Freedom for Oban

03 August 2004
Freedom for Oban

The 59-bedroom Oban Caledonian hotel sits on Oban's harbour front, with spectacular views across the Firth of Lorn to the Isle of Mull off Scotland's west coast. Its stylish lobby gives way to a comfortable caf‚-bar overlooking the pier. The dining room could easily be that of a chic city-centre hotel in Glasgow, Edinburgh or London. It is not what one would expect in a quiet port town, known as the jumping-off point for the south-western Hebrides.

For the hotel's owner, three-strong hotel group Freedom of the Glen, it is the first new property it has opened since 1992. Not only that, but it is only 40 minutes away from its existing properties, which sit at the mouth of Glen Coe, south of Fort William.

"The scary thing about getting bigger is not knowing if the USP [unique selling point] is what you think it is," says John Jennett, managing director of the Freedom of the Glen group.

That USP is offering groups and leisure travellers a quality, four-star hotel with about 60 rooms, either in tourist towns or in completely rural destinations. "That is big enough to be run commercially and take groups, but small enough to have a family feel," Jennett says.

The Oban Caledonian was a run-down property when Freedom of the Glen bought it in the spring of 2002 for £1.5m. Throughout that year, the group ran the hotel in its one-star state, then closed it after Christmas. From January, it underwent a £1.5m refit, transforming it into an urbane four-star property with character, reopening in March 2003.

The group may make its home in a small area of Scotland but its vision is international. "We were on a budget but we wanted to go for a high standard of fitting," Jennett says, "and we'd heard from another hotelier that it was cheaper to buy things in South Africa." The exchange rate was favourable at the time, so Jennett went to South Africa, took pictures and designs of what he wanted, and shipped items home.

He estimates that prices were only 20% of those in the UK - the sleek designer restaurant chairs cost only £90. "We could have fitted this hotel on the same budget in the UK," he says, "but the spec wouldn't have been as high."

However, shopping around locally also paid off. The blinds in the dining room, and the curtain rods and fittings in the bedrooms, come courtesy of a local sail-maker and the latest advances in sailing technology. "Instead of contacting the usual suspects, we used local suppliers to keep costs down," Jennett says. "We got something that was interesting and unique."

The hotel certainly stands out from its competitors in town. But is there a market for this style of hotel here, and has the group's expansion strategy paid off?

Oban fits into the category of tourism town, Jennett says, as it is a port for three ferry companies that take visitors out to islands such as Mull and Iona. Certainly, a trendy deli and a variety of restaurants and shops along the town's George Street are testament to the demand for a quality offering.

There were three reasons for the group's expansion. First, with only three hotels, Jennett felt there was a need to grow in order to remain competitive. Second, it would offer the hotels' existing client base, particularly the group market, a new venue to add to their itineraries. And third, it would give further scope to offer hotel staff new challenges.

"Acquisitions provide the opportunities for people to develop careers with us," Jennett observes. "The labour market is very competitive, and I think there is increasing focus on succession planning."

The opening team at the Caledonian was in part shared with the other three hotels, providing solid expertise in a new setting. In addition, the company's management training scheme, launched last year, has provided at least one senior staff member for the Caledonian - Kristen Humphrey spent six months on the scheme before moving to become assistant manager at the Caledonian.

After a year in business, Jennett is pleased with the financial success at the Oban Caledonian. Turnover this year will reach £1.7m and is expected to grow by 15% in year two. The average achieved room rate will reach £56, with occupancy at 70%.

Jennett points to the opening of a commercial airport on the site of a former RAF base on Oban's outskirts as further evidence of the increasing popularity of the area. Flights from Glasgow should open up the short-break market for the town.

And the hotel's success means that future expansion is possible. Jennett says: "It gives me confidence that we can retain our brand essence - which I identify as the ‘family feel' - in other locations."

Freedom of the Glen Hotels
0871 222 3415

Started: 1979
Turnover: £5m
Staff: 190

Hotels include: 14-bedroom Lodge on the Loch hotel, Onich, near Fort William; 54-bedroom Ballachulish Hotel, Ballachulish; 59-bedroom Isles of Glencoe Hotel & Leisure Centre, Ballachulish; 59-bedroom Oban Caledonian hotel, Station Square, Oban

Freedom to improve
Freedom of the Glen is an independent group on Scotland's west coast, with a forecast turnover of £5m in 2004-05. Its business consists of 60% independent leisure travellers and 40% group visitors. The UK group market is the mainstay in the winter months, but in the summer it is groups from the European Union or the USA who arrive in coaches.

The company has focused on retaining its customers, directing 25-30% of its marketing budget into guest retention. It has produced a guidebook, entitled The Very Best Things to See and Do, which is handed to guests on arrival. This makes them aware that there is more to do in the area than they might have originally thought, and encourages them to return, according to managing director John Jennett.

He says: "We started in 2001 and have seen our return visit percentages increase, and we have seen our direct relationships [with customers] grow."

Now, 44% of the group's leisure business comes from return visitors, and 30% of the leisure business is booked via the internet. Jennett believes that such direct contact with customers is vital not only for cutting distribution costs, but also for providing a better customer service.

The group runs its own central reservations office, open 363 days of the year. "The yield management opportunities are excellent and it gives us the opportunity to cross-sell," Jennett says.

Guests are actively encouraged, on the phone and on the website, to enquire which hotel is likely to suit them, with reservations staff well briefed on each property's individual strengths.

At one time, the hotels were marketed as catering to the same market, but now their differences are emphasised. For example, the family market accounts for 25% of the room stock at the Isles of Glencoe hotel. Down the road, the 14-bedroom Lodge on the Loch is for those seeking an intimate, quiet stay, and no children under 16 are accepted. And the Ballachulish hotel, with its iconic baronial facade, attracts those looking for a traditional Highlands hotel.

Jennett believes that if guests get the right hotel for them, they're more likely to return.

Although the Oban Caledonian is the group's first new hotel in 12 years, the company has added bedrooms to its existing hotels, and in 1996 it opened the Highland Mystery World as a visitor attraction. However, the fallout from the outbreak of foot-and-mouth disease in 2001, and the failure of visitor numbers to meet targets, forced its closure. Jennett is now planning to convert it into offices to house the company's headquarters and call centre, providing a platform for future growth.

Future expansion will be along the A82, which runs north-east from Fort William to Inverness and is the route taken by most tour buses. Jennett rules out city centre properties, but he believes that something on the outskirts may be possible.

However, expansion for its own sake is not the aim. "We have made a lifestyle choice to live on the west coast of Scotland," Jennett says. "I don't want to be sitting in traffic jams to get from one property to the next. We need to balance that and make the right decisions so what we have is successful and sustainable. Any opportunities for the group will be looked at through that."

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