News review of the year…
Northern Ireland, which was to end 1999 on a wave of optimism with the re-establishment of government from Stormont, started the year on a more mundane and less happy note: hotels across the province lost electricity for several days because of storms.
The first week of 1999 also saw the announcement that restaurants and food outlets were to be charged £2-£10 a week to help fund the proposed Food Standards Agency. This was unpopular, and in June the Government dropped the idea.
Early in the year there were pessimistic predictions that both restaurants and contract caterers were facing tougher business conditions in 1999.
New Year Honours recipients included Annie Schwab, who runs the two-Michelin-starred Winteringham Fields in Lincolnshire with her husband Germain. She was appointed MBE, while Jeremy Logie, chief executive of the British Hospitality Association, was appointed OBE.
Increasing concern about hygiene and safety standards in the industry was reflected in the size of fines thoughout the year. One of the first to pay the price was the Walton Park hotel, Clevedon, near Bristol, which was fined £19,000 after guests were poisoned by an infected tiramasù. In the same week Birmingham health inspectors announced that the number of restaurants and take-aways shut down annually in the city had doubled. But there was some respite when Manchester caterer Marc Cooper was cleared in March of poisoning diners, because he took every possible care when preparing his food and was unwittingly supplied with a contaminated egg. Chef Antony Worrall Thompson gave evidence in his defence.
Trouble of a different sort affected chef Pierre Koffmann at the end of January, when he lost his third Michelin star shortly after he moved his restaurant into London’s Berkeley hotel. Happier were chefs at Gidleigh Park, Devon, and Winteringham Fields, who both won their second stars.
As the year progressed, the controversy over genetically modified soya and maize heated up. Egon Ronay joined the fray in February when he said that GM foods should be treated as new drugs and be subject to the same meticulous independent tests before being put on the market.
Beef on the bone was never out of the news – and rarely in the oven – although a number of high-profile objectors to the ban flouted the regulations. Others appeared to do so in error, including the Celtic Manor hotel which, famously, offered the Prince of Wales an illegal joint. The ban was eventually lifted on 17 December, although the French continue to reject British beef.
Gordon Ramsay upset some and entertained others with robust language in his kitchen during the Channel 4 documentary series Ramsay’s Boiling Point, which began in March.
The minimum wage of £3.60 an hour came into force on 1 April with little objection from employers, although there was some argument in the following months about employers trying to undermine the regulations by including tips in wages. In July a report from Salary Survey Publications found that the hospitality industry as a whole is employing fewer staff and paying lower wages than it was a year ago; although the habit of surveys of coming up with contradictory results was perpetuated by another report in September, from Industrial Relations Services, which found wages had risen due to the minimum wage. The industry’s poor image for staff was not helped by the revelation, in October, that chefs, waiters and other hospitality staff are four times as likely to get the sack as workers in other jobs. They are also the most likely to quit.
In July the troubled Regal Hotel Group announced plans to sell 35 hotels, make redundancies and abandon plans for a new head office. It is now the subject of a takeover attempt.
August was disastrous for Cornwall, which had been expecting a boom in business because of the solar eclipse, but instead saw business get worse. High prices and fear of crowds were blamed.
September saw the introduction of a new voluntary code on smoking in restaurants, which was met with accusations that it lacked guts and would not be independently monitored.
In October the latest phase of the Disability Discrimination Act came into force, requiring hoteliers and restaurateurs to take all reasonable measures to make sure their businesses are accessible.
A somewhat turbulent end to the year for the Pride of Britain consortium saw more than a quarter of its members resign, although five new ones partly made up the shortfall.
Edinburgh’s Caledonian hotel was put on the market in December by Queens Moat Houses. Nick Ryan, proprietor of the Crinan hotel, Argyll, was Caterer &Hotelkeeper’s Hotelier of the Year.
Openings and closures
Cardiff’s first five-star hotel, the St David’s, part of Rocco Forte‘s RF group, opened on 16 January after twice putting back its opening date because of building delays.
At the end of January it was announced that Paris chef Michel Rostang was to open a bistro at Le Méridien, Piccadilly, London, in March.
In February Gary Rhodes opened his third restaurant in the Quality hotel at Old Trafford, Manchester United’s football ground. In March chef Marcus Wareing opened his new restaurant Pétrus in St James’s Street, London.
The beginning of June saw the Virgin Hotel Collection surprise its own members by announcing that the consortium was to be dissolved at the end of the year, leaving most of its 20 members looking for a new home. Later in the year a smaller Virgin group, Limited Edition, rose from the ashes of the old one and was launched by Richard Branson at Le Manoir aux Quat’Saisons, in which he now has a 50% stake.
In August receivers were called in at the Crowded House pub company, which had bought 40 Beefeater restaurants from Whitbread. In September Manchester’s 630-seat Yang Sing restaurant reopened almost two years to the day after it was gutted by fire. Another opening was the St Martin’s Lane in London, the first effort to crack the British market by US hotelier Ian Schrager.
November saw Oliver Peyton‘s latest restaurant, Isola, open, also in London, along with the restaurants at the Great Eastern hotel, which will open fully next year. And there was the purchase of 11 Arcadian hotels by financier Guy Hands. The hotels will be managed by Macdonald Hotels.
In December the George V hotel reopened in Paris after refurbishment. Nearby rival the Meurice, also closed for refurbishment, put back its scheduled opening until next spring because of building delays.
As early as January some hotels were saying they were closing on Millennium Eve because they were frightened of high staff costs and poor value for guests, with a British Hospitality Association (BHA) survey suggesting a quarter of hotels would be shut. By February the Isle of Eriska hotel, north of Oban, said it would close over the millennium and added, “the hype and commercialism have got out of hand.”
Even the bullish became more cautious as the year went on. In May the Balmoral hotel in Edinburgh cut the rate for its millennium package from £8,500 per couple to £5,700. By August hoteliers were being warned that if events were ruined by the millennium bug, guests might have a case for taking legal action against them. And in October a survey said that just 5% of hotels were full on New Year’s Eve and many had decided to close.
The dangers from the bug appeared to recede as the year went on, however. Certainly, hoteliers were sceptical: by mid-October even the BHA was claiming that “scary headlines” about the bug were unhelpful. Not surprisingly, by December the phrase “millennium fatigue” was commonplace.
Getting bigger, getting better?
In the biggest British hotel takeover deal of the year, Ladbroke’s Hilton hotel chain announced plans in February to take over Stakis with an offer worth £1.4b. In the same month two of Britain’s biggest independent consortia, Best Western and Consort, announced they wanted to merge, making a group of nearly 400 hotels.
Not everybody was happy about the changes. At the Stakis annual general meeting many private shareholders said they didn’t want the takeover, but the financial institutions did and they held 87% of Stakis shares. In April Irish group Jurys agreed to buy rival Doyle group for IR£187.6m. Unusually, staff at Doyle (but not Jurys) enjoyed a bonus of about IR£160 after the takeover to thank them for their loyalty.
Contract caterer Catering & Allied was swallowed by French giant Elior in May in a deal which left the French outfit holding 80% of the shares in the company. Throughout the year there was talk of Jarvis Hotels merging with another company, but nothing came of it. But the group did buy London’s Regents Park hotel from Hilton for £72.2m in August.
Also in August came the final act in the long-running saga of who was to take over Allied Domecq‘s pubs – Whitbread or Punch Taverns – which ended with Punch winning the battle with hefty backing from Bass. The deal was worth a whopping £2.75b. Smaller in scale was the £30m deal under which the London restaurant owners Hartford Group and Montana came together, also in August. Hartford ran the Pharmacy restaurant.
In September Millennium & Copthorne announced its intention to take over 29 hotels from US chain Regal International in a deal worth £395m. After some wrangling the deal was done, but for 28 not 29 hotels.
October saw Granada starting the talks that ended in the purchase of Harry Ramsden’s for £20m. In November Whitbread agreed the takeover of the Swallow group in a deal worth £578m, which led to more predictions that other groups would face pressure to merge or expand in order to compete.
Fat cat file
Chief executives not only earned a lot more than their staff in 1999, but surveys showed they also enjoyed higher percentage pay increases, thus further widening the gap between the highest and lowest paid. Most of the following figures are for 1998 salaries made public only in annual reports published this year.
Bass chairman and chief executive Ian Prosser was given £717,000 in shares to top up his 1998 salary of £914,000, the company’s accounts revealed early in 1999.
Later in January it was learned that Francis Mackay, Compass chief executive, enjoyed a 22% pay rise to take his package to £606,000. But later in the year Sunday Times research put Mackay’s total package including incentives at £2.5m, which it calculated was £2m too much compared with other chief executives. Mackay’s staff, meanwhile, achieved an average 3.5% pay rise. However, under Mackay, the Compass share price has risen from 55p in 1991 to £6.30.
At Greenalls, chief executive Lord Daresbury pocketed a relatively meagre 6.2% rise to £411,000; while David Michels, in his last pay rise before Stakis was taken over by Hilton, did better: a 27% rise took his salary to £448,000.
Millennium & Copthorne’s chief executive John Wilson had to survive on £312,000 in 1998. And, wages aside, Granada chairman Gerry Robinson had a wallet-stuffing April when he cashed in share options to make a pre-tax profit of £5.26m. Which made Andrew Coppel‘s share options as chief executive of Queens Moat Houses seem rather paltry at £189,000. Still, it was beefed up by his £453,934 pay package.
City Centre Restaurants chief executive James Naylor had to manage on an even more modest £180,000 in 1998, which was nevertheless a 16% rise on the year before. Nicholas Crawley, who parted company with Regal Hotels in July, earned £284,000 in 1998, a 29.7% increase on 1997. Donald Macdonald, chief executive of Macdonald Hotels, was paid £350,000 in the year to 28 March.
Suing me, suing you
In a dispute that is still unsettled, chefs Gordon Ramsay and Marcus Wareing were jointly served with a writ by A-Z Restaurants in January claiming £1m damages. The claims are a result of their acrimonious departure from London restaurants Aubergine and L’Oranger in 1998.
In April Simon Rhatigan, former manager of Le Manoir aux Quat’Saisons, was threatened with legal action by his former employer over alleged breach of contract. In July the wrongful dismissal claim of four sacked directors of Queens Moat Houses was thrown out by the High Court.
In September it emerged that chef Jean-Christophe Novelli was being taken to tribunal by a former employee claiming that she was sacked because she was pregnant: the tribunal upheld her claim of unfair dismissal.
In November a tribunal ruled that a dyslexic woman was forced to resign from Compass because the company refused to buy her a £23 Argos spellchecker: she was awarded £6,500.
In the same month Marco Pierre White and restaurateur Oliver Peyton settled their dispute over the restaurants Titanic and the Atlantic Bar & Grill operating in the same building.
The industry’s revolving door
At the end of January Charles Vere Nichol resigned as executive chairman of Regal Hotels after a boardroom row. At the beginning of March three more senior executives left the troubled group.
In February Phillip Britten left the Michelin-starred restaurant at the Capital hotel after 11 years as executive chef. Eric Crouillère-Chavot, part-owner and chef at another of London’s Michelin-starred restaurants, had to shut down because of poor business. He eventually ended up cooking at the Capital himself.
In April David Newbigging was appointed the new chairman of Thistle Hotels, replacing Rodney Price, who stepped down in February. Also in April, less than six months after joining London restaurant Frith Street, chef Stephen Terry quit. Later in the year he returned to Coast, the London restaurant he had left in January 1998.
Meanwhile, in May, chef Jean-Christophe Novelli pulled out of the deal to buy Gordleton Mill in Hampshire, even though he had already installed Richard Guest as head chef. Guest later moved to the Castle hotel in Taunton after the departure of Phil Vickery. In July Novelli decided that he would also be closing Les Saveurs and is now concentrating primarily on Maison Novelli in London’s Clerkenwell.
In June chef Garry Hollihead quit London restaurant Morton’s because its owners wanted a less elaborate menu. Roger Matthews resigned as executive director of Compass in July after losing out to US boss Mike Bailey in a contest for the job of chief executive. Francis Mackay became executive chairman in the reshuffle.
In July Tony Potter resigned as chief executive of Friendly Hotels to become chief operating officer of Millennium & Copthorne, while Roy Tutty became chief executive of Arcadian Hotels, replacing Robert Breare. In August Michael da Costa had his contract with Groupe Chez Gérard axed following a profits warning and the appointment of David Williams as chief executive.
In September John Wood became executive chef at Cliveden in Berkshire. October saw the confirmation that Bob Cotton will be the new chief executive of the BHA when Jeremy Logie stands down at the end of this year to become chairman of the Joint Hospitality Industry Congress. Later the same month Ramón Pajares, Britain’s most award-laden hotelier, announced he would be standing down as chief executive of the Savoy at the end of the year.
October also saw Barry Warwick announce he would be retiring as chief executive of Old English Inns. And Marco Pierre White said that at the end of the year he would complete his transformation from chef to businessman by hanging up his apron.