Bath plunge

Thursday 4th January 2001 00:00

The past year has been a whirlwind of purchases, refurbishments and openings for Philippa and Sebastian Hughes. The couple recently bought their third hotel in the South-west of England in just over 12 months. Such rapid expansion has brought the number of hotels they own to four, enabling them to offer a choice to guests who return time and again, and give staff the chance to move around the business.

Their latest acquisition is Dukes on Great Pulteney Street, Bath. When it reopens in March, this townhouse hotel will offer 19 bedrooms in the heart of the city. The Hughes hope it will act as a funnel for their other three hotels in Exeter and Devon.

Refurbishments

At present the hotel is trading well, with an annual turnover of £450,000. Refurbishment begins this month and Sebastian estimates that turnover could reach £800,000 in the first year, with an occupancy of about 70%. The nearby Bath Spa, currently undergoing a £7.7m restoration programme, is likely to draw in more guests when it opens to the public in April 2002.

The Hughes' portfolio now includes three townhouses - Dukes, the 17-bedroom St Olaves in Exeter and the 10-bedroom Little Admiral in Dartmouth - plus their first property, Holne Chase, a country house hotel in the heart of Dartmoor.

Each acquisition has brought new headaches and each hotel has benefited from the lessons learnt from previous mistakes. When the Hughes took over Holne Chase in October 1995, it was like being "dropped from a great height and experiencing a very fast learning curve", says Philippa.

Sebastian explains: "We bought it in six weeks, got rid of 50% of our income, which came from the existing clientele of weddings and management training courses, and spent one and a half times the purchase price doing it up."

Previously, Philippa had worked in sales and marketing for property companies. Sebastian came from a farming family on Dartmoor, but was running a helicopter business in Madeira when they met. Holne Chase fulfilled Sebastian's aim of finding a business in the area and allowed the couple to "start a family and combine our talents", says Philippa.

The previous owners were getting ready to retire and although the hotel was not on the market, the Hughes persuaded them to sell. With the help of their "hugely understanding bank manager", they continued to refurbish the hotel while refusing much of the business that had been coming in before so they could move the hotel more upmarket. It took about three years to turn the corner into profit.

The kitchen budget trebled because the couple realised they needed to raise the standard of the somewhat ordinary hotel food, and they hadn't bargained for the brigade of chefs they had to employ.

"We made a loss on the food, but it helped the business," says Sebastian. Holne Chase was awarded three AA rosettes the following year, and still has them. Now the hotel's turnover is £900,000, with room charges of £125-£165 for its doubles and suites.

Having cut their teeth on Holne Chase, the Hughes were ready to expand. They realised that running a single hotel between them was not putting their previous experience to best use. "We stayed in other hotels to help learn about the business, and we saw how some hoteliers became very cynical over a period of time," says Philippa. "Being here 24 hours a day and changing light bulbs isn't the best use of our time."

They had also discovered the difficulty of staffing a country house hotel in the middle of Dartmoor.

"You can't surround yourself with great people unless you have more than one hotel," says Philippa. "With four hotels, we can offer career opportunities for them."

Now, when Holne Chase is quiet during the weekdays in December, staff can be taken to work on the Christmas parties hosted at St Olaves. In this way, they don't get laid off in quiet times, and the Hughes don't lose staff or suffer an unnecessary wage bill.

Opportunity knocks

The Hughes put the speed of their expansion down to the right opportunities coming one after another. Funding has been provided through the bank; a couple of Holne Chase's guests have also invested in the new businesses.

Chase Hotels is the holding company for all four hotels. The Hughes own 70% and two shareholders hold 15% each.

Dartmouth was the choice for the first expansion because so many of Holne Chase's guests spent at least a day exploring it andit was only 35 minutes away. The Little Admiral was bought in August 1999, and was turned from a pub with rooms into a small, quiet townhouse hotel. The Hughes decided to replace the restaurant with a drawing room.

"We thought people wouldn't want to eat in the hotel," says Sebastian. "But we were wrong." So a restaurant has now been installed in place of the bar. The Little Admiral has a turnover of about £300,000 with an average achieved room rate of £80 and 65% occupancy.

Following on quickly from this purchase, Martin Rodgers, head of hotels at property company Knight Frank, asked the couple to look at a hotel in Exeter.

"We hadn't thought of Exeter, but the more we looked, the more we realised it was a good move," says Sebastian. "Exeter is the next Bristol - there's lots of money going in."

So St Olaves became acquisition number three. The couple decided to relocate the kitchen of this townhouse from the ground floor to the basement to create a large drawing room with fireplace and bar area for the guests. But the mistake they made - which they now admit - was in not closing the hotel to do the refurbishment.

The work took twice as long as expected and by the end of week four, the lunch trade had disappeared. Refurbishment started in February 2000 and didn't finish until July, adding £180,000 to the budget. But Sebastian estimates that turnover in year one will be £850,000, with occupancy around 70% and an average room rate of £100.

Having learnt from St Olaves, the Hughes will shut Dukes completely and hope to finish the refurbishment programme in two-and-a-half months. Once the hotel is up and running, the Hughes will market it to their database of 7,500 names, most of whom are already loyal customers. Repeat or referred business accounts for 69% of Holne Chase's business.

Such fast expansion means the Hughes now need to catch their breath. They are stepping back from the day-to-day running of Holne Chase, allowing joint managers Anne Coles and Jasper Ware to take the strain. The immediate future includes coping with the arrival of their second child, who was due as Caterer went to press.

And then? Neither of them rules out further purchases, as long as they're in the right location, have synergy with the existing portfolio and come at the right price. And, of course, assuming their understanding bank manager says yes.


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