Tomahawk cuts its own groove
Robert Foulston and Tom Horsfall met in 1974 at school in Wakefield, and have been friends from the age of 10. In adulthood, however, they went separate ways, with Foulston, now 42, qualifying as a solicitor before becoming an investment banker in London, while Horsfall, now 43, trained as a quantity surveyor in Yorkshire.
But they kept in touch, and one day decided to go into business together. "We got together one weekend and decided we should go into property," says Foulston. "Why? We thought our skills would complement each other in the property business."
The pair set up Tomahawk Development in 2000 using private funding and bank loans, and began buying properties across the North of England, planning to develop and sell them for a profit. The name Tomahawk was chosen to match the company's image. "We thought the name was strong, young and aggressive," says Foulston.
After four years in business together, their first Tomahawk hotel came about almost by accident. The opportunity presented itself only when the Woodlands - a run-down nursing home in south Leeds, bought in February 2003 by the company and earmarked to become apartments - was found to be in the wrong location for such a development.
Residential flats wouldn't work in that area, according to Foulston, but a hotel, it was decided, would. He says: "There's a lot of snobbery between the north and south of Leeds and, as a result, there are lots of hotels in the north but a definite demand in the south for a luxury product. If we'd bought Woodlands in north Leeds, it wouldn't have worked."
With little or no experience, the pair decided to open Woodlands as a hotel and see whether their talents stretched to hotelkeeping. For Foulston, being a hotelier was an attractive proposition. "I'd always worked in hotels or bars as a student, and over the years stayed in some great hotels," he says. "It's a fascinating business. We thought we'd give it a go with Woodlands and, if we were successful as hoteliers, we'd keep it. If it didn't work, we'd sell it."
First, however, the property needed a £2m refurbishment to turn it into a hotel. Despite the age of the 19th-century building, the pair decided to go for a contemporary look instead of the traditional design usually associated with country house hotels.
Design company Browning and Baize, owned by Horsfall's wife, Jayne, created the interiors, going for a clean and simple decor, using injections of colour and rich fabrics yet retaining all the original features. "We kept the original features and mixed old and new," says Foulston. "It's what the market looks for at the moment. When the market changes, we'll change the decor."
In 2004 Woodlands opened. With no pre-existing business and the building hidden in its own grounds, business was predictably slow at first. But once a strong sales team had been assembled, business from January 2005 started to boom.
"We went after weekday business very aggressively," says Foulston. "We marketed senior professionals, chief executives, journalists and celebrities from Leeds. We had Ken Bates, the chairman of Leeds United, staying in our penthouse suite for a year and, after that, the footballers followed."
Today, the 17-bedroom hotel brings in about £2m in turnover per year. Rack rates are between £120 and £450 a night, with average achieved room rates reaching £100 and occupancy between 75% and 80%.
Bitten by the hotel bug, Tomahawk's purchase of the 20-bedroom Aston Hall hotel followed swiftly, in March 2005. A former hotel, it was run-down and in need of refurbishment.
Another £2m later, Aston Hall, with a restaurant and banqueting suite, is now doing well. Rack rates range from £95 to £445, average achieved room rates are at £110 for refurbished rooms, and occupancy is 60%, rising to 95% at weekends. Sales were up by 25% last year and again this year. There is planning permission to extend the hotel to 52 bedrooms in 2008, with a further four penthouses to be built in a separate building.
Huge regeneration
Building on the success of Aston Hall, Tomahawk bought Bradford's railway hotel, the Great Victoria, last November. The city holds great potential for Tomahawk, as it is undergoing a huge regeneration programme and awaiting the 2009 opening of a major shopping development to rival that of nearby Leeds. There is also plenty of potential hotel trade in the city, with its busy commercial centre.
Moreover, when the Great Victoria is finished as a four-star boutique hotel, there won't be much competition. At present, there's the Midland hotel - busy, but not in Tomahawk's boutique style - while the next nearest hotel is a Hilton.
Yet, as with the other hotels, the 60-bedroom Great Victoria is in need of a serious facelift to bring it up to four-star boutique standard. So far, the kitchen, ground floor, and 40 bedrooms are complete, but there are still another 35 rooms to go and it hasn't been easy . The hotel can't afford to close, which brings its own difficulties, as customers demand the newly refurbished rooms over the originals - making rates hard to manage. Occupancy is running at 60%.
Foulston is quick to admit that the purchase of the Bradford hotel came too quickly after Aston Hall. "The general view is that it was too soon to buy another hotel, but the opportunity was there and we couldn't turn it down," he says.
Despite this, the Tomahawk hotel group isn't stopping there. Horsfall and Foulston are looking for more hotel properties and are in discussions over another property at present, but insist they will be staying in the North.
Foulston says: "Buying hotels in the North means entry costs are lower. If we were looking in the South, the costs would be four, five times the price, but the business wouldn't be much different. The geography also means we can get from one hotel to the other, and that we can move staff around when needed."
"So far," he adds, "it's worked well."
Ask an expert Ian Graham, of the Hotel Solutions Partnership, gives some advice on whether or not to stay open for business during a refurbishment.
Management should perform an economic evaluation of the lost profit under the two options. Bear in mind the following:
Profit lost will be the marginal profit on each room, and thus a high percentage of the achieved room rate. If the programme forces rooms to close in high season or days of high demand, the lost room rate will be high.
If the refurbishment involves a lot of scaffolding or dust or noise, disruption to regular guests will be considerable, so you must assess the lost goodwill.
A refurbishment programme carried out while operating will almost certainly take longer than a programme that involves closing the hotel, so the period of profit loss will be greater and there will be longer to wait before the profit upside from the refurbishment can be earned.
You are likely to need a higher quality, and thus higher cost, of project management in the accelerated (closed) refurbishment option.
In either case, failure by the contractor to perform should give the hotel owner the right to withhold a penalty cost that is at least equal to the lost profit.
The cost of an independent assessment of the options will usually pay for itself handsomely.
What is best practice? In a soft refurbishment, it is usual to continue to trade. If the refurbishment involves significant work to infrastructure and equipment, and/or involves a fundamental repositioning of the hotel, it is probably best to close.
Tomahawk development
Established 2004
Owners Tom Horsfall and Robert Foulston
Investment £4m to £5m for each property, including refurbishment
Hotels Woodlands (opened 2004)
Gildersome, Leeds 0113 238 1488
Aston Hall (opened March 2005)
Aston, Sheffield 0114 287 2309
Great Victoria (opened November 2005) Bridge Street, Bradford 01274 728706
