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Z Hotels – A capital idea

13 September 2012 by
Z Hotels – A capital idea

After 20 years working in the world of corporate hotels, Bev King wanted a change. The result, as he tells Janet Harmer, is the launch of Z Hotels, which competes with both budget and boutique properties

After working for three-and-a-half years as chief operating officer for Thistle Hotels, Bev King decided he was fed up with the delays and frustrations that so often come with working for a large organisation.

"My decision to leave was a lightbulb moment," he explains. "I had spent four to five months working on an asset management plan for the Tower Thistle hotel to create a whole new façade for what is a rather ugly building, as well as add 400 extra bedrooms. I had spoken to the local authority at Tower Hamlets and they were very supportive about the idea. Around £1m was required to get planning assent for the scheme, which if it had gone ahead, would have added around £200m to the value of the property.

"However, the company turned down my request for the money and I decided then and there that the company was not for me any more and resigned in December 2005.

"My key focus for the future was to set up a hotel company of my own in which I would not be held back by a large corporate structure."

After ditching plans to launch a boutique hotel company, King and his business partners - Rich Meehan, John Raymond and Jamie Goldstein - devised the concept for Z Hotels. The brand was launched in November 2011 with the opening of an 85-bedroom property in Soho, London. A second 106-bedroom hotel opened close to the capital's Victoria Station in July. Meanwhile, spring 2013 will see the launch of a property in Liverpool, with maybe a further 10 to 15 hotels eventually opening throughout the UK.

BRAND CONCEPT

For King, the key focus of the brand had to be a central location for every hotel, reasonable room rates, with a stylish design, great technology and high-quality features throughout.

So while most new independent hotel companies tend to look at the cheaper areas of town to introduce their first property, King went straight into the heart - and most expensive areas - of the capital. But, with the Soho and Victoria hotels costing £3.5m and £4.7m respectively to develop, and with room rates starting at £60, there has had to be a compromise. And that compromise comes in the room size, with the smallest rooms measuring just 9sq m. A number of the rooms - less than 15% in Soho and 60% in Victoria - are also windowless.

The compact room size is not a problem as far as King is concerned, as most guests stay in London because they want to be out and about in the city - either on business on exploring the city for leisure purposes.

"For most visitors, a central location and a reasonable price point are the key factors in deciding where to stay - and this is where we do well," explains King.

The rooms may be small, but as well as free Wi-Fi available throughout the hotel, the bedrooms all offer 40in LED high-definition TVs with Sky Sports and Sky Movies at no additional cost, power showers in en suite wetrooms and toiletries by Thierry Mugler. Beds, which use organic fibres, are from the Natural Mat company, while the 100% lambswool duvets cost around £70 each.

Generally, the size of the rooms is more conducive to a younger audience, as many of the beds require one of the guests to climb over their partner. "However, we've had a female guest in her 70s who loved staying with us," says King.

FINANCE

The difficulty in obtaining finance from the banks for a new hotel group led King, Meehan, Raymond and Goldstein to eschew their original plans for a boutique group in favour of the Z Hotels concept.

"Because we had to go down the route of obtaining private equity, we would have not been able to make the returns on what it would cost to create a boutique collection of hotels," says King.

While the four partners have a financial stake in the Soho and Victoria hotels, which involved the purchase of the two properties on a leasehold basis and all refurbishment costs, the remaining equity has come from 12 short-term private investors - including a number of Premiership and former football players. The investors are contracted to sell back their shares to the four partners after two years, at a fixed price.

Funding for the Liverpool hotel - costing £4m to develop - is coming from the Business Premises Renovation Allowance (BPRA), which helps fund new businesses in inner-city areas of regeneration where the property has previously been unused for 12 months. The scheme, which was launched in 2007, had originally been due to end this year, but the Government has recently extended it to 2017.

With an entrance on to North John Street close to Liverpool One shopping centre, the first Z Hotel outside London will be located on the top three floors of a former office building.

King expects to be able to use BPRA to fund the development of other Z Hotels in cities where there are disadvantaged areas, such as Glasgow, Belfast, Newcastle and Manchester. Plans to open properties in Edinburgh, Bath and Brighton are likely to require alternative methods of funding.

THE NAME

King explains that he asked two friends - an architect and a brand logo designer - to go away over a weekend and come up with a shortlist of names for the hotel group. "One came up with Z and the other with Z Bed," recalls King. "Z Hotels is simple to remember, falls off the tongue easily and is a brand name that we have been able to bring to life."

Z HOTELS AT A GLANCE

Founders Bev King, Rich Meehan, John Raymond and Jamie Goldstein
Hotels Two in London - Soho (85 bedrooms) and Victoria (106 bedrooms) - plus one in the pipeline in Liverpool (92 bedrooms)
Staff 40
Starting rate £60
Average room rate £100 in Victoria and £120 in Soho
Occupancy 80% in Victoria, 91% in Soho

Z CAFE AT Z HOTELS

A relaxed approach is the focus of the food and beverage offer at Z Hotels, where staff handle both check-ins and service at Z Café. Breakfast is served from 6.30am to 11am (11.30am at weekends), with a continental breakfast buffet costing £8.50 and full English breakfast at £11. For guests in a hurry, there is the option to grab a tea or coffee and pastry for £3.50.

Throughout the rest of the day, Z Café offers a choice of sharing platters, either charcuterie or cheeseboard, at £8.50, or a selection of baguettes priced from £3.75 to £4.25.

During the Olympics, with room rates rising to as much as £160 in Soho, the hotels laid on free cheese and wine in Victoria and a free BBQ with beer or wine in Soho, between 5pm and 9pm, for all guests. "It was a great way to provide extra value to our guests and went down very well," says King.

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