Room for more rooms?

31 May 2001
Room for more rooms?

Detractors quip that if you go to Dundee to see Captain Scott's ship Discovery (left), the first thing you discover is that you don't want to be in Dundee. It's a joke that's wearing thin with the locals. Slowly but surely, there are fewer detractors and more investors discovering the potential of Scotland's fourth city.

As far as the hospitality industry is concerned, though, most of this potential is still unexplored. The north-east-coast city was once known only as the home of the Dandy and Beano comics, fruit cake and marmalade, while clinging on to a history rooted in the jute industry. Now it's an international centre for biotechnology and cancer research. It has the largest teaching hospital in Scotland, Ninewells, 3,000 scientists from all over the world and a battalion of 26,000 students at its two universities and its colleges.

Surprisingly, though, despite a population of 150,000, there are only two mid- to top-end hotels in the city centre - the four-star, 129-bedroom Hilton and the independently owned, three-star, 52-bedroom Queens. On the outskirts, the only large hotel is the 104-bedroom Swallow, while further afield there's a sprinkling of small country house and budget hotels.

On the other hand, there are 10 conference venues in the centre, in addition to the hotels. The city's largest non-residential venue, Caird Hall, alone holds 2,400 delegates.

Here lies the problem. Dundee's medical research kudos means the city has huge potential to become an international conference destination, but because it does not have enough hotel accommodation it repeatedly loses out to Edinburgh and Glasgow. And yet conference rates in Dundee are competitive, at an average of £129-£135 per person per day, compared with £180-£200.

It's not a conundrum that will be easily solved, as Dr Colin Smith, chief executive of Angus and Dundee Tourist Board and Convention Bureau explains.

"The two universities generate a lot of [conference] business but we don't have the accommodation to make the leap into becoming a first-class conference venue. It's a chicken and egg situation," Smith says. "We are trying to gee up the conference side to get hoteliers in. The problem is that in the short term, [some] hoteliers will suffer, but we are confident they will benefit in the long term."

To develop conferences, the tourist board and Scottish Enterprise Tayside launched the Ambassadors Programme last November. The idea is to persuade academics at the universities and colleges to pitch Dundee as the venue for national and international conferences they attend. In return, they get help organising the tender, accommodation and so on. In addition, Smith is spending part of his £30,000 marketing budget on encouraging hoteliers to invest in Dundee and thereby stimulate the development of more conference facilities.

Hotel operators rumoured to have considered the city include Macdonald Hotels and Holiday Inn Express. There's also been an application for a 103-bedroom hotel in Marketgate, but the operator has not been announced.

One hotelier who has bitten the bullet is Norman Springford, managing director at Apex Hotels. He plans to open a 155-bedroom hotel with conference facilities for 500 delegates in September 2002. Total investment is estimated at £13m and work begins this autumn on the site, which lies between the Hilton and another new development, City Quay retail centre.

"We've done the marketing assessment and feel that it is an up-and-coming city for us," says Springford, who already has two hotels in Edinburgh and one in Glasgow.

Part of the attraction for Springford is that the Apex will be a big player in a small market. He acknowledges, however, that this in itself could mean business is difficult to come by initially. Another worry is the lack of good restaurants in town, and for that reason the new hotel will have two of its own concepts.

On the subject of big players, it's hoped that the Swallow hotel will attract a well-known buyer. It has been up for sale, along with 11 sister hotels, since the company was bought by Whitbread last year. "We are disappointed that Marriott [a Whitbread brand] didn't take us over," says sales executive Pat Fraser. "I saw us as a Crieff Hydro. Dundee is up and coming. If you had seen [the city] 20 years ago… we have transformed. It's fantastic."

Nevertheless, although bars such as Yates's Wine Lodge have arrived in Dundee in the past year, the dearth of good restaurants has caught the attention of David Howie Scott, who has been looking for sites to expand his five-strong Howies chain. He is in negotiations to open a Howies with a 100-seat restaurant, 120-seat bar and four bedrooms on South Tay Street, near the Rep Theatre, in an area being marketed as Dundee's "Cultural Quarter". The £750,000 project is expected to launch this autumn in time for the students' new term.

"Freeholds are at reasonable levels," Howie Scott says. "We feel that if we get in there now we will be in a strong position. A number of other people have been looking at Dundee but it has an old-fashioned image."

This old-fashioned tag is one that also worries Howie Scott slightly. He notes that locals don't dine out at the beginning of the week - a tradition in many northern cities that he hopes will get pushed further north. One thing he's sure of is that his restaurant's £15-a-head average spend for dinner will suit the Dundee purse.

Both Howie Scott and Springford have been further encouraged by retail and leisure developments in the city. Since 1999, openings have included the £9m Dundee Contemporary Arts museum, the science centre Sensation, the Ice Arena and the £150m Overgate shopping centre. In addition, there are established attractions such as the Rep Theatre, and Discovery Point.

Coming onstream at the moment is the £30m retail centre at City Quay, being developed by Forth Properties. Jack Campbell at chartered surveyor Fisher Wilson, the developer's agents, says at least 65% of space will be sold to retailers, but there will be up to 20,000-30,000sq ft of space for restaurants and pubs. He confirms that Harry Ramsden's has signed up and mentions that Pizza Hut has made enquiries. Space is being rented out at £20 per sq ft a year.

Such retail developments are helping to promote the city for shopping breaks, while on the outskirts there is a move to generate more golf business by emphasising that the area is within easy driving distance of famous courses such as St Andrews. To this end, the region has bid for the Ryder Cup in 2009 and will hear in September.

One hotel that would expect to benefit from this is the multimillion-pound 85-bedroom Carnoustie Hotel Golf Resort and Spa 11 miles along the coast, which opened in 1999 in time to host the Open Championship. Local developer Michael Johnston, who owns the hotel, reckons that 80% of business is from golf in the summer - particularly Americans - with 90% from conferences in the winter.

Not all new hotels on the outskirts are welcomed, though. There's a fear that the proliferation of budget hotels such as Travel Inn on the periphery of Dundee is pulling travellers away from the centre - particularly for one-night stays.

Maxine Bertschy, joint owner of the six-bedroom Old Mansion House hotel, just outside Dundee, complains that she has lost trade from businessmen on a budget. Her rack rate is £120 for a double. "It has hit a lot of hotels like us," she says.

Smith, however, is more relaxed and welcomes the extra bedspaces the budget hotels bring: "If that is the kind of accommodation that's developing you have to work with them," he says.

A view across the River Tay shows Dundee snuggled at the base of an extinct volcano, the Law, which some might say reflects the city's future. Despite a population of 150,000, the city has only two mid- to top-end hotels in the centre - the Hilton and the Queens.

FACTS

www.dundeecity.gov.uk

Population: 150,000

Average weekly earnings, 1999: £354.20

Percentage of workforce employed in hospitality in 2000: 6.3%

Tourist revenue: 1999, £134.9m; 2000, £128m (-5%)

Conference business: 60% takes place from October to March. In Dundee and Angus it is worth an estimated £4m a year

Dundee Airport: daily flights to London City Airport have increased from four to six

Sources: Angus & Dundee Tourist Board and Convention Bureau

What existing hoteliers think

Gordon Sneddon, joint owner of the Queens hotel in Dundee city centre, is unfazed by the launch of the four-star, 155-bedroom Apex in 2002. "We have pitched [ourselves] as value for money in the three-star market," he says.

Sneddon and business partner Robert Oliver bought the 52-bedroom hotel three years ago, hoping to cash in on a city boom. "It's like Glasgow in the 1980s" Sneddon explains. "It's going through a regeneration and shaking off its left-wing attitudes. There's a big in-come of commerce - for instance call centres - and hospital and medical research, which is bringing the upper middle class to Dundee."

A month before they took over the run-down hotel, the 80-bedroom Thistle hotel was knocked down, "which was good for us" Sneddon says. Following an investment of £750,000, they added five bedrooms and last July relaunched the refurbished conference rooms - all of which, Sneddon says, has doubled turnover. The restaurant was also given an overhaul, creating a bright bistro called Nosey Parkers. Now they are spending £140,000 on the roof.

Average annual occupancy at the hotel is 70%. Room rate is £61 for a single (or £55 corporate rate). The achieved room rate is in the high £30s or £40s. Hilton and Swallow achieve rates in the £50s off rack rates of £140 and £118 respectively for standard doubles.

Over at the 129-bedroom Hilton, Carol Melhuish, conference and banqueting events manager, welcomes the competition that the Apex will bring when it comes in 2002, but admits it is forcing the Hilton to improve its own facilities. The hotel, which can take up to 400 delegates theatre-style, versus 500 at the Apex, is spending some £200,000 on refurbishments in the next few months.

Most concerned about Apex is Pat Fraser, sales executive at the 107-bedroom Swallow hotel on the outskirts of the city. She's worried there's not enough business to merit more conference venues and hotels - only 10% of the Swallow's conference business is residential. In 1999, the hotel invested £500,000 in a conference centre, which seats up to 120 delegates theatre-style. She estimates average room occupancy at 55-60% throughout the year.

"We are already scratching around for accommodation business five to seven times a year. So how many conferences would we have to get to merit the extra accommodation? I still think another hotel coming into the centre is 155 rooms too many. The Travel Inns are a mistake, too."

Maxine Bertschy and her husband Jannick have owned the Old Mansion House, 20 minutes' drive from Dundee, since 1997. The six-bedroomed country house hotel and two-rosette, 50-seat restaurant sees 70% of its custom come from business people or visitors to the university. The winter months are usually busy with shooting parties, the summer months with golfers. Occupancy of the six rooms is about 60-65% and room rate is £120 for a double.

"We aren't full all the time so don't believe there is room for many more high-quality venues," Bertschy says.

For her, the main issue is to make Angus and Dundee a better area to visit. "Everyone's image of Dundee is that it is a poor city," she adds. "But I think Dundee will have its heyday."

One of the top established attractions for visitors to Dundee is Glamis Castle, the childhood home of the Queen Mother, which is 12 miles from the city centre. Open from April to October, last year it saw 107,000 visitors paying £3.10 - £6.20 each. The projection for this year is 110,000 visitors. The castle also offers banqueting facilities for up to 90 people.

Source: Caterer & Hotelkeeper magazine, 31 May-6 June 2001

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