When I last visited Auchrannie Resort & Spa in Arran in June 2015, work had just finished on 20 new luxury rooms. My visit this year coincided with a completely new look for two of its three restaurants Cruize and Brambles, but even more exciting is the news that in June the Auchrannie Resort will become employee owned… a first for the UK hospitality industry.
The hotel, which was founded in 1988 by Iain & Linda Johnston is now owned by Managing Director, Linda Johnston (pictured above – middle), with fellow family members as minority shareholders. The business will pass into Employee Ownership following the sale of the business to an Employee Trust. This guarantees that Auchrannie will never be sold on, and that the ethos at the very centre of the business, will remain unchanged. Explains Linda, “This sort of arrangement is not normal or usual in the hospitality business. I’m not sure why it’s unusual, perhaps because people haven’t realised it is an alternative option to take your business on to the next generation when you don’t have a natural family succession. I think it is because a lot of family businesses in Scotland pass the business down to their family or perhaps the businesses are owned by private shareholders, and it is not possible to put this kind of deal together because it does need the agreement of all the shareholders.”
She continues, “Obviously, in this situation we were willing to accept a fraction of the money than we would have got if we went out on the open market.”
Linda and her late husband Iain bought the hotel, which at the time had 16 bedrooms, just under 30 years ago. Says Linda, “We started the business because we wanted a swimming pool for Arran – I was a PE teacher, and Iain was the tourist officer on the island. We knew we needed a community pool as a facility for visitors but we had to find a way to pay for it and very naively decided to buy a hotel and build a swimming pool. We are still trying to work out how to get the hotel to pay for it 30 years and two pools later!”
Today Auchrannie Resort & Spa is a luxury resort, comprising two 4 star hotels with 85 rooms, thirty 5 star self-catering luxury lodges, three restaurants, a shop, two leisure clubs with pools, a destination spa, an outdoor adventure centre, a childrens ‘Playbarn’ and next year there will be a Couples Retreats which are going under the nom de plume ‘Project Z’ at the moment.
Linda assures me, “It was never the intention to sell this business. We have had offers in the past, but have always shied away from them. We feel that Auchrannie is so central to Arran itself. If another operator bought it they could shut the place to the public. That would affect the economy of the island and the well being of the people. “It has always been the intention that Auchrannie should be for the benefit of the island and not just a few shareholders. So we were just going to sit on the shares and if something happened to me the shares would have gone to a trust and the profits to the community of Arran. Then I decided to have a look at Employee Ownership. We had looked at a management buyout a few years ago, but at that time it wouldn’t have worked financially. More recently, with the business being more sustainable, we re-considered the management buyout idea, but then we thought that perhaps an Employee Ownership model might work better.”
She says, “So basically I put the idea to the other shareholders and they were all very supportive. I wanted to protect the ethos of the business and at the same time give the employees a stake. There are all sorts of things written into the agreement which would prevent the business being sold, so now Auchrannie it will always remain an employee owned business.”
What, this means, is that Linda will no longer be the owner, although there will be no change to the management team. Linda admits the main feeling is one of relief. She tells me, “In some ways it is a relief, because at the end of the day if the rest of the management team had decided to walk, I was left holding the baby. This means that Auchrannie it is now everyone’s responsibility and it does give me a way out (although not yet) otherwise I’d be coming in here with my zimmer at 85 wondering what to do if the GM left!”
She continues, “When staff see that the business is owned by someone they make the assumption that the owner is creaming off all the profits. So this is a way of actually formalising the way we have always operated. The money goes back in. We already do try to include staff in what we are doing and they will now realise that they have a vested interest. We have always tried to put that across – staff are all part of the Auchrannie family. Of course they will play a big part in making the business more profitable in the future.
“I think the sustainability of the business, if it is seen as everyone’s business, will make our future more assured. Everyone has their part to play. It’s now not owned by any individual.”
There will be a Trust Deed which protects the very ethos of the business. Explains Linda, “A Trust Deed will govern the way the company is run as it goes forward. At the moment the company values are safeguarded by myself, and by the Board and by management, in fact by everyone who works here. They all understand what our ethos is but we have never formalised it or quantified it. It’s all just been passed on through word of mouth. Now the Trust Deed contains all the detail. It has been quantified, written down and agreed by the board and shareholders. Hopefully 100 years from now the business will still operate as it does today because if it doesn’t the Board of Trustees will hold the Auchrannie Board to account.”
The Board of Trustees will be made up of two staff members, elected by their colleagues, an independent trustee and two members of the Auchrannie Board. Their role is to ensure that the Auchrannie Board are acting in accordance with the Trust Deed. If at any time there a need to sell (if anything went drastically wrong) then the proceeds would go to charity, and not to the staff. Therefore no one has a vested interest in selling.”
“Why did I do it? I don’t know. I had always wanted to give employees a bigger stake in the business and I thought about the John Lewis model to achieve this. So we read up about this model and we spoke to a few people. I worried about how I could safeguard the business going forward. People always talk about succession planning but it was all a bit woolly. Highland and Islands Enterprise (HIE) were great. We talked to them, and they put us in touch with the right people to get the idea going.”
She continues, “Obviously HIE have a keen interest in Auchrannie. Over the years they have assisted our development and helped us grow. If we sold and another company came in and ran Auchrannie into the ground, HIE’s input would be lost and they would have lost a business on Arran that makes a major contribution to the local economy. Alternatively the business could have been bought by an offshore company and that would take the control out of Scotland. The Scottish Government support employee ownership. They want to keep Scottish businesses…Scottish! They don’t want big multi-nationals coming in with overseas HQ’s.” She adds, “If it wasn’t for HIE we might still be scrambling about and wondering what is the best thing to do.”
She believes that there is a lot of other hospitality businesses out there who may also look at what Auchrannie has done, and consider it themselves. Maybe 20 years from now they will be calling it the Auchrannie model!
Auchrannie serves more than 156,000 covers a year so it is no wonder their restaurants Brambles and Cruize are very important parts of the operation. Just before Christmas both restaurants were given a total revamp. Brambles, which also doubles as a breakfast room, was transformed into a Hampton’s style dining space, while Cruize got the sumptuous treatment. GM, Richard Small, told Hotel Scotland, “We wanted to create a more luxurious bar and restaurant. Before it was somewhere you would come with your kids, but now it is more adult friendly. We spent £350K on Cruize and £120K on Brambles but already we are seeing our revenues positively impacted by the re-design. Brambles is up 14% for the first three months of the year and Cruize is up 17%.”
He continues, “In Brambles our brief to Platform 9 was to create a washed out new England look.”
The result is a bright an airy room with shuttered windows and contemporary furnishings. Before the room was dark red with wooden beams. Now the brick work has been painted white, the fireplace too, and in situ is a log burning fire. Lovely cream and light blue/grey checked sofas, with plenty of cushions, keep the lighter theme going, and all the dark wood work which was previously there has been painted light. The artwork is contemporary and there is even a black board around the top of the bar with the days specials.
In Cruize all the seating was ripped out, and a whole new breakfast buffet was put in. The restaurant was re-carpeted and retiled, all the furniture has been replaced and there are some lovely statement pieces like the giant clock, and marble-based lamps. The colours are predominantly pale grey and cream with the chairs all upholstered with a modern checked tartan. A large part of the floor is tiled with Italian-like tiles while arge luxurious booths dominate the main eating area, perfect for parties of six, while fabulous couches are used in various other areas too.
The breakfast buffet – is also modern and stylish. Says Richard, “We wanted a country kitchen look that was a bit quirky. Here guests can serve themselves tea and coffee as well as choose their breakfasts. Everything is top of the range including the coffee machine which cost a fortune.”
The Lounge bar area is just as sumptuous although the walls here are darker, and the artwork is striking. It’s got the feel of a gentleman’s club. Says Richard, “The feedback has all been very positive.” I’m not surprised.