Scotland's rural hotels: is now the time to check in?

While a pre-pandemic holiday was usually synonymous with jetting off to balmier climes, this year has seen most holidaymakers swap, say, sangria and sun loungers for destinations much closer to home.

The Glenmorag Hotel in Dunoon is among rural sites currently on the market. Picture: contributed.

That has provided many of Scotland’s rural hotels with a rush of trade over the summer in contrast to the bleaker environment for city peers. But amid a recent run of such properties coming onto the market, are they a good investment financially and career-wise – and how are hoteliers making them a success?

The past few weeks alone have seen the “for sale” sign go up at the likes of the Invergarry Hotel in Inverness-shire, described as a “well-established, and profitable four-star inn,” as well as a trio that together comprise Hart Hotels.

Alistair Letham, hotel property consultant at Graham + Sibbald, which is marketing all of these properties, said the events of 2020 had prompted people to “have a look at how better they can live their lives”. Such dreams are more easily realised given the strength of the residential market, particularly in Scotland, where people can sell up and have cash ready to invest, he added.

There is a pinch in bank lending, but there is “money out there to be borrowed”, he also explained, with some parties seeking a return similar to that of high-street lenders, and others quick to lend money, with higher charges but enabling hoteliers to get their purchase in order and refinance when the lending picture is better.

Mr Letham said he has just received interest in a property from someone based in Dubai who was looking to return to Scotland, while there was still a “reasonable” amount of people coming from the south of England. "We're not dealing with floods of buyers, but there’s still a decent flow,” he said.

And he flagged robust demand from private investors, based either in the UK or overseas, who were happy to invest into the leisure and hospitality sector and have the business run by a management company – although focused on operations of a decent scale. “They're looking for a sensible return on their money … achievable profitability has to be there for the business,” he said.

That said, leisure and hospitality have stressed the negative consequences of lockdowns – with the 100 top Scots hotels last month writing to Nicola Sturgeon to express their disquiet, for example.

As for what it takes to make a hotel a success, Mr Letham sees the need for a suitable level of business knowledge, and while some background in hospitality is an advantage, it isn’t essential. Smaller hotels with ten to 15 rooms often involve first-time buyers, he said.

He also pointed out the lifestyle is hard work, probably now more so than ever, and requires someone willing to “roll their sleeves up” in what is a 24/7 job, and enjoy dealing with the public.

One person who knows exactly what is involved is Sue Stuart, director of The Four Seasons Hotel in St Fillans, Perthshire. She bought the property in 2017, having always worked in hospitality, opening the Sheraton in Edinburgh and working for InterContinental in London.

She had waited to find the right property at the right time, and said being your own boss meant a person didn’t have all the systems available in a large chain, “so you get to actually be a hotel manager when you're in those [bigger] environments”. But with a smaller property, she said an owner had to be a jack-of-all-trades.

Her hotel boasts relaxing views across Loch Earn, and includes self-contained chalets, so it could resume trading a few weeks before some rivals in July.

Back to nature

From then on it was non stop. “We've had a very, very busy summer,” she said. “And I think that’s been pretty much the case for a lot of properties outside the city. People have wanted to get away, back to nature – it’s all about wellbeing and healthiness. Certainly my books were looking very busy through October and into November until the latest government guidance came out.”

That said, she is expecting a busy 2021. “But I think we will probably have to work harder,” she said, citing local rivals that decided to sit this year out – but will be back.

The hotel says it fuses “the best of the old whilst introducing just a few new touches” – and Ms Stuart sees customer demands growing - for example, expecting an in-room minibar or 24-hour room service, and many rural hotels lack the resources to provide four or five-star service.

Mr Letham said meeting growing guest demands, within reason, “can really be hard work for the operator – but it's no bad thing because it keeps them on their toes”.

As for the outlook, he said he believed 2021 “will be an interesting year” to see what happens with firms that have been reliant on coronavirus-related support.

Property industry veteran Chris Macfarlane of Lismore Real Estate Advisors echoed this, expecting that potential investors – who for rural properties will likely be from the UK – will want to wait until they see real value in the market. “I'm not sure we've seen that yet,” he said. “I suspect it will probably be into next year once the government support schemes start to fall away.”

As for hotel trade itself, he forecast renewed interest in the better rural locations, amid nearly three-quarters of those surveyed by building society The Cumberland saying they plan a UK holiday in 2021.

While nobody can forecast what is in store for the industry, Ms Stuart is keen to stress there are many pluses of running your own hotel. She has no regrets. “It is what I have always wanted to do. It challenges me every day and develops my business skill set … the variety and challenge is my motivation.

“Working here also provides for an unrivalled work/life balance, which becomes increasingly important.”

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