David Guile is chief executive of Macdonald Hotels & Resorts. He tells Janet Harmer how the recession has strengthened the company and how room prices are being driven up by a focus on quality
The recession was particularly tough for regional hotels. With 41 hotels in the UK outside London, how well has Macdonald Hotels & Resorts survived the downturn?
We have not only survived it, but have come out the other end stronger. We continued to invest during the difficult times to ensure quality of product, people and service. It has been a challenging market and we have had to create new revenue stream through our spa and leisure facilities. Our forthcoming results will show that we have achieved strong EBITDA growth. We're also close to concluding a refinancing of the business with Lloyds, which will provide us with a strong platform for developing the business in the future.
What is the biggest challenge facing the company? Coming out of a difficult trading period, our greatest challenge is being able to maximise our pricing. We need to drive price through quality. There has been the tendency for the industry to rely on third-party distribution channels and short-lead time discounting. But we have now got back to feeling more confident about charging according to the product.
You have been speaking for some time about introducing an equity participation scheme â¨for staff. Has this been put in place? We strongly believe in rewarding our teams and sharing in the prosperity of the business. The scheme will initially be aimed at the management and once we ensure that works well, we will consider introducing it to the rest of the staff. We think it will become an important motivational and retention tool.
What are your plans for investing in Macdonald's 46 hotels? Each hotel has the potential for development, whether it is adding a spa or refurbishing the property. So we are enhancing the existing portfolio to maximise the potential of the asset. For example, we are spending £1.3m on extending the spa at our Craxton Wood hotel in Chester, and we have spent £420,000 on refurbishing the ground floor at the Compleat Angler in Marlow, where we have permission to add a further 28 bedrooms.
We shall be spending around £10m this year on improvement, which will help to â¨reposition a number of the hotels and ensure they are all either at the top end of the four-star or in the five-star category.
We know people are prepared to pay for quality. Our best-performing hotels during the recession included our two four-AA-red-star hotels - the Compleat Angler and the Windsor - and our two five-star hotels [the Bath Spa and the Randolph in Oxford]. We have several hotels with the potential to be red-star properties - the Bear at Woodstock; Leeming House in Ullswater; and Rusacks hotel in St Andrews - while Rusacks and the Marine in North Berwick could become five-star.
Our 11 premium hotels are now identified through the Macdonald Hotels' Signatureâ¨Collection, which includes the four-red-star and five-star properties, as well as those in iconic locations.
Will you be adding to the portfolio? We're going through a period of consolidation, but we'll always look at new opportunities. Any growth is likely to be through management contracts, as that has become an effective means of growing the brand. We own 39 of the hotels and have seven management contracts. We would only be interested in properties that would fit into the portfolio, which means they would have to fall within the four- or five-star market, have 70-plus bedrooms and be â¨consistent with Macdonald's values and standards. We would like a London hotel, as the â¨capital is such an important gateway city. It is not easy, though, to find the right property.
You closed the 29-bedroom Egerton House hotel in Bolton. Why was that and will thereâ¨be more closures? The hotel was a joint venture and was never really representative of the brand in terms of quality. We're now reviewing the potential â¨of the property and it may be sold or converted into a private residence. We certainly don't have plans to close any more hotels.
You have appointed Harwood Warrington, previously of the Lazy Cow restaurant group, into the new role of restaurant operations director. What will be his focus? We have always had a strong focus on our food and beverage operations and have more than 40 rosettes across our hotels. However, we hope Harwood will help to transform our hotel dining rooms by taking more of a high street approach and help to drive external business.
He has already been involved in introducing the Scottish Steak Club into four of our hotels - the Inchyra Hotel & Spa, near Stirling; the Manchester Hotel & Spa; the Windsor Hotel; and the Tickled Trout, Preston - with a fifth being launched at the Spey Valley Hotel in Aviemore. It is very much a high street offer, serving quality steaks from Scotland, Argentina and the USA and providing value for money.
Do you intend to continue working with outside chefs and restaurateurs? Absolutely. In fact, we hope to soon announce a new agreement concerning the Compleat Angler, where we previously had a five-year partnership with the London Fine Dining Group to run the Aubergine restaurant.
We have a partnership with restaurateurs Susan and Adrian Pieraccini, who recently opened their brasserie-style Rocca@Holyrood within the Holyrood hotel, Edinburgh, to join the Rocca Bar & Grill, a three-AA-rosette â¨restaurant at the Rusacks hotel, St Andrew.
There are challenges working with outside operators. Sometimes the third party is not used to working in a hotel and finds it difficult to deal with breakfasts, room service and functions. It therefore works best when the restaurant is the hotel's second outlet, where the operator can just concentrate on lunch and dinner - as is the case at the Compleat Angler.
What are your plans for developing the spa and leisure facilities? Spas in particular are a growing part of the company - as well as generating a lot of â¨resident business, we are receiving an increasing number of bookings for spa days. We are focusing on a more holistic approach to â¨wellbeing by offering health assessments â¨and nutritional advice as well as relaxing treatments. We have 24 spas and we certainlyâ¨plan to add more, as well as enhancing the proposition of the ones we already have.
We have recently appointed Daniel Hodson from De Vere Hotels as our managing director of golf to drive our golf offer across the seven hotels with golf courses. And we're spending more on improvements, including the new £1m club house at the Spey Valley hotel.
Macdonald Hotels & Resorts was named the AA Hotel Group of the Year 2013-14, the second time it has achieved the accolade in six years. How do you account for the group's success? I think it is because we look at ways of â¨improving the customer experience - either through our product, service or people.
We've worked at increasing our customer service levels through our Commitment to Excellence programme, which is about delivering exceptional service by ensuring staff go the extra mile to surprise and delight guests. We aim to recognise special occasions, leave personally written notes in rooms, understand guests' interests and make specific recommendations. We want to anticipate the guests' needs, rather than react to them.
With regards to our people, we put a lot of focus on our internal development and training programme, Stairways to Success, and have introduced a mentoring scheme, which involves the senior executives within the company providing help and encouragement to younger members of the team. It has proved very successful, with 30 staff being mentored over the past two years. I have mentored two members of staff; one, Robin Ford, an operations manager, is now general manager of â¨the Tickled Trout in Preston.
How significant is the company's investment in operating a company with strong environmentally-friendly credentials? We take our environmental responsibilities very seriously. It is very important to the growth of the business as so many corporate companies choose us over our competitors because of our commitment to our Room 15 strategy. The strategy, which helped us be named AA Eco-Hotel Group of the Year 2012-2013, focuses on 15 areas concerning the environment, including improving our electricity, heat and water efficiency by 15%; expanding our use of renewable sources of energy and establishing at least five green hotels within the group [hotels that have successfully achieved all 15 targets].
Is the founder Donald Macdonald still â¨actively involved in the company? Yes, he is the executive chairman and he still contributes to the success of the business.
As a company with its head office in West Lothian and 18 hotels in Scotland, where does Macdonald Hotels & Resorts stand on the impending referendum on Scottish independence? More details are being communicated and â¨discussed, but we still don't know what the impact of independence would be on our â¨business. As a UK-wide hotel group, we look forward to continuing to deliver the highest standard of service and product, whatever the outcome of the vote in September.
MACDONALD HOTELS & RESORTS - A HISTORY
Donald Macdonald left Stakis Hotels in 1990 to establish his own company with the purchase of two hotels in Aberdeenshire - the Waterside Inn near Peterhead and Ardoe House in Aberdeen.
In 1996 Macdonald Hotels & Resorts, which had grown to 100 hotels and resorts with an annual turnover of £240m, was floated on the stock market - a move that Macdonald later admitted was a mistake. "It cost us plenty - in terms of the product - to take the business to market," he told Caterer and Hotelkeeper in 2007.
The company was brought back into private hands in 2003 through a £620m management-led buyout in a joint venture with the Bank of Scotland which, at the time, was one of the biggest public-to-private deals ever seen in Scotland.
In 2007, the company sold 24 of its UK hotels to Moorfield Real Estate Fund for more than £400m, a move that helped the business to further establish a solid footing in the four- and five-star markets.
DAVID GUILE'S CV
David Guile started his career with Crest Hotels in Gatwick as a trainee manager in 1985 and worked his way up to become general manager of the Forte Posthouse in Hemel Hempstead in 1994.
He was promoted to regional director of Heritage Hotels, part of the Forte Group, in 1996, before moving to Macdonald Hotels & Resorts in 2000 as regional managing director for the south of England. In 2006, Guile was made deputy chief executive of Macdonald Hotels & Resorts and then became chief executive of the group in 2008.
Today, the group owns and manages 46 hotels and resorts (41 in the UK, four in Spain and one in Portugal), with a combined annual turnover of £139m.