September 29 2022, Kimpton Fitzroy London
Friday 30 September 2022, JW Marriott Grosvenor
21 November 2022, Hilton London Metropole
Ruaridh Macdonald, sales and marketing director for Macdonald Hotels, talks about the past, present and future of the British hotel group.
Macdonald Hotels has more than 40 hotels throughout the UK. The chain is investing heavily in its properties, all of which it owns and is in the middle of a £16 million refurbishment and investment programme.
Tell us about Macdonald Hotels...
The company was formed in 1990 so we’re relatively young in the marketplace. We started out with two hotels in Scotland and rapidly expanded. In 1993 we bought eight hotels from Rank, then very very quickly things moved on, so three years after that we were managing or owning over 100 hotels, with the management being on behalf of the bank.
In 1995 we bought four hotels from de Vere, and at the same time we bought 50% of the Barrett International Resorts – there were nine resorts in the UK and Spain and we had those under a management contract as well.
In 1996 we floated on the London Stock Exchange and built our first new hotel in Edinburgh,which opened in 2000, and developed brand new hotels in Manchester Sheffield, Cardiff and Bristol, some of which were joint ventures.
In April 2001 we made our biggest acquisition, buying 47 hotels of the Heritage brand from the Compass Group for around £130 million financed by the Royal Bank of Scotland which gave us a much stronger foothold in the south [of England]. Those hotels included the Randolph in Oxford, the Compleat Angler in Marlow, the Bath Spa, and also in Scotland the Rusacks Hotel in St Andrews, a landmark hotel right on the 18th green of the Old Course and the Marine hotel in North Berwick.
At the same time as that we also bought the remainder of the 50% in the Barrett business and rebranded that into Macdonald resorts, so we are the third largest time share operator in Europe with circa 35,000 owners.
We then took the decision in 2003 to buy the business back and take it into private ownership. During the time we were on the Stock Exchange we had doubled the value of the business. But we felt we were probably not very well represented, being mixed in with some international brands so that when they had issues within their businesses it significantly affected our market value, so we took the decision to buy the business back.
So how do you differ from other UK hotel brands?
If someone asked me what our unique selling point is, it would be that we own all of our assets so we have a vested interest in continually developing and improving them not only to enhance the customer experience but also to enhance the asset values. We are all hoteliers - the main board of the company and the senior executives within the company - so we’re in business because we care about the experience we deliver to our guests.
We are very committed to quality and standards, both through physical improvements in property but also staff training. We employ just under 4,000 staff in the UK and we take an approach that we want all our staff to have the opportunity to further their education or gain a qualification.
How many hotels do you have?
We have 48 hotels. London is obviously a key target area for us. It has been in a bubble in terms of the rest of the UK looking at average room rate and occupancies and trading. That in turn has held property prices, so getting into London is difficult. The second part is that in terms of going in and investing significant amounts of money in brand new developments in London, given the current state of the country’s finances, now is probably not the right time. But London is a key focus for us.
We have an affiliation with the Royal GGS. It is an excellent relationship. It is a sales and marketing agreement that we have with the Royal Garden. They are on our website; they are in all of our collateral, so from the customer experience it is a good choice. It is privately-owned and is 100% aligned with the quality and service. It’s a good fit and gives us that ability to quote for business in terms of corporate rooms.
Do you have a loyalty programme?
We do. We have invested nearly £600,000 in loyalty to get it to where it is today. We recognised we had to with the change in the market to online travel agents. We wanted to drive as much of that business direct [to us] and at the same time look at our top spending guests, firstly recognising them and secondly rewarding them. It was a fairly intensive project to create two distinct areas – Club for individuals and Club Corporate for the MICE market.
We didn’t go down the traditional route of hotel loyalty with airline partners and car hire partners. We wanted to make it more lifestyle orientated, so the partners give our customers the chance to reward themselves with a stay at the Langham in London or shopping at House of Frasers or enjoying hospitality at the [Golf] Open, which we think is more appealing than offering additional air miles.
We launched in June of last year, but we are recruiting on average 600 new members per month. We don’t want to sign everyone up to the scheme. We don’t actively push recruitment across the brand. We want to identify the top spending customers and invite them into the scheme.
Do you have relationships with corporates?
We do, yes. August and September time is our key RFP negotiation period and last year we completed over 500 RFPs purely on rooms, plus meetings RFPs on top of that. We have agreements with over 500 companies, which will give them agreed rates from Inverurie in the north of Scotland right down to Southampton.
How does it split between leisure and business?
It’s pretty much 50/50. We cover all the segments. We have golf courses in the UK, and we have 24 spas and leisure clubs. All of our hotels are very unique in their own right. We trade in the upper four and five-star market, and we don’t take a cookie cutter approach to the way we develop hotels. We have everything from modern city-centre hotels in Manchester to baronial castles in Aberdeenshire, but the one thing that remains constant is the quality and standards of service and food that we deliver. It is a diverse portfolio but then that fits very well with the times of year and the different market segments.
Is the development opportunistic?
It probably is more opportunistic. We get a number of approaches from independent hotels, and from groups of hotels. There’s a lot of movement in the marketplace and also a lot of uncertainty as well. We look at every opportunity. We are an entrepreneur-led business and we never stand still. Our focus this year is to really build on the successes of the past two or three years. We have outperformed the market in just about every way, so we will focus and build on that.
The UK regions were hit the hardest, so how did you fare?
They were, but we were also very fortunate in the mix of business that we have. The staycation is here and it helped us immensely. Also in the corporate rooms market we saw a growth, which was down to relationships with the key booking agents and being hungry for the business. If we see a piece of business that we have the opportunity to quote for it comes down to the commercials of whether that business is profitable or not, and we have shifted a lot of market share away from our competitors by being strong on relationships.
Who is your competition?
We benchmark each hotel against the five or six hotels within a 10 or 12 mile radius of that locale. We see our competitive set across the UK as being De Vere collection, Q Hotels, Principal Hayley's Handpicked and a number of independent hotels. In our city centre location in Edinburgh, Manchester and Birmingham we are competing against Marriot and Hilton as well.
Do you have any openings this year?
No. We opened a brand new hotel in Windsor at the end of October last year (2010). It has been a fantastic success for us. It’s quite a departure for us in terms of the look and feel. For any new hotel development that we may do in the future, Windsor will be the blueprint. We also took over what was the Princess on Portland in Manchester, which we rebranded as the Macdonald Townhouse last year. Those were the two key new openings.
This year we will spend on the hotels we have - not only in terms of the physical property but also investing in people and systems. The property management system and a new website will launch in August or September, which is a pretty substantial investment in making the customer’s experience much better. We have looked at what the customers wants and needs are and making it easier for them to book online.