Asset Management Grand and Small
May 9, 2011
On a recent visit to a magnificent stately home with copious grounds in Wiltshire, I was taken aback by how well the estate is run and by how up-to-date and commercial the thinking is.
It is perhaps a misconception that the ‘landed gentry’ have endlessly deep pockets with which to run their family estates – this may have been the case a hundred years or more ago, but the economic reality has to be faced in the twenty-first century. Plenty of homes are now open to the public – and ‘home’ is not just a title, it is often the building in which the owners reside.
Due to high running costs the public are invited in to certain areas of the house, in order to admire the history of the building and to appreciate the architecture, furnishings and general ambiance of the place. This is one of a number of revenue streams that large home owners are turning to in order to assist with cash flow.
My particular choice for the Easter weekend was the Bowood Hotel which already has an 89-year-old, rather fine golf course within the few hundred acres of grounds. Three years ago they added a 43 room hotel and spa. The Spa manager sparked my interest with how utterly commercial he was in his thinking.
He explained that the hotel is entirely focused on service and quality, with the customer experience at the heart of the proposition. The fit out, dining and service should speak for itself. They are not obsessed with targets, rather obsessed with the customer’s experience – and it shows, very positively. Notional financial targets have been well beaten in each of the past three years, flowing from service levels rather than ‘sales’. Phase one of the development has achieved its financial return predictions, with phase two including an extension to the Spa facility (due in 12 months). What I consider a very sensible approach.
All of this from a ‘departmental’ manager who was completely in tune with the overall business strategy and performance.
The Bowood Hotel does not advertise and gains nearly all business via referrals and recommendations – and I am very happy to recommend their product and services.
The parallels with how the Young Group operates struck me immediately. Active, smart asset management is critical to any property business. When you own an investment property, no matter how large or small, the same things are at the heart of capital protection – service to the tenant, your revenue stream, good management and no small amount of hard work. One should plan for capital expenditure on the upkeep of the property and manage the monthly cash flow. This is a business after all, and all successful businesses employ key staff / advisors who are experts in their field to enhance yields – both income and capital returns.