Club Hotel & Spa: There's no competition

13 April 2006
Club Hotel & Spa: There's no competition

Lawrence Huggler is amused to hear all the wailing on the UK mainland when it comes to utility bill rises. He is, after all, in a good position to put the hikes in perspective. As well as owning the Club Hotel & Spa in St Helier, the Huggler Group of hotels also owns the four-star Apollo hotel in Basingstoke, Hampshire.

"One of the difficult things is definitely the utility bills," he says. "But that's nothing compared to Jersey, where prices for water and gas are already horrendous."

Huggler calculates that for gas, he pays a massive 36% less in Basingstoke than he does in Jersey. More astonishing, however, is water, which costs some 49% less to pipe in on the mainland than it does in St Helier. The problem, says Huggler, lies with supply. On the island, Jersey Water supplies water, while Jersey Gas supplies the gas. There's no competition. So complacency and inefficiency set in and the result is higher costs, he reckons.

The pattern applies not just to utility bills but basic goods as well. By law, people on Jersey are allowed to consume only Jersey milk to protect local herds. "Now I don't mind paying for a premium product and Jersey milk is rightly regarded as the best in the world," Huggler says, "but when it's 60% more than the cost of milk on the mainland it represents a pretty big chunk." Again, he says, there's little pressure on dairy suppliers to improve efficiency and bring down costs.

Supplies which have to be shipped in from the mainland are often also more expensive. "A keg of Guinness is about 10% cheaper on the mainland because we have to pay for shipping costs," says Huggler. "Of course it's probably just as expensive to transport the Guinness to the north of Scotland as it is to bring it over here."

One area where Jersey does have the advantage is electricity, which is supplied from France. Because 70% of France's electricity is generated from nuclear power it's not subject to rising costs on fossil fuels, and as a result is some 28% cheaper than on the mainland. Jersey is also only just introducing a goods and services tax of 3% (equivalent to VAT), and the island has lower tax burdens on businesses.

However, this doesn't equal a level playing field, says Huggler. "If a holiday-maker looks at Bournemouth, our hotel may look slightly cheaper," he says. "But we have to pay much more on these extra costs behind the scenes - and we have to persuade people to pay for their flights."

Huggler says the answer for the island is to increase more competition. This year Cable & Wireless will be able to supply telecoms services to the island and last year, for the first time, a monopolies commission was set up on the island. "To compete with the mainland we need more competition and thankfully that now seems to be something Jersey is addressing," he says.

Of course, Huggler concedes that one way to cut energy bills is to reduce consumption, but says that in the real world hoteliers are very conscious of not wasting energy anyway.

However, he admits that guest comfort and enjoyment come first. "Guests like downlighters because of the aesthetic effect and they need good lights to be able to read by," says Huggler. "And if they want to run a bath then we can't really stop them."

What modern hotels can do is improve how they're designed in the first place. The Club has double glazing and an air conditioning system that runs on an energy-saving programme when guests are away from their rooms. But Huggler would also welcome more technological advances.

"We looked into photocells for the roof," he says, "but they just weren't economically viable." Which is a shame, because with Jersey's climate as sunny as it is, the Club Hotel could definitely get one over on the mainland.

The story so far The Club Hotel & Spa was opened on 21 August last year by Lawrence Huggler. His family already owned the site's freehold through its St Helier printing business, but it still took £7m to get the project off the ground. This included the fine-dining restaurant Bohemia, which opened in 2003 and won its first Michelin star last year.

Looking ahead, Huggler hopes the hotel will record a gross operating profit of between £750,000 and £850,000.

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