaiming West Yellowstone, Mont., as the snowmobile capital of the world—an exciting destination with over 650 miles of trails. There, snowmobilers were free to ride in the street like cowboys and were welcomed with detailed trail maps. There were motels with hot tubs, secure parking for expensive gear and all-American big steak dinners.

West Yellowstone had identified its natural customer, and the unique quality (in this case, its unrivaled location) that set it apart from its rivals. It had created its very own, and highly receptive, market niche.

Still, there were snowmobilers right in Wallace, too. With this in mind, we visited the U.S. Forest Service and asked for a set of trail maps local to Wallace. On returning home and laying the maps out, Melissa and I were shocked to find that our little town was at the center of over 1,200 miles of trails.

So, we took a leap of faith.

From our dining room table, we took an area the size of Greece—50,000 square miles of public land from Spokane, Wash., to Missoula , Mont., an area that was renowned as a former silver mining region—and repositioned Wallace as the center of the world’s largest snowmobile system, with over 1,000 miles of snowmobile trails.  

It was critical to our success to state our goals as if they’ve already happened. We promoted the idea as an obvious and simple eventuality—that this area and its collection of small towns would continue to wither away as ghost towns. Or, we could unite and become the world’s largest destination for snowmobilers, where every small business would have a part.

Idaho has become a popular destination for snowmobiling. Photo courtesy of The Spokesman-Review.

Action Plan

Building a market is like building a battle strategy; first you must ask yourself a series of questions:

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  • What’s the objective?
  • Total market size, niche, and desired share of market.
  • Who is the competition?
  • What is my differentiation?
  • What’s my location?
  • What are the resources (assets, money or people)?
  • What are the challenges and the opportunities?
  • What is in the way of accomplishing the objective?

Our objective was simple: position Wallace, Idaho, as the center of the world’s biggest snowmobile destination. We knew our competition: West Yellowstone, Mont., which for years was the unchallenged snowmobile capital of the world. In terms of location, we were located on an interstate highway, and Wallace was also the mid-point between two smaller market airports: Missoula and Spokane.

And our resources? We had over 1,000 miles of groomed trails, teamed with an army of believers in our cause. Because we promoted a shared vision that was both simple and achievable, we built a local, state and federal coalition that drew upon support from all levels. Small businesses recognized that they stood to make more money from our proposal, and local, state and federal political entities could share in the success of a new economic engine for a fading old economy.  

We knew that snowmobilers drove big trucks with trailers and their own gear, but we still needed to understand more details about the market we were targeting. We pitched our story to the country’s top snowmobile magazine, "SnoWest", and found that there were about 50,000 subscribers to the magazine within a 350-mile radius of Wallace. If we managed to bring just 10 percent of these subscribers to Wallace, that would mean a $16-million annual impact on our town.

We used direct mail to put our plan into action. It was low in cost, and simple enough to send a postcard offering visitors to Wallace an invitation to “Ride wild in the streets of the Great American West,” and explore 1,000 miles of breathtaking high mountain trails across Idaho and Montana.

Now, Wallace is no Aspen, and we were careful to position it as such. Rather than Ralph Lauren boutiques and expensive restaurants, visitors could expect to find hot tubs, prime rib dinners and the opportunity to celebrate in an Old West town full of like-minded snowmobiling enthusiasts.

Our local mayor supported the cause and passed a monumental ‘open streets’ ordinance, meaning that snowmobilers could ride as priority VIPs through the streets of downtown Wallace. This was important: snowmobilers, traditionally, had been treated as outcasts of tourism. We call this principle "securing an orphan market"—targeting a niche market that is traditionally overlooked because of its size, or because it isn’t glamorous. But if you are the first to it, you will have tremendous loyalty.

As we had little money, public relations was our primary marketing strategy. The press needed something new and exciting to work with in a dark time of the year—and what’s more American than a Rocky-style story about a near-death Western mining town taking on the snowmobile capital of the world?

When we opened on Dec. 7, 1995, we celebrated alongside the mayor of Wallace with a torch-lit, nighttime parade of 100 snowmobilers and a declaration of "Gentlemen, start your engines!" Three weeks later, Wallace and the 1,000-mile trail system landed on the front page of The New York Times’ Sunday Travel section.

From there, we secured corporate partnerships with Coca Cola, Southwest Airlines, Best Western, AT&T and Hertz—and over the next five years we leveraged the city and the trail system to include mountain biking, ATV’s, hiking and heritage tourism. The David versus Goliath story of our small town rode for years, and even resulted in Universal Pictures coming in to take over the entire town for six months to shoot the movie "Dante’s Peak."—the economic impact of which on the region was close to $100 million. In addition, the accumulative lodging and food-and-beverage revenue increase to the surrounding area and tax base increased by 25 percent a year for five years.

Finding a Market Niche

Through spotting a gap in the market, and Wallace’s unique position, we set up the town and surrounding area for decades of potential. Here's how:

  • Look for changes in demand. What segments can you expand upon?
  • Create a stand tall differentiation. What can you do to define yourself as the world’s biggest, best or only at what you do? Are you the closest hotel to the hospital? Are you in Coconut Creek, Fla., the butterfly capital of the world?
  • Focus on identity vs. image
  • Be true and authentic, and do not create a false marketing image. Identify your truest organic market by connecting who you are to whom it matters.
  • Create partnerships by defining the win/win vision.
  • Leverage existing infrastructure to support your specialized tourism niche.

You know your market, your property and your unique differentiation better than anyone. So, don’t wait—be fearless sooner, rather than later. Because when you think you've given it everything, you haven’t. There is always another way to go bigger.

Tom Magnuson is the co-founder, along with his wife Melissa, of Magnuson Hotels.

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