So you want to run a hotel?
When former teachers Rob and Joan Reen took over the running of Ynyshir Hall in Eglwysfach, Powys, in 1989, they didn't even know how to get a measure of gin from an Optic. The previous owners had promised to stay for a couple of weeks to help with a seamless transition, but the Reens arrived on the appointed day to find that their predecessors had booked a holiday at the last minute instead.
The handover that the Reens had expected lasted all of an hour - at a time when the hotel was already full of guests. "We arrived with only a few items of furniture," recalls Joan. "The previous owners gave us the key and left. We had a full house and one chef, and we wondered what we had let ourselves in for."
It was the Reens' first attempt at running a hotel. Rob is a professional artist with a degree in fine art from Cheltenham Art College. He taught art and design for 20 years. Joan has a degree in geology and originally went into retail management before switching to teaching after the birth of the couple's two children.
In the early 1980s, as two teachers nearing their 40th birthdays, they began to consider a change of lifestyle. Rob was head of art and Joan head of lower school, teaching geography, in a grammar school in Aylesbury, Buckinghamshire. "We were just fed up with the general grumbling that goes on in teaching," says Joan. "You can't spend your life grumbling. You've got to get on with it."
The decision was also partly fuelled by Rob's work. He had always painted and exhibited his work and was becoming more and more successful, with several one-man shows behind him. But he needed somewhere to display his work.
Their original idea was to buy a property in the country and run art courses. Rob would teach and Joan would play hostess and cook. But the more the Reens looked into the economics of running art courses in Britain, the more they realised it wasn't a viable idea. However, they had seen several specs from estate agents of hotels with all the necessary licences in place, so they decided to buy a hotel.
"We didn't know the first thing about hotels," says Joan, "but the more we looked into it, the more we became fascinated by all aspects of the business. And the skills we had as teachers, such as looking after budgets and managing people, seemed complementary."
It took two years to find the right place, and the Reens had almost given up hope when they saw a tiny advert in Caterer for Ynyshir Hall. They rang the agent, to be told it had just been taken off the market, but the Reens decided to go and stay anyway. They fell in love with what they saw.
"When we came up the drive," says Rob, "we were enchanted, despite the overgrown gardens and air of neglect. It was painted pink and really shabby, but we couldn't wait to take it over and bring it back to life."
Six months later, the Reens wrote to Ynyshir's owners saying that they would be interested in buying the property. They were told that, if they could hang on another three months, it would be theirs. Rob handed in his notice, despite the fact that all the couple's friends thought they were mad. They finally moved in to Ynyshir in July 1989, having bought the 11-bedroom property with a turnover of £73,000 for £395,000. They also borrowed £30,000 from a friendly bank manager who told them he admired their bravery.
On the Reens' third day as hoteliers the chef said it was his day off, so Joan donned chef's whites to feed all the guests, with no formal catering training to her name. "I'd always enjoyed cooking, but as a hobby," she says. "I didn't know anything about costings or gross profits."
The previous owners had closed during the winter, so the chef had October to March off. Once again, Joan found herself in the kitchen, reading books to give her guidance. At the same time, the Reens gutted most of the bedrooms, doing as much of the work themselves as they could, including Joan making curtains when she wasn't in the kitchen.
Fourteen years, some £750,000 of expenditure, a new chef and lots of hard work later, the Reens have a rather different hotel to the one they started out with. There are nine bedrooms, each named after an artist and individually styled. Rob's paintings of Welsh life adorn the walls, and public areas are welcoming and comfortable.
And there are gongs, too: three red stars and three rosettes from the AA, and a gold ribbon award from the RAC. Last year, a hat-trick of events was, say the Reens, the pinnacle of their lives as hoteliers to date - chef Les Rennie won a Michelin star for his food; Ynyshir Hall was admitted to Relais & Châteaux; and the property scooped the Independent Hotel of the Year Catey. "We were overwhelmed by our success last year," says Rob. "The challenge now is to maintain what we have."
Do the Reens have any regrets about leaving teaching? "None whatever," they reply in unison. "It's been incredibly hard work, and no one should do what we've done unless they are 100% committed. But we've never looked back."
Ynyshir Hall, Eglwysfach, Powys
Tel: 01654 781209
Owners: Rob and Joan Reen
Staff: 12 full-time, plus owners
Rooms: nine
Three-course dinner: £42
Seven-course tasting menu: £55
Two nights' dinner, bed and breakfast: from £220
Turnover: £450,000
It was a bout of appendicitis while on holiday in Spain some six years ago that prompted Roger McKie to get out of the rat race and take up life as a hotelier in the remote Scottish village of Tighnabruaich in Argyll, on the shore of the Kyles of Bute, about a two-hour drive from Glasgow.
Roger was a management consultant working in London but living in Cheltenham, where his wife, Bea, had a delicatessen. But commuting took its toll. Roger was, according to Bea, "always ill whenever we took any time off". After he was taken ill in Spain, the McKies decided they'd had enough of the pressures and that a lifestyle change was needed. It was, they say, always in the back of their minds that they would one day run their own place, as they both had a liking for good food and wine.
The McKies were fond of Scotland, so they started to look at places within reach of a city that was served by budget airlines. They looked at a few properties before coming across the Royal hotel at Tighnabruaich, one of three villages with a total population of 700 and fantastic views over the water of the Kyles of Bute. "We'd never been down here before but we thought it was just fantastic," recalls Roger.
But there was a lot to do. The most popular menu items were (frozen) breaded haddock, and burger and chips. The decor also left a lot to be desired, with bright red carpets, dark green walls and wood-chip everywhere. The bedrooms were not much better, with no central heating, no showers within the rooms, and nylon carpets.
Despite the problems, the McKies decided to take a chance. "It was at such a low level of trading that it could only go one way," says Roger. "We looked at other places that were in much better condition, but decided that, with this one, we could put our stamp on it."
The McKies purchased the 20-bedroom hotel for £230,000 and sailed seamlessly into running it. Being a property with a public bar in a small village, the Royal naturally had an existing clientele, although not one that the McKies would necessarily have chosen. "The place was exceedingly noisy," says Roger, "and at times we had to throw people out at lock-up time. But we needed the money, so we had to put up with lots of things."
While Bea was busy with the refurbishment of rooms and reception, Roger took over in the kitchen, with the help of a few books but no formal training. "The philosophy on the food was to keep it simple, using the best ingredients wherever possible," he says. "I knew how I liked my food, and that was the style I tried to copy. If I couldn't get something locally, then I wouldn't put it on the menu."
Now everything is home-made - from bread to ice-cream. Langoustines and scallops are dived for by local Mary Galloway, and the McKies even have their own deer and game stalker, surprisingly named Winston Churchill.
Nearly six years down the line, Roger has handed over the running of the kitchen to his daughter, Claire, aged 23. There are now two restaurants: a 35-seat fine-dining outlet and a newly built 40-seat brasserie. The hotel has been awarded 74% by the AA and has one rosette for its food, with a second expected soon. The McKies would like to convert their AA two black stars into two red stars, and are hoping to make the AA Top 200 list next year.
But there's no desire to jump up the star ladder. "We'll stay at two-star, because we don't want trouser presses," says Roger. "That's not what we are about."
The Royal has gone from a run-down establishment turning over £140,000 a year to a business generating revenue of £480,000. The original 20 bedrooms have become 11, some of them converted into bathrooms.
There's still a little way to go, with bedrooms and bathrooms next on the list for attention. But the old life seems a long way behind the McKies now. There are no regrets, and there's even talk of expanding the empire and eventually opening a restaurant in Glasgow.
Royal Hotel, Tighnabruaich, Argyllshire
Tel: 01700 811239
Owners: Roger and Bea McKie
Staff: four full-time, nine part-time, plus owners
Rooms: 11
Two nights' dinner, bed and breakfast: from £140
Turnover: £480,000
Is this a good time to buy a hotel? With low interest rates and a highly volatile stock market giving a bleak outlook on pensions, investing in an existing hotel is an attractive proposition.
Andrew Theobold, associate of property agent Knight Frank's hotel division, reckons that returns of up to 10% are perfectly feasible and confirms that Knight Frank has a "fair number" of people on its books looking for that perfect country house hotel. However, these would-be hoteliers may not necessarily realise their dream. "The biggest problem is a lack of stock, as a lot of people are reluctant to sell in the current climate," says Theobold. A typical request, says Theobold, is for a country house hotel of 15-20 bedrooms on a budget of £1.5m.
Prices are worked out based on a reconstituted net operating profit of the existing business multiplied by a factor that the agent decides is applicable to the area. So, if the net operating profit of a business is £70,000, this becomes a reconstituted net operating profit of £100,000 once depreciation of building and contents is added back in. The agent then adds a factor ranging from 6.5 to nine times this amount, depending on where the hotel is located.
But beware: getting the money to invest in a going concern is not as straightforward as getting a mortgage on a residential property. Often borrowers are prepared to lend only 75% of the total purchase price, meaning that would-be hoteliers will have to have a fair percentage of equity to plough into their new venture.
Buyers' check list
So you want to run your own hotel? Remember that now isn't a brilliant time to go into the business, although cleverly marketed hotels are picking up domestic guests. With the property market subdued, though, it might be a good time to buy.
Running a hotel takes pots of drive, hard work and commitment but, if you understand that and are prepared to take the rough with the smooth, read on. Simon Stevens, head of hotels at property agent Knight Frank Leeds, provides a check list of things to consider before you buy:
* Location, location, location - should it be town, city, coast or country?
* Identify market sectors and select the most suitable - corporate, leisure profile, or a combination of both?
* Check out the competition - a lot of competition is generally a healthy sign of good trading conditions.
* Select properties to suit the sector - country house or town?
* Prepare a business plan.
* Register interest with specialist hotel agents to complement and assist with your search criteria.
* Funding - talk to a bank or broker to secure your funding.
* How much can you borrow against any equity?
* How will you repay your business loan?
* Identify suitable hotels to buy and select the most suitable - having profitable accounts and being in good condition, with scope for growth, are musts.
* Establish whether the hotel has owners' accommodation, or is that also needed off site?
* Find out why the business is for sale.
* Check staff arrangements - is there a good supply, and will existing members remain?
* Use a chartered accountant to certify accounting information and review the business plan.
* Make sure you have the business valued and the property surveyed by a qualified surveyor.
