Shire power

Ian Harkness might well be a straight-talking man, but he can't give a simple answer to a straight question. With 40 years-worth of hotel anecdotes up his sleeve, conversation with the managing director of the nine-strong Shire Hotels bats with breathtaking speed between past hotel deals, the economy, juicy industry snippets and views on his favourite football team, Liverpool.

Get him on the subject of his latest project, the 123-bedroom Thorpe Park Hotel & Spa in Leeds, however, and he immediately focuses, becoming almost protective. "It's my baby," he agrees. "I am very proud that a small group can do this."

Besides being proud, however, Harkness is probably justifiably nervous. At £18m, Thorpe Park represents the biggest investment in a new-build hotel yet for the company. It also represents a big change in style, from traditional to contemporary, in line with the competition - in Leeds the competition comes from Malmaison, Radisson and Marriott.

"It was a big decision to go contemporary," Harkness says, "but Thorpe Park strikes the right balance between the best parts of Shire Hotels and it uses everything we have learnt."

One thing Harkness has learnt is that Shire hotels need more rooms. Thorpe Park is therefore the first of its properties to be purpose-built to 123 bedrooms. In the 1980s, as he explains, 90 bedrooms was regarded as the perfect balance for the level of service offered. Post-1990, when recession bit, the hotels couldn't get high enough room rates and so were forced to build extensions, raising room numbers to about 120.

Harkness has not been content just to look at the bigger picture, though. It's clear as he walks through Thorpe Park - greeting staff by name, questioning why a flower arrangement is in the wrong place or an ashtray is missing - that he has taken a detailed interest in its design. Outside, he explains that the rows of lavender planted around the imposing entrance are a nod to Provence; while inside, the airy, glass-covered courtyard at the heart of the hotel conjures up a chÁ¢teau. He also points out "glimpses" through archways and windows from reception to the courtyard, and from the corridor to the terrace café and the swimming pool beyond. The idea is that it will encourage guests to use all the public spaces, and that includes dining where they choose.

So why create all this in a business park in Leeds? The answer to that lies at the heart of Shire's strategy. All the hotels are aimed at the business traveller and all are built on motorway junctions close to growing cities - and near enough to a major source of tourism to fill the hotel at weekends. So, for instance, the Aztec is in AztecWest Business Park on the M4/M5 intersection, near Bristol and Bath, and the Solent is near Junction 9 of the M27 near Portsmouth. "We needed to be on a trunk road next to a big city. The synergy is that that is where we do business," Harkness says.

It's no surprise, then, that Thorpe Park has 14 meeting rooms, all with natural light, and a bright, trendy conference caf‚ where delegates can "graze". The main conference room is kitted out with the latest equipment and can host 150 for a dinner dance or 220 theatre-style.

But it's not all work. The spa is another key element for any Shire hotel, as it brings in the leisure customers at the weekends when the business folk go home.

Thorpe Park, which has an 80:20 business-to-leisure split at the moment, has 1,000 spa members, a serious gym with 35 pieces of equipment and, as Harkness diligently insists: "The pool is for fitness, not sex."

Gordon Jackson, general manager at Thorpe Park, says it's too early to divulge occupancy figures, and stresses that his job is to ensure people return to the hotel. To make sure he gets four-star guests from the start, Jackson discounts only for corporate volume business, selling most rooms at the rack rate of £140. It isn't cheap, he says, but then the service is good.

It's also friendly. While at least 50% of Thorpe Park's managers have come from other Shire hotels, many of the 100 staff are raw recruits, chosen for flair and personality rather than technical skills, which they are being taught.

It may sound relaxed, but Harkness will expect results. Most of the quality control throughout the group is done by mystery shoppers. General managers are given incentives to excel through share options and bonuses, but if they don't hit the minimum benchmarking target of 80% they forfeit their bonus - whether or not the hotel has made a good profit. Harkness is quick to add, however, that the bonus is paid in arrears when benchmarks are met. "We don't destroy people," he says.

Indeed, what sets Shire apart from many hotel companies is the low staff turnover. The average length of service is about 10 years; Jackson, for example, started at Penrith 17 years ago. Harkness is pleased about the fact that he miscalculated when he originally ordered gold pins for five years' service. "People are staying much longer, so we are having to go in the opposite direction - from gold badges for five years to silver for 10 years," he jokes.

He reckons part of the success in retaining staff is down to making sure each new member fits in with the team. "We aren't overt - we don't do what Pret A Manger does where staff vote after a week if a new member can stay - but if you don't fit, in you will be moved somewhere you will fit. We are hard on the task, soft on the process."

Thorpe Park is not the end of the story, but Harkness says he will take his time to find the right locations for expansion. He cites the Four Seasons as an example of a group that owes its success to slow and careful growth, and he is happy with the fact that although he has been at Shire for 22 years it won't be at its optimum "until a long time after I have retired".

Indeed, getting each hotel off the ground takes time in itself. The Thorpe Park site was identified as long ago as 1997 when the M1-A1 link road was first proposed. "It takes five years from identifying a location to opening and operating a hotel until you reach the maximum potential," Harkness says, adding, "after all, it took the company 10 years to understand what we were doing - and then we decided to build to a new size."

Ian Harkness - 40 years in the industry

Born: 18 February 1948
1966-69 National Diploma in hotel administration (forerunner of HND), Oxford Polytechnic
1969-71 management trainee, Trust Houses
1971 chef de partie, Lacy's restaurant, Whitfield, London
1971-80 assistant to the catering executive, rising to group catering manager, at Crest Hotels, Banbury, Oxfordshire
1980 managing director, Shire Hotels
1989 director of Daniel Thwaites (parent company of Shire Hotels)
1994 Advanced Management program at Cornell University, Ithaca, New York
1997 Leading and Managing Change program, Stanford University, California
2000 Executive Program in Strategy and Organisation at Stanford University, California

Shire Hotels

Colne Road, Burnley, Lancashire BB10 2NG
Tel: 01282 414141
Web site: www.shirehotels.co.uk

Founded: 1980 by Thwaites, the Blackburn-based brewer and pub operator
Managing director: Ian Harkness (also group board director for Daniel Thwaites)
Daniel Thwaites turnover 2001: £127m
Shire Hotels turnover: £33m
Investment in refurbishment of hotels over past three years: £10m
Total staff: 1,100
Spa membership across all hotels: 6,500

Combined yield for core four-star business hotels (excluding Leeds)
2001-02 - £51.85
2000-01 - £50.69

Dates and rates…

Shire Hotels: from the bar to the bedroom

Shire Hotels, formerly Shire Inns, was founded in 1980 by Thwaites, the Blackburn-based brewer and pub operator, which turned over £127m last year and is now the third largest company listed by the off-exchange stock market, Ofex. The share structure is closed, with more than 50% of shares owned by the Yerburgh family, descendants of the founders.

It's a structure that suits the hotel arm's driving force, managing director Ian Harkness, who says. "One of the big things is ideas. Big corporations don't let the ideas go through, whereas here the shareholders are closer to the business and have a better understanding of what's involved."

The first new-build hotel was opened in 1985 - the North Lakes Hotel and Spa in Penrith, Cumbria - and the aim at that time was to create three-star hotels. "We felt we couldn't compete with the four-star hotels, so we aimed to be a top three-star hotel and then outperform," Harkness says.

By 1990, when they opened the next batch of hotels - the Aztec at AztecWest Business Park on the M4/M5 intersection and the Solent at Junction 9 of the M27 - they were confidently positioning themselves as four-star hotels in business locations. To underline the point, they also moved away from being known as inns, rebranding the company Shire Hotels. The combined yield figure for the core four-star business hotels (excluding Thorpe Park) is £51.85 for 2001-02, up from £50.69 in 2000-01.

So why did Thwaites turn to hotels? "It just felt appropriate," Harkness says. "Shire already had a number of properties - small country hotels - and a business that had synergy with hospitality. They also felt it was good to have another string to their bow, because the cycle of hotels is different to the cycle of the brewery - they now have brewery, pubs and hotels - a three-legged stool is better than a two-legged one."

One hotel that doesn't fit the nine-strong portfolio is the Stafford in London's Mayfair. As Harkness explains, in the 1980s the industry was overheating and business park hotels seemed to be an expensive option. The view in 1994 was that a London townhouse hotel would be less capital-intensive. He saw the 74-bedroom Stafford and bought the freehold in a week, for £16m, driven by "gut and good numbers". And the value has now doubled. "It's the best deal I have ever done," he says.