A way through the Mayes

Colin Mayes is a man with a mission. The newly appointed chief executive of 164-outlet Old English Inns (OEI) wants to have on-line booking with on-line confirmation for his 2,200 rooms by the end of this year, and to have grown to 200 outlets by the end of next year.

Typical of the new acquisitions is the 33-bedroom Castle & Ball hotel he is buying in Marlborough, Wiltshire, for £1.15m, which will immediately receive a £250,000 refurbishment. "This is perfect for us," says Mayes. "It's on the tourist trail and it's within 15 minutes' drive of major business centres."

OEI aims for a minimum of 16 rooms in the two- to four-star quality range and the ability to deliver £10,000 in revenue each week. When Mayes started in the pub business, he learnt that the key was to buy properties, refurbish them economically and quickly, and get them trading again. This year OEI will refurbish 500 rooms at an average cost of £2,000.

Compared with his time at Forte, this is cheap, but he quotes Michael Cannon, with whom he worked at the Magic Pub Company, when he says: "You move rapidly and bring love to a business."

Mayes is a classically trained hotelier with international catering experience, who has brought big-company discipline to the sometimes parochial world of British pubs and inns since he left a successful international career in 1995.

"After an environment where innovation was not exactly a ‘core phrase', the pub industry was like the Wild West," he says. He took to pubs, and they took to him. His career rocketed, and last October he was head-hunted from his role as chief executive of Greene King Pub Company to solve the problems stemming from Old English Inns' rapid expansion of the past 18 months.

In a way, it's a problem that many chief executives would welcome. OEI comprises a staggeringly consistent estate of properties with character, bought from individuals as well as from Forte and Regal. But the rapid expansion seriously overloaded the company's managerial ability. Despite acquisitions of premium units at premium prices, the delay in their integration means that the company has not realised its full earning potential, and it has borrowings of £58.5m to service.

OEI must show investors that it has the managerial skills to ensure its second phase of growth after a disappointing 1999, which saw a profits warning in spring wipe 44%, equal to £43m, off its market value from the previous November. By the start of 2000 shares were creeping back up, trading at about 134p against a high last year of 316p.

"Units weren't integrated with speed and efficiency," admits Mayes. "The back-up support wasn't there to deal with the influx in such a short time." All areas of the business were affected, as managers and staff tried to cope with new menus being introduced, properties being refurbished and changes in human resources and accounting procedures.

The properties and managers need direction, an integrated reservations system and, above all, central marketing.

OEI currently operates in two divisions: Old English Inns & Hotels has 112 large coaching inns, while Countrystyle Inns comprises 60 smaller but equally characterful pub-restaurants. About 70% of the properties have rooms, with an average occupancy of 63% and an achieved room rate of £45. "The opportunity is there to bring occupancy up to the high sixties or low seventies," says Mayes. "I'm happy in the short term to grow occupancy but to hold room rate - although I'd like to edge it up 5% within 12 months."

To achieve this without being a major national presence means that Mayes needs an effective way of reaching the consumer and avoiding the commission-grabbing agent. This is where his bid to sell directly on the Internet comes in. "If we can market directly," he says, "I can offer special terms - for example, for tourists spending five nights in our hotels over a two-week period." Not only will the room yield increase, but Mayes can ensure that most guests pay in advance.

Another plus is that, due to the attraction of OEI's bars and restaurants, as many as 80% of B&B guests will dine on site. This turns a £45-a-night guest into a £75 customer.

But OEI is not experiencing all the benefits yet. Christmas was slightly disappointing, as bookings were lost from some of the newly acquired hotels. Also affecting reservations and occupancy is the fact that the new central reservations system only includes 30 sites, although the whole estate is expected to be on-line by early summer. It is no surprise, therefore, that, while rapidly integrating the estate, Mayes's most immediate problem is one of marketing to his clearly targeted audiences: business travellers, the "grey pound" and tourists.

Positive response

In order to fill those hotel rooms quickly, Mayes decided to target the European travel agents and went last November to World Travel Market in London. He was surprised at the positive response, which has brought in about £250,000 of business. "Agents almost bit our hands off when we showed them our portfolio and room standards," says Mayes.

"We're not a brand. We're more of a collection of characterful inns," he adds. "I want guests to have a ‘picture of us' which assures them of the consistency in character and the level of service, including food, from each property. Each inn is different, and each room is different. Yet guests can stay with us at pretty much the same price as the budget chains."

The market for budget accommodation is maturing and guests, business or tourists, are looking for points of difference. They don't want sterile, square rooms that are exactly the same as the last one they stayed in, he says.

Technology, through a loyalty card scheme, will also allow Mayes to emulate high street retailers' success in building a relationship with customers and understanding their needs. Currently, 2,000 people pay £200 a year for the Old English Country Club Card, giving 25% off accommodation and 10% off food. The system, however, is basic.

By 2002 Mayes wants 30,000 subscribers using a card and giving him a wealth of information about themselves and their leisure habits. This will allow him to better understand, segment and target his customer base. Younger, monied customers can be persuaded to take three or four leisure breaks a year, he reckons, and older customers can fill the rooms during quiet months thanks to attractive promotions which could revolve around birthdays and wedding anniversaries.

Nineteen properties are registered for weddings, which is a profitable and growing market. For example, the Bull at Long Melford in Suffolk held eight weddings in 1998, 52 in 1999 and, by 1 January, 48 were booked for this year. Average attendance is 60 guests at £29.50 per head, and 35% also book accommodation.

CV, Colin Mayes

1972 Left school at 16. Decided not to join father's Whitbread tenancy but became management trainee with Trusthouse Forte. Was Student of the Year at Ealing and Westminster colleges.

1976 Appointed general manager of Forte Bournemouth.

1979 Moved to Toronto, Canada, as manager, then a director, of Holiday Inn.

1982 General manager, Talk of the Town, London; then ran outdoor and special events division of Ring & Brymer. Turned a £45,000 loss into £2.5m profit in three years.

1986 Forte Airport Services, running retail and catering with 76 operating units and 900 staff.

1990 Operations director, Forte London Hotels; seven major hotels with 4,500 rooms, sales of £75m and 1,800 staff. Despite Gulf War, profit grew by £40m to £60m.

1993 Moved to Italy as vice-president, Agip Forte, a joint venture with Italian government.

1995 Head-hunted by Michael Cannon to become operations director for Magic Pub Company, initially responsible for 21 hotels, 650 rooms and 600 staff, but taking on wider managerial responsibility. Introduced strict financial controls on operating costs, developed new markets and a group of talented managers. Within 18 months profitability grew by 28%.

1996 (July) Appointed managing director of Magic after acquisition by Greene King, to handle integration.

1997 Appointed managing director, Greene King Pub Company. Acquired Morlands, closed a brewery and restructured the new Greene King estate into three clearly directed divisions.

1999 (October) Appointed chief executive, Old English Inns.

Source: Caterer & Hotelkeeper magazine, 20 - 26 January 2000