The Eton Town House hotel group opened its first hotel outside the capital last week. Ben Walker spoke to the group's founder and major shareholder, Peter Tyrie.
Eton Town House group is set to open three hotels this year, a flurry of activity that is not entirely a matter of choice. This is because the 70-bedroom Threadneedles, in London's Square Mile, was originally due to open last August but building delays mean it will now open in April.
In trading terms, managing director Peter Tyrie described last year as "a nightmare, particularly in London. We had nothing to fall back on."
His two London townhouse hotels, where US visitors make up 40% of guests, saw rooms yield fall by 30%. And this came at a time when the group was investing more than £30m in new hotels - or, as Tyrie put it: "A lot of money going out and not much coming in."
Tyrie was, therefore, relieved last week to open the group's first hotel outside the capital - the 45-bedroom Quebecs in Leeds.
The former Leeds & County Liberal Club has been converted at a cost of £6m, including the freehold and a refurbishment that took a year to complete.
The most prominent original Victorian feature is its broad, winding oak staircase lit by five stained-glass windows depicting the five ridings of Yorkshire. Tyrie enthused: "It's a glorious building. It feels like it was always meant to be a hotel."
Tyrie believes that the expansion of big groups in the hotel business has stifled flair and creativity.
He said: "Everything is branding. It's just follow-the-leader. I believe that more people are looking for individual treatment at an individual hotel.
"I think we have a real opportunity. Large companies have overlooked and undervalued the boutique market."
The group registered an accumulated loss of £1.7m in 2000, according to the most recent results.
Finance director Ken Pratt said that this was a result of set-up costs and interest, and added that the group's two London hotels made an operating profit of £513,000 in the same year.
Established in November 1998, the group has £50m in funding from a consortium of banks. It operates on a ratio of one employee to every two bedrooms when, at most other hotels, the ratio is one to one, said Tyrie.
Quebecs has 43 bedrooms costing £200 a night, two suites at £235 a night, and 25 staff, often doing more than one job each.
Tyrie explained: "A porter is responsible for room service and food preparation, and he might do a little gardening. Everybody does everybody else's jobs. This brings the team together. I wouldn't say we spoil them in wage reward, but I am really conscious of how expensive it is for young people, particularly in London.
"It's a balancing act to keep both shareholders and staff happy."
In 2000, 61 staff, including directors, made an average gross annual salary of £17,289, according to accounts registered with Companies House.
The group's total number of bedrooms is set to rise from 93 to 181 by November, when the Glasshouse is scheduled to open in Edinburgh. This will take Tyrie back to the city where he redeveloped and managed the former North British hotel as the Balmoral.
Back then, the Gulf War made trading "extremely difficult" and, in 1992, the 186-bedroom hotel was repossessed by the Bank of Scotland, Eton Town House's principal lender today.
Tyrie wants three more hotels in London, and two abroad, which would double the group's size to 10. "I feel relaxed with London, because it's such a big market," he said.
He predicted that last year's turnover of £3.5m would climb to about £9m for 2002, but added: "We're not going to be too harsh on ourselves for the first year." He expected to see 75% occupancy by 2004.
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