Edinburgh's capital investors
Lucky old Edinburgh - unlike most cities, it has what many locals call two "Christmases". There's the one in December, of course, where the Scottish Hogmanay traditions bring in a revenue of £37m a year, and the Edinburgh International Festival and Edinburgh Festival Fringe in August. This combination of music, theatre, arts and literary events, pulls in 500,000 visitors and a revenue of £136m per year. Some restaurants and hotels take in as much during Festival time as they do during the first five months of the year.
Not that the hospitality industry in the city can afford to sit back and rake in the cash. In line with other UK cities, Edinburgh has experienced a downturn. Long-haul travel from the USA has dropped 7% over recent years and restaurateurs and hoteliers agree that while customer numbers in the corporate, tourist and local markets are fairly buoyant, there's less money around.
However, as the festivals have grown over the years, so too has the hotel and restaurant scene. Graham Birse, director of customer development for the Edinburgh and Lothians Tourist Board, admits that competition within the city's hospitality sector is fierce.
"In the restaurant sector, the independent, high-quality providers are finding margins squeezed, and the same goes for hotel market," he says. "We have to try a lot harder to get more people in to fill beds, and general managers and sales directors have to work on rates to compete."
The way forward is to plug the gaps during the rest of the year, Birse says. Events are being organised throughout the year, from sporting competitions to the International Festival of the Sea in May. The big prize has been capturing the MTV Music Europe awards, which will be held in November.
"We are still the leading arts festival worldwide," Birse says, "but there is a lot of competition from other European cities running arts events, so we have to develop a year-round programme."
The good news is that the number of short-break visitors to the city is up by 15% in the past three years, and air travel has soared to 21% in the same period. As far as corporate business goes, Edinburgh was voted 9th Best Conference Destination in the world this year by the International Convention and Conference Association, and a £24m extension to the Edinburgh Conference Centre will be ready by 2006
There are also other new developments to look forward to. A gargantuan private-public project - the largest in Europe - is under way to regenerate the Grantown area in the north of the city. Established three years ago, Waterfront Edinburgh is a £16b series of initiatives designed to create a modern day New Town.
"We're optimistic," Birse says. "It is difficult because the market is moving very quickly and our competitors, such as London, Barcelona and Paris, are neither asleep not poorly resourced. It's up to us to take Edinburgh forward to attract awards and accolades and develop a brand that unifies and retains the inherent strengths of the city but matches it with style, innovation and design. That's the direction we're heading in."
Edinburgh hoteliers: James Thomson
A newcomer to the Edinburgh hotel scene, but no stranger to the city, is restaurateur James Thomson, who just last month took control of the 400-year-old Prestonfield House hotel, buying shares for a rumoured £5m.
Thomson is well known in Edinburgh. He owns and operates the Witchery restaurant by the castle, and the Tower restaurant above the Museum of Scotland. Thomson will be chief executive and managing director of Prestonfield House, taking over from Charles Stevenson, who will become chairman of the hotel.
For Thomson, the move is an emotional one, as he worked at Prestonfield House as a 17-year-old student and has long harboured an ambition to return. "I have dreamt of taking on Prestonfield ever since I worked here, and I now relish the prospect of polishing a true gem," he says.
Expansion in Edinburgh itself, rather than going outside the city, is also a logical move for Thomson on both personal and business fronts. "There is a great quality of life in Edinburgh," he says, "and also a lot of business to tap into year-round, what with all the festivals and the conference business from the EICC."
Prestonfield House has 26 en suite bedrooms and five further bedrooms without en suite facilities. Thomson plans to spend £2m refurbishing the property, turning seven of the rooms into suites and adding en suite facilities to the rooms that don't currently have bathrooms. Trading will continue as normal, apart from a 10-day closure to uncover a 200-year-old ceiling, and the hotel will be officially relaunched in November.
Thomson anticipates occupancy in excess of 72% in year one, and further down the line an average achieved room rate not far short of the rack rate of £195 for a double with breakfast. He aims to achieve this by establishing a destination restaurant within the hotel, developing a reputation for good food in much the same way as the Witchery has done.
The food will be fresh and seasonal, but there are no aspirations for any Michelin stars. "I'm not after that sort of thing," Thomson says. "They don't tend to make much money."
But Thomson may have some problems with some unusual sitting tenants. Sharing the 20 acres of land in which the hotel is housed are 17 peacocks and four highland bulls.
Edinburgh hoteliers: Peter Tyrie
When hotelier Peter Tyrie opened the 65-bedroom Glasshouse hotel in Edinburgh at the start of June, he was unprepared for the amount of publicity it would generate. It wasn't just the two-acre rooftop garden or the unusual glass complex in which the hotel was housed that attracted attention. Rather, it was the 200 photographs of naked women adorning the walls - some as large as two metres tall - that caused a stir and had the story picked up by many newspapers.
Tyrie is amused but unrepentant. "It turns out to be one of the best moves I ever made in terms of publicity, but it certainly wasn't planned," he says, dismissing the allegations that the pictures are about titillation, claiming instead that they are tasteful examples of real art.
However, he adds cheekily that photographer Trevor Yerbury, whose work they are, must have the best job in the world: "If I ever come back in another life, I want his job!"
Tyrie is no stranger to Scotland. In 1981, he launched Gleneagles Hotels after a buyout from British Rail, which included the Gleneagles hotel in Perthshire and the Caledonian and North British Hotel, now the Balmoral, in Edinburgh. And, he says, he's glad to be back.
"In terms of managed funds, Edinburgh is the second-largest city in Europe after London," he notes. "That gives us a lot of corporate business. It's also the second most visited city in the UK after London, so there's also the tourist market to tap into."
So, what kind of property is the Glasshouse, and what makes it different from its rivals? Chic, unique and boutique is the trio of adjectives that Tyrie uses to describe his new baby. It's neither minimalist nor over-trendy or quirky. Furniture and fittings are of a high quality, in muted tones that should stand the test of time. "We aim to be a high-quality home-from-home," Tyrie says. "You should feel as relaxed in your room as if you'd just got home from work, switched on Classic FM and poured yourself a large glass of Chardonnay."
The Glasshouse is the fifth property in the Eton Group, a company that Tyrie founded in 1998. The hotel, which cost £7m to build, is housed inside the city's Omni leisure complex, a new development with a cinema and fitness centre. The hotel reception is on the ground floor and the bedrooms on the top two floors of the six-storey building, with the top floor bedrooms looking across the rooftop garden. Each room has a CD system and music library, Eygptian cotton bed linen, and voice-mail, broadband internet and fax and modem points for business users.
One difference between the Glasshouse and its competitors, such as the Balmoral and the Scotsman, is that there is no restaurant. Instead, the hotel offers 24-hour room service, though there is a breakfast room. This is a deliberate move to allow Tyrie and his team to concentrate on the business of selling rooms rather than dabbling in food.
"There are lots of hoteliers who run restaurants and think they are good at it, but they are not," Tyrie says. "Restaurants and rooms are completely different concepts, and I can't see the point in running a restaurant in a hotel when there are 20 restaurants within a few hundred metres."
Rates at the Glasshouse start from £175 a night for a double without breakfast. Tyrie anticipates an average achieved room rate of £115-£120 excluding VAT, and occupancy in year three of 75-78%. There are 33 full-time staff for the 65 bedrooms.
Is the Glasshouse the final component of Tyrie's empire? "I said I wanted five hotels and this is the fifth," he replies. "But there will be more. I am now going into phase two. I want to recapitalise the company to maintain a low gearing, and ideally I would like another five hotels, including properties overseas."
Barcelona and Madrid top the list for European ventures, although there is also talk of Oxford, Cambridge, Bristol and more hotels in London.
Hotels overview
Edinburgh's established hotel players are watching the opening of new hotels with interest - and a slight sinking feeling.
"I think we're really there, in terms of players in the market," says Peter Murphy, general manager of the 260-bedroom Sheraton Grand Hotel and Spa. "You hear of 68 rooms here, 98 rooms there, Holiday Inn opening a 200-rooms-plus hotel - the city is not that robust."
While new players may grab the headlines, for existing hotels the challenge is always to reinvent themselves, keep customers loyal and find new reasons for guests to frequent their restaurants and rooms. Targeting niche markets is the way forward.
At the Sheraton, Murphy and his team have been able to target a different type of customer since opening a spa in September 2001. "By coincidence," he says, "we opened the spa at the very time we needed to look at the UK short-breaks market."
The spa enabled the hotel to attract a more affluent leisure-seeker. Murphy estimates that, while the hotel's business-to-leisure ratio is still 50:50, the average achieved room rate on a weekend has increased from £95-£105 (pre-spa) to £120-£130 in 2003. Overall, the average room rate is now £115, an 8.5% increase over the figure for 2002.
At the 68-bedroom Scotsman hotel, general manager Andrew Stembridge's goal is to increase the revenue generated from Vermillion, the hotel's 36-seat fine-dining restaurant.
The hotel has created a cinema club on Sunday nights, offering customers a two-course dinner and a movie shown in the hotel's comfortable screening room. Stembridge estimates the club, at £35 a head, will increase the restaurant's revenue by 20%. The screenings focus on classics such as Some Like it Hot, Breakfast at Tiffany's and The Italian Job. Two weekends into the exercise, there were 24 covers.
The Townhouse Company, meanwhile, is looking for women who are in need of some pampering. A luxury weekend costing £260 per person is being billed as either an upmarket hen weekend or a just-for-girls weekend. "The UK market is really strong for us at the moment, and we want to add value for our customers," says marketing manager Kaye Clarke.
With that in mind, the weekend includes a room in one of the 29 suites of the all-suite townhouse Edinburgh Residence, a trip to Harvey Nichols with a personal shopper, in-room deep-tissue massage treatments, in-room dining and a movie.
"We are trying to find niche markets in the UK," Clarke says. "Women getting married for the second time, who are slightly older, are unlikely to want the traditional hen night, and we thought this would fit the bill."
The 188-bedroom Balmoral is bringing in visitors with a special programme of events. One idea that could catch on with chocoholics is a special chocolate buffet in its Palm Court restaurant on Thursdays. For £12 a head, all things chocolate should attract guests in from 5pm to 8pm, extending the usual teatime dining.
In the longer term, the hotel is spending £3.5m refurbishing its bedrooms and suites, updating corridors and adding air-conditioning to some of the bedrooms.
Edinburgh: the restaurant scene
Hot spots
New Town…
George Street and environs
Edinburgh's answer to Bond Street, the majestic George Street in the New Town, is a honeypot for Edinburgh's glitterati - of all ages. Harvey Nichols famously opened last year at the east end of George Street in St Andrew's Square, and the Living Room group makes its first foray north of the border next month - destination, George Street, with a refit budget of £1m.
With rents and rates here among the highest in the city, the main drag itself is home predominantly to the chains (Brown's, Est Est Est, All Bar One, Wok Wok, Hard Rock Café), with only a few sites occupied by the larger independents (the Dome, Candy Bar, Opal Lounge - Montpelier Group). However, a colourful mix of independents thrives in the adjacent streets (Fishers, Café St Honoré, Henderson's, Muang Thai, Hurricane), the most high-profile of these being rooftop restaurant and bar Oloroso.
Opened in January 2001, Oloroso continues to attract a style-conscious clientele. Corporate trade constitutes a large chunk of the business for chef-proprietor Tony Singh, and he has noticed that companies are being more economical with their entertainment budgets. "Instead of regular one-on-one lunches, they'll take four or five clients out at a time," he says.
Singh is more concerned with the perennial problem of recruitment, made increasingly difficult by the influx of restaurants. "It dilutes the stock of staff," he comments. "You can promote existing staff, but then there are issues of improving their skills and higher salaries."
The area's latest independent operators, Jon Clemence and Bruce Weir of the Cambridge Bar & Gourmet Grillroom, get around this conundrum by offering an easily executed menu, featuring 12 different burgers, salads and waffles. "To offer a full pub menu requires a well-qualified - and therefore highly paid - chef, but you can't charge restaurant prices," Clemence points out.
After transforming a traditional pub into bar-grillroom chic at a cost of £80,000 in May, Clemence and Weir believe there's a market for freshly prepared, accessible food in the city centre. "There's a lot of restaurants here but they're all quite expensive," Clemence says. "Our turnaround is good because the menu is simple and quick. It's also easier to keep the consistency and to transfer this menu to other sites."
With that in mind, the 30-year-old entrepreneur has revealed plans to open two further Grillrooms in Edinburgh.
Leith
What was once an Edinburgh backwater is now the trendiest place in town, and The Shore is the place to be. "PizzaExpress decided to open in Leith [in May 2000] because there was a fantastic, vibrant local community," says operations director Vito Ivone.
On the cobbled waterside streets, his swanky, wood-clad and chrome restaurant fits but is conspicuous thanks to its ubiquitous indigo logo. The Shore is the domain of the independents, from the Michelin-starred Restaurant Martin Wishart and the flagship Fisher's to the traditional King's Wharf and brand new, ultra-hip £1.5m Lighthouse bar-restaurant complex.
Established 19 years ago, Skippers restaurant is a veteran. Manageress Ana MacDonald believes there are two factors contributing to the bustling maritime scene. "The constant promotion of the area as a trendy, up-and-coming place is self-perpetuating," she says, "and people love a port."
With the completion of four luxury apartment developments in the past six months (and a further two under way), there's a healthy young professional population, as well as a growing band of inquisitive tourists, helping to sustain the many eating-out venues - whose number is set to swell further with another two restaurant openings imminent.
MacDonald, though, is upbeat. "The greater variety of bars and restaurants bring more people to the area," she asserts, "which means we get a bigger percentage of that increased market."
Casualties
Not everyone is as positive about the breezy streets of Leith. For example, proprietors Valerie Faichney and Alan Morrison recently put (Fitz)Henry into voluntary liquidation. It was originally run by David Ramsden, now of Rogue, but the flamboyant restaurateur blamed his former restaurant's location for its downfall, despite having built up a successful business there himself.
Ramsden famously told the press earlier this year that he would be forced to close his restaurant in the financial district, Rogue, if trade didn't improve. Appealing to customers to tell him where he was going wrong, in what some called a publicity stunt, Ramsden was candid: he needed to take £15,000 to £18,000 a week, not £10,000.
The state of the economy, the war in Iraq and Rogue's location have all been blamed for Ramsden's recent struggles, which resulted in staff cutbacks from 30 to 16.
Rumours of further potential difficulties surround the hospitality venues in the £120m Ocean Terminal shopping and leisure centre, situated beside the Royal Yacht Britannia, now moored two miles from The Shore. Tenants such as Ma Potters and Conran's Zinc are said to be quiet and, despite a glitzy opening two years ago, the capacious complex has still to let 25 per cent of its units. However, MTV hosts its annual awards in a purpose-built theatre near Ocean Terminal in November, which should bring some 6,000 people into the area.
The Establishment
Old Town and beyond
To the south-east of central Princes Street (home to the newly Michelin-starred Number One at the Balmoral hotel) lies the historic Old Town, with its cobbled streets, narrow wynds (alleys) and 16th-century architecture. The restaurant scene on this side of town arguably has more character than the other hubs, mostly due to the number of owner-operated sites. It's here that Gordon Ramsay is looking for a site.
Recent openings of note include the chilled vegetarian restaurant, David Bann, the diminutive rustic Italian, Prego, and the stylishly relaxed Outsider, sister restaurant to the Apartment in Bruntsfield.
In the past few years, veteran Spanish restaurateur Iggy Campos has opened the contemporary Bar Rioja next door to his fine-dining restaurant, Igg's, capitalising on the trend towards casual dining. Two doors down is La Garrigue, where chef-proprietor Jean-Michel Gauffre serves the flavour-rich country food typical of his French homeland.
Among the tartan tat on the Royal Mile, David Anderson and Aileen Wilson's Off the Wall is an oasis of calm. Opened in 2000, following the success of their vegetarian restaurant, Legume, this fine-dining Scottish restaurant initially struggled to lure people "across the bridge". Anderson concedes: "Luckily, our regulars followed us, but it took a long time for New Town people to come."
As with the other independents here, despite its location, the tourist trade only accounts for about 20 per cent of business, the rest being split between corporate and local trade (although this balance evens up during the Festival). Wilson claims that Edinburgh doesn't have the moneyed people it likes to think it has. "Glasgow people spend their money on themselves," she says, "but Edinburgh people spend it on private education."
On the more established front, local restaurateurs James Thomson and David Scott operate completely opposite, but equally successful, dining concepts. Thomson, who has just added Prestonfield House to his portfolio, is behind fine-dining eateries the Witchery by the Castle, the Secret Garden and the Tower - all notorious for attracting celebrities, politicians and other famous folk.
Meanwhile, Scott heads up the Howies group, comprising four Edinburgh sites (one in the Old Town's appealing Victoria Street) and one each in Aberdeen, Dundee and Perth. Howies, a refined version of Pierre Victoire, the chain that inspired Scott 13 years ago, are all individually designed, and serve affordable, modern Scottish menus created by autonomous chefs, and operate a bring-your-own option.
Andrew Radford
In recent years, established industry operators have realised that accessibility is key to maximising revenues from the home market, which explains the rise of diffusion dining concepts across the city.
One of the first to cotton on to this was Andrew Radford, with his elegant eaterie, the Atrium, and cool bar-bistro Blue. Located in Saltire Court, home to Scotland's top legal and financial firms, the Radford restaurants are in the heart of a corporate and cultural Mecca, with the Usher Hall, Traverse and Lyceum theatres, and the Filmhouse, Sheraton Grand and Caledonian Hilton all on the doorstep.
Radford has been observing the evolving scene since launching the Atrium in 1993, and Blue in 1997. "There are too many restaurant seats in Edinburgh now, and there will be casualties," he predicts, mentioning (Fitz)Henry as an example. "It's becoming increasingly difficult - lots of people are talking about survival."
The Atrium's figures, however, are as good as they have been for the past 10 years, despite doing fewer covers, while Blue is doing similar numbers but food spend is down and cocktail spend is up. "People are grazing more," Radford points out, "and there's a considerable amount of competition at Blue's level."
Concierge referrals still account for much of the fine-dining market, while this year has also seen the return of the Americans - typically, older and more discerning. But, like his contemporaries, Radford has noticed that corporates have less time and money to spend. "It's a commercial world," he concludes, "and I hope that the independent restaurant can survive the rates and economic downturn we're enduring just now."
