Hoteliers and Hotels: Case Studies the Growth and Development of U.K. Hotel Companies 1945 - 1989
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HOTELIERS AND HOTELS: CASE STUDIES THE GROWTH AND DEVELOPMENT OF U.K. HOTEL COMPANIES 1945 - 1989 DONALD A STEWART Thesis submitted for the degree of Doctor of Philosophy at the University of Glasgow Faculty of Social Sciences Department of Economic History October 1994 (c) Donald A Stewart (1994) ProQuest Number: 13818405 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a com plete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. uest ProQuest 13818405 Published by ProQuest LLC(2018). Copyright of the Dissertation is held by the Author. All rights reserved. This work is protected against unauthorized copying under Title 17, United States C ode Microform Edition © ProQuest LLC. ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106- 1346 {GLASGOW { u n i v e r s i t y \ ti m r TABLE OF CONTENTS PAGE LIST OF TABLES iv ACKNOWLEDGEMENTS vii ABSTRACT ix Introduction 1 Chapter 1 The Development of the UK 5 Hotel Industry Chapter 2 The Independent Sector 69 Introduction 1. The Goring Hotel, London 2. The Lygon Arms, Broadway, Worcestershire 3. The Metropole, Llandrindod Wells 4. The Open Arms, Dirleton Conclusions on Independent Sector Chapter 3 Hotel Groups Geared To The UK Market 156 Introduction 1. Mount Charlotte Investments Pic 2. Norfolk Capital Group Pic 3. Centre Hotels, Comfort Hotels, Friendly Hotels 4. Gleneagles Hotels Pic Conclusions on Hotel Groups Geared to the UK Market Chapter 4 The International Sector 272 Introduction 1. Grand Metropolitan Pic 2. Bass Pic 3. Queens Moat Houses Pic 4. Trusthouse Forte PLC Conclusions on International Groups ii - Chapter 5 Evaluation of Case Studies 414 1. The Independent Sector 2. The U.K. Sector 3. The International Sector Conclusions 1. Duality of Industry as Property Investment and Retail Operation 2. Location 3. Techniques and Timing of Acquisition 4. Professional Advice 5. Techniques of Management Appendix 1 Note on Methodology - 445 Selected Biographical Details Bibliography 456 Published Paper The Growth and Development of Trusthouse Forte - Donald A. Stewart in Tourism Management (1991, Butterworth Heinemann) P 341 to 351 Video Recordings Peter Tyrie - Managing Director Gleneagles Hotels Pic - June 1985 Arthur Neil - Proprietor The Open Arms, Dirleton - November 1986 LIST OF TABLES CHAPTER 1 Table Page 1-1 British Residents' Holidays of Four or 12 More Nights Away From Home 1951, 1955, 1965 - 1969 1-2 British Residents' Expenditure on 13 Holidays of Four or More Nights Away from Home 1951, 1955, 1965 - 1969 1-3 Consumers' Expenditure on Meals and 14 Accommodation 1966 - 1969 1-4 Overseas visitors to Britain (Leisure 16 and Business) Numbers and Expenditure 1946 - 1970 1-5 Sources of Household Income 1968 - 1978 21 1-6 Sources of Household Income 1977 - 1989 22 1-7 Consumers' Expenditure on Meals and 24 Accommodation 1970 - 1975 1-8 British Residents' Expenditure on 25 Holidays of Four or More Nights Away from Home 1970 - 1975 1-9 British Residents' Holidays of Four or 26 More Nights Away from Home 1970 - 1975 1-10 Trends in Holidays by UK Residents 1965 27 - 1989 1-11 Overseas Visitors to Britain: (Leisure 29 and Business) Numbers and Expenditure 1970 - 1988 1-12 UK Hotels PLC: Room Nights Used 1979 - 31 1989 1-13 Distribution of Hotel Capacity, Great 33 Britain 1974 Licensed Hotels 1-14 Distribution of Hotel Capacity, Great 34 Britain 1974 Unlicensed Hotels 1-15 Distribution of Hotel Capacity, Great 35 Britain 1974 All Hotels - IV - 1-16 U.K. Roomstock 1971 - 1981 38 1-17 Leading Hotel Operators in Britain 1976 45 1-18 Top 20 Hotel Operators 1989/90 46 1-19 Overseas Travel and Tourism Summary 54 1980 - 1989 CHAPTER 2 2-1 The Goring Hotel Limited - London 91 Financial Summary 1976 - 1985 2-2 Spa Hotel (Goring) Limited 92 Financial Summary 1976 - 1985 2-3 The Lygon Arms Limited - Broadway 108 Financial Summary 1976 - 1985 2-4 The Hotel Metropole - 126 Llandrindod Wells Financial Summary 1978 - 1985 2-5 The Open Arms - Dirleton 143 Schedule of Figures 1976 - 1985 The Howard Hotel Schedule of Figures 1976 - 1985 CHAPTER 3 3-1 Mount Charlotte Investments Pic and 172 Subsidiaries Financial Summary 1983 - 1987 3-2 Norfolk Capital Group 201 Financial Results 1983 -1987 3-3 Centre Hotels Financial Data 1967 215 1976 3-4 Comfort Hotels International 1978 223 1983 3-5 Friendly Hotels 1984 - 1987 229 - v - CHAPTER 4 4-1 Merger Documents Grand Hotels (Mayfair) 282 Limited and Mount Royal (Marble Arch) Limited Profit Statements 4-2 Merger Documents Grand Hotels (Mayfair) 283 Limited and Mount Royal (Marble Arch) Limited Balance Sheets 4-3 Intercontinental Hotels 304 Operating Results 4-4 Balance Sheets of Trust Houses Limited 373 and Forte Holdings Limited at time of Merger 1970 4-5 Trusthouse Forte Limited and 384 Subsidiaries Profit Statement 1970 - 1977 4-6 Trusthouse Forte Holdings Limited 385 Consolidated Balance Sheets (Abridged) 1970 - 1988 4-7 Trusthouse Forte PLC and Subsidiaries 402 Five Year Record 1981 - 1985 4-8 Trusthouse Forte PLC and Subsidiaries 403 Five Year Record 1984 - 1988 - vi - ACKNOWLEDGEMENTS I should like to express my sincere appreciation and gratitude to those who have contributed, directly and indirectly, to the writing and production of this thesis. My thanks are due firstly to my family and in particular my wife Jennifer whose cheerful disposition proved a constant source of encouragement. The fieldwork was facilitated by gaining access to leading hotel companies, and hoteliers, in the U.K. Arthur Neil of The Open Arms, Dirleton, the subject of the first study, paved the way for access to subsequent studies in the independent sector. Fritz Ternofsky of Commonwealth Hotels International Co (formerly Commonwealth Holiday Inns of Canada) kindly made available accommodation for the fieldwork conducted in London. Anthony Northeast, the manager of the Business Information Division of the Financial Times, made available the comprehensive files of press cuttings, stretching back to 1945, which provided an unrivalled continuous source of accurate commentary relating to the events of the period under review. - vii - I am grateful to my employers The Queen's College, Glasgow (now Glasgow Caledonian University) and in particular to my former Head of Department Mr Andrew Greig, who arranged a period of leave in 1987 in order to facilitate the field research. At the University of Glasgow in the Department of Economic History, my supervisors were Dr Charles Munn and Professor Anthony Slaven. To both I owe much; for their interest in the chosen subject and for their guidance, direction and encouragement. To Professor Slaven especially I should like to record my appreciation for his considerable patience and invaluable support during the latter years of study. The interest, patience and expert secretarial skills of Mrs Diane McAdam enabled successive drafts of material, originally generated on my wordprocessor, to be progressively improved to the standard required for presentation as a thesis. To all those involved, therefore, I offer my sincere thanks. - viii ABSTRACT The aim of this thesis is to establish the characteristic features of hoteliers and hotels in the main sectors of the U.K. hotel industry, and to demonstrate, through case studies, patterns of growth, development and performance in hotel companies in the period 1945 - 1989. The year 1945, which marked the end of the Second World War, is a natural start point for such a work whilst by 1989 the U.K. hotel industry had established a standard of hospitality combined with general management skills at least equal to and in many cases superior to that offered on the Continent of Europe and throughout the New World. Subsequent to outlining the economic context of the industry in the introductory chapter, the thesis demonstrates the growth and development of the industry by charting the progress of twelve separate hotel companies. These are divided into three groups - hotels in the independent sector, hotel companies which operate throughout the U.K. and whose basis for growth has been the underlying asset value of their property portfolio linked to their ability to operate in a specialised retail environment and hotel companies which have grown principally as a result of international expansion and diversification. The final chapter is directed towards an evaluation of the case studies and to factors which have been central to the growth and development of each company. x - INTRODUCTION Although hotels and inns have existed for centuries it is only in recent times that the hotel industry has come to feature as a principal component of the service sector of the economy. This is as a result of the growth and development of the industry in the post-Second World War period and it is this expansion which is the subject of the thesis. The purpose of the thesis, therefore, is to trace and analyse the reasons for the growth and development of the U.K. hotel industry since 1945. Traditionally, the hotel industry in the U.K. was dominated by independent hotels, often family controlled, which sought to provide accommodation, food, liquor and latterly leisure to their various markets (Ch. 2). The post war period, however, has seen the emergence of a number of large firms which operate groups of hotels and it is these firms to which much public attention is now paid, particularly those which operate as Public Limited Companies. Furthermore, other large firms, especially national brewers, have sought to diversify into the hotel industry and have built up chains of hotels which form separate divisions within their organizations (Ch.