Rebirthing pains

"I've got the sign, now all I need is a hotel to put it on," says James Thomas, as he strides into the reception room of the Beverley hotel clutching a blue wooden board under his arm. With a broad smile, he proudly shows off his prized possession, which reads, in freshly painted white letters: The Royal Harbour Hotel.

In fact, while Thomas jokes about needing a hotel, he already has two. Both are in Nelson Crescent in Ramsgate, Kent, and both are called the Beverley. One has 12 bedrooms and the other 27. The smaller property, which was called Shirley's B&B when Thomas bought it last year, is now on the market again. He expects to sell it in the next few weeks for use as a private home.

Tentative estimate

Once the smaller property is sold, the 27-bedroom hotel, which is currently trading as a B&B, will be renamed the Royal Harbour. In the next 12 months, it will be extensively refurbished to transform it into a four-star townhouse hotel, at a cost tentatively estimated at somewhere between £500,000 and £1m.

Before the work can begin, Thomas must sit down with his chartered surveyor, Martin Cartwright, his builder, Ian Gifford, and an architect to decide how the finished hotel will look. The surveyor will then draw up a series of plans which will be converted by the architect into drawings that can be submitted to the local planning authority, Thanet District Council, for approval. Planning permission is not expected to be granted until the end of the year.

To get this far, Thomas has had to give up everything. Last year, he packed in his London life and moved to Ramsgate. Asked why he did it, he says, with a slightly bewildered expression: "I know it might sound corny but I didn't choose Ramsgate, it chose me. It really did. For some strange reason, which I cannot begin to explain, it suddenly had everything I wanted."

Thomas first visited Ramsgate by chance with his father, Ian, in August 1998. The two had stopped off at the seaside town for a rest during a sailing trip to France. That visit, although Thomas didn't realise it at the time, would change his life forever. Seven months later, to the surprise of his boss, his family and his friends, he quit his job at London-based hotel group Firmdale, sold his flat and his MG car, and embarked on the biggest challenge of his life.

It was a lot to give up. As general manager of Firmdale's 37-bedroom Dorset Square hotel in Marylebone, Thomas earned a respectable annual salary of £45,000. His boss, Tim Kemp, had also offered him the chance to be general manager of the group's flagship property, the Charlotte Street hotel. His salary at the 52-bedroom venue would have been about £70,000.

That proposed pay-rise, however, started a chain of events that would lead Thomas to Ramsgate. With the prospect of earning more, he decided to sell his London flat and buy a bigger one. An estate agent told him that the flat he had bought 18 months earlier for £68,000 would sell for £108,000. Thomas recalls: "I hadn't thought of Ramsgate since my visit but, as soon as I realised I'd have £40,000 in my pocket, my thoughts returned to the day I had spent there and I knew it was where I wanted to be."

From that moment, things moved quickly. He drove to the town to have a look at Shirley's B&B, which was for sale. The following day, he went back with his father to get a second opinion and, in his words, "see if I was going bananas". With his father's approval, he put his flat on the market, handed in his notice at work, and sold his car for £7,000 to pay off debts and solicitor's bills. He has since replaced it with a second-hand BMW, bought from a relative for £1.

In March 1999, Thomas bought Shirley's B&B for £140,000. He used the £40,000 profit he made on the sale of his flat, and the remaining £100,000 he borrowed from the bank. It wasn't easy but, after three visits, the bank finally agreed to give him a 10-year loan. Each month, he gives the bank £900.

So how did Thomas get to the Beverley hotel? Seven months after moving into Shirley's, he decided it was too small. On a whim, he went to see the owner of the 27-bedroom Beverley, two doors along. He had never been inside before, nor met the owner, but he asked him to contact him should he ever want to sell. As luck would have it, the owner for 15 years "wanted out". A deal was struck and, on 30 March 2000, Thomas bought the Beverley for £250,000.

This time, Thomas had no money so he "begged, borrowed and stole" £85,000 from his family and the remaining £165,000 he borrowed again from the bank, in the form of another 10-year loan. For this, he pays back £1,900 a month. To get the loan, he told the bank that he expected to make a total of £163,000 (from both the Beverley and Shirley's) in the nine months from 1 April to 31 December 2000, and a profit of £33,000. In the five months to 31 August, his sales stood at £85,968 and his profit at £34,368.

After buying the Beverley, Thomas gave Shirley's the same name. Average monthly occupancies at the two hotels have been: April, 61.5%; May, 61.3%; June, 71.9%; July, 80%; and August, 88.8%. The average room rates for these months were £19.51, £19.96, £21.65, £22.71 and £23.95 respectively.

Thomas's first year at Shirley's was hard, both emotionally and financially. He was lonely and had no regular salary. In the first 12 months, he suffered a trading loss of £5,361 and could not afford to pay himself a decent wage. He used to give himself £60 a week "pocket money" and it wasn't until August this year that he was able to award himself his first proper monthly salary of £1,000. Each month, he spends £2,000 to £2,500 on wages for his three staff.

Thomas's immediate priority is to sell the former Shirley's. Despite some difficulties, he does not regret the time he spent there. He says: "If I hadn't bought Shirley's first, then I would never have bought the Beverley, the bank would not have said yes, and my family would not have agreed to help me.

"That first year was a test. Everyone was waiting to see if I would sell up and go back to London. Now everyone is watching me to see what will happen next."

Next visit to the Royal Harbour: 23 November