In our final focus on Tomahawk Hotels in this series, Tom Vaughan looks at its swift rise over the last three years, and what the future might hold
It's nearly three years since Tomahawk owners Tom Horsfall and Rob Foulston fell into the world of hospitality. Old school friends, they decided to go into the property business together after years spent as, respectively, an investment banker and a quantity surveyor.
Their first hotel came about almost by accident. After they bought Woodlands, a run-down nursing home in south Leeds, in February 2003 they found it to be in the wrong location for their original plan of turning it into flats. Despite little or no experience between them, they decided to try their hand at hospitality and convert Woodlands into a hotel.
Now, three years down the road from its opening, the pair are sitting on an £8m turnover business with assets of more than £20m, and are in the process of adding a fourth hotel to go alongside Woodlands, the Great Victoria in Bradford and Aston Hall in Sheffield.
"I can look back now and say we've created a high turnover business in three years with sizeable assets," says Foulston. "To go to that after starting with zero is really pleasing. When we started we said 10 hotels in 10 years. It was a throwaway comment but we're on course."
The fourth property will cost about £5m and will be in Yorkshire like the other three hotels, but more in the mould of the rural Woodlands than the city-centre-based Great Victoria. Negotiations are under way with a view to completion late this year.
Is the proximity of the four locations part of the business model? "Keeping all the hotels close was a decision we made a while ago," says Foulston. "It means we can move staff around, share resources and keep costs down. When hotels are scattered around the country managers can spend their lives on the motorway. This way we'll be able to visit all four hotels in half a day."
The first three hotels all opened over a short period of time. Woodlands in 2004 was followed by Aston Hall and Great Victoria in March and November 2005 respectively, mainly because of what Foulston labels "opportunism" in the property market. A decision was taken to consolidate the existing properties before adding the fourth. "In the last 18 months we've learnt that recruitment and selection is critical," he says. "If you get that wrong it takes time to recover. We're putting a huge amount of effort into our human resources at present. How hard it is to get good people caught us by surprise at first, and we filled a lot of slots in the early stages with people that perhaps we shouldn't have."
But this doesn't mean the new business, which is an existing hotel, will see a large staff turnover. "It's important to keep the majority of staff for an easy transition but the key is to put in your own managers," says Foulston. "You have to have it run how you want it, not how the previous owners wanted."
While the new property will be in the mould of the rural Woodlands, Foulston is adamant that the experience of running the Great Victoria in Bradford city centre has made him and Horsfall better hoteliers. "We've really enjoyed being in the city centre," he says. "It's a completely different market. It's busier, it's easier to fill midweek and it's part of a community. You don't realise how isolated you can be in the countryside. In Bradford the business community were so welcoming and helpful."
Does Foulston envisage further Tomahawk hotels opening around the same area? "As a strategy we want to make a tight cluster of successful hotels in Yorkshire and then take that model into a new county," he says. "Preferably, I'd like to stay northern-based, but there's no reason why it shouldn't work across the UK."
Further developments are in the pipeline for the original trio of hotels. The 17-bedroom Woodlands hotel will have 35 rooms added later this year, and planning permission is in place for a spa, while refurbishment of the top floor of the Great Victoria is due for completion by the end of the summer and the addition of a gym is also planned.
Earlier in this series Foulston mooted the idea of adding Tomahawk restaurants to complement the brand, but has since shelved this idea. "A large part of the enjoyment in hotels is the property element," he says. "Restaurants tend to be leased."
Three years after starting life as a hotelier, is Foulston enjoying his career change? "I wouldn't go back, I made a decision to leave the financial market and I stick by it," he says.
But despite the success, life hasn't always been easy. "A lot of people have lost a lot of money in hotels," Foulston says. "It's a difficult business. If you don't control them tightly they can run away from you. But on the flip side there are incredible perks. Look at the boom in the property market. Each of our properties has doubled since we bought it. There are two sides to the hotel market - management and ownership. And I'm enjoying them both."
With the target of 10 properties in 10 years still firmly in sight, Tomahawk has seven years left to achieve it. And bearing in mind what the company has achieved so far, only a fool would bet against it.
Ask an expert
The next acquisition for a small but growing hotel company is a very exciting event, but there are many practicalities to consider. Hotel industry consultant Melvin Gold looks at a few of them…
• Consider whether the property is a good fit with your existing business. Then, as you get more detail on the business, consider it again just to be sure you haven't uncovered anything to change your mind.
• Gauge the impact of previous management of the hotel. For example, a popular and energetic private owner may have established a loyal following and it can be difficult for companies to replicate that.
• Get an accurate assessment of the likely costs of any future investment plans you have for the property.
• Be sure the price is right, especially in today's buoyant market conditions. Overpaying on acquisition is something that can hang over the business during the period of your ownership and is probably the most significant factor affecting your overall return on investment. Overpayment on entry cannot be made up later.
• Get a good professional team on board. Their advice may be invaluable and the right professionals will give you a broad experience base to call on.
• Don't take your eye off the ball. Your existing business needs to continue to trade strongly and it's easy to be distracted by the excitement of a new transaction.
• Listen to the bank. It will have seen it all before and will have advice to give.
Overall occupancy: 80%
Midweek occupancy: 90%
Weekend occupancy: 70%
Average achieved room rate: £95
Aston Hall, Sheffield
Opened: March 2005
Overall occupancy: 70%
Midweek occupancy: 80%
Weekend occupancy: 60%
Average achieved room rate: £80
Great Victoria, Bradford
Opened: November 2005
Overall occupancy: 60%
Midweek occupancy: 90%
Weekend occupancy: 30%
Average achieved room rate: £69