With a wealthy, ambitious new owner and £10m up front, Malmaison Group CEO Gary Davis has embarked on the rejuvenation of the company’s 27 existing boutique hotels, with further plans to significantly expand the portfolio in the UK and take it abroad.
Established in 1994 by Scottish hotelier Ken McCulloch, Malmaison Group — comprising boutique hotel brands Malmaison and Hotel du Vin — was acquired by US-based KSL Capital Partners for an estimated £200 million in March 2013 after its parent company MBW Group went into administration the previous November.
Strong brands and high performance of the design-led hotels meant they were unaffected by the collapse of MBW Group with operations continuing as normal, however, a lack of investment over the past decade was apparent in the tired-looking interiors of some of the properties.
KSL Capital Partners kept management in place and expressed plans to invest in the renovation and expansion of the two brands.
Davis, who joined Malmaison Group last year from the same role at UK hotel chain Village Urban Resorts, says: “The business had lacked investment for a few years so they [KSL Capital Partners] immediately said ‘Gary, here’s £10m, start bringing the places up to date, spruce the hotels up’. So the £10m was just an initial investment to get some of the key projects going.
“The great thing about the American investor is that it has bought two very strong brands. So it is not just individual properties, Malmaison and Hotel du Vin have had a lot of impact in this hotel market. It is in KSL’s DNA to invest in great products,” Davis tells Boutique Hotelier.
“You might have a great brand but if the beds aren’t very comfortable, the showers don’t work as well as they used to, the floors are wearing thin, the guest won’t want it. It is KSL’s view that if you have a premium in the market — both our brands sell at premium prices — you’ve got to put in investment to keep that premium.
“So we’re spending money on the hotel, refurbishing bedrooms, probably adding some new bars, new restaurants. It’s a constant investment through the portfolio. So even though we had an initial injection of £10m to get things rolling. This year, in our existing state, we’ll probably invest a total of £15m just on keeping things fresh,” explains Davis.
Malmaison London, a converted nursing home dating back to the 1800s and last renovated in 2003, was pinpointed as a good place to start. Renovation of the property began in the last week of July this year and is due to be completed in October, including the addition of a new restaurant, bar, lounge and extra meetings space.
“We’re all frustrated designers at heart,” says Davis, explaining that he has been very much involved in the redesign of the hotel alongside head designer Steph Briggs.
“That’s part of the fun, the nice bit of the business,” he adds, with Briggs inviting his opinion on some new flooring a moment later.
“We had to keep the brand DNA of Malmaison but introduce a new look. We’ve gone a little more London apartment feel as we get a lot of regular corporate guests, so we wanted to make it more homely. Malmaison is known for very dark, plush designs. We felt something lighter and contemporary would suit the London hotel,” he says.
Davis, who in his last role developed a variety of new concepts relating to F&B and health and fitness, and even signed Dame Kelly Holmes as a brand ambassador for Village Urban Resorts, plans to introduce various components to Malmaison, including a contemporary steak house in London.
“We’ll open Strip Bar & Steak here in the basement in mid-October,” he reveals, as staff go about the finishing touches all around us.
“That’s a new concept so chef John Woodward is going out to Kansas next week to source the butchers. We’re importing US Black Angus steaks. The idea was to come up with something new while the new lounge and bar upstairs will be a more traditional Malmaison Brasserie.
“We felt it would fit this area of London next to the city, next to Smithfield meat market. Traditionally, London steak houses are very heavily man orientated; this is a little brighter — a bit more female-friendly if you like.
“So it’s a new brand. We’re looking at whether we’d do another Strip Bar & Steak in Manchester, but we don’t want every hotel to have the same restaurant. Where we have additional space, we’re looking at extra things we can do. Food and beverage is a very important part of what we do,” adds Davis.
F&B makes up to 40% of total revenue at hotels under the Malmaison brand, and reaches 50% at Hotel du Vin properties which tend to have smaller rooms and bigger restaurants.
Davis is also looking to enhance leisure facilities at the hotels, adding small executive gyms and opening the group’s Le Petit Spa where possible.
“It’s not a huge profit generator but it’s a facility a lot of people like,” he says, speaking of the spa component. “With our brands people like to eat and drink with us and hang out in the hotels rather than seeing it as a place just to sleep”.
The second project to benefit from the initial £10m cash injection is the conversion of the old Tay Hotel into Malmaison Dundee, which is due to soft launch next month with an official opening planned for December 1, 2013.
“There’s a huge amount of EU money and Scottish development going into the market. There’s the first V&A Museum outside of London opening there and the waterfront’s being redeveloped so we’re quite excited about Dundee, we think that it is going to be a great market for us,” Davis comments.
Other expansion plans include a deal for a Malmaison hotel in Bristol, and Davis is also searching for new sites for Malmaison and Hotel du Vin in Dublin and London, he reveals.
“We’re just finishing off a deal hopefully in Bristol for Malmaison, just finishing off with planning consents and stuff so touch wood. It’s a nice hotel market without a Malmaison; we have a Hotel du Vin there.”
Davis says the Bristol property, which he expects will open before the end of 2014, would involve the conversion of an office building but declined to reveal the value of the deal which he is close to signing.
“In Dublin, we’re just looking everywhere to find Hotel du Vin and Malmaison sites; there are a couple we’re interested in.
“The other thing I didn’t mention is we have a great Malmaison in Aberdeen and we’re looking for a Hotel du Vin there as well. There are a few deals we’re looking at.”
Meanwhile, the £10m conversion of the Golf Hotel in St. Andrews, Fife is well underway, with the property set to close on November 11 and due to reopen as Hotel du Vin in the first week of March 2014. The number of rooms will increase from 22 to 40 and the Ma Bell bar, made famous by Prince William who regularly visited while studying at St. Andrews, will be retained.
Further expansion is also on the cards for London: “We’re desperately trying to find another spot for Malmaison on the other side of town.
“But in London the cost of property is so expensive. Residential property is booming and anything that comes up gets turned into apartments. But there are a few areas where people want hotels, where councils say they want employment and things happening. So we’re looking at two or three opportunities,” continues Davis.
“We’d also love to get a couple of Hotel du Vins in London as we’re not there with that brand yet, it would be a great market for us. We’re looking at various options in terms of old, historic buildings,” he reveals.
While investments will be approached on a “case-by-case” basis, Davis expects both Malmaison and Hotel du Vin to receive equal investment.
“We’re close to doing a deal for Hotel du Vin in Stratford-upon-Avon and as with a lot of Hotel du Vins, these are old Georgian townhouses we’re going to convert and expand on the back,” he says, adding that the property is likely to open by the end of 2014.
Overall, Davis is eyeing six deals for Hotel du Vin properties and three Malmaison signings in the UK within the next 12 months.
“Obviously our focus is on the UK because it’s our market, but we’re looking into Europe and definitely the US market as well,” he reveals.
On global aspirations
He says both brands are recognised in the European and international markets and the search for sites outside the UK is already on.
“We’ve just been looking at Scandinavia as an opportunity. We think being a design-led, food and beverage-led chain there are certain markets that will welcome this.”
Having a Denver-based owner will also help Malmaison Group break into the American market.
“KSL is an experienced investor in the US market so we have an advantage there. What we’re looking at currently is Hotel du Vin and what is the acceptability of that brand in the US?
“We find that the US customer has more of an affinity to Hotel du Vin because it’s very different to what they’re used to; it’s English, wine-led, relaxed. They’re very used to city-centre boutique hotels so when they come across a Hotel du Vin in a funky old building and fall in love with it — that will be a very strong brand for the US,” he continues.
“We’ll do well in Boston, San Francisco, markets with great buildings where people like to eat and drink well,” asserts Davis, who is well placed to comment on the US market having worked there as international president and CEO new brands for Planet Hollywood between 2000 and 2007.
Even today he divides his time between the UK and the US, where his wife lives with their four children who are studying there: “I commute between the US and here, I’m usually here for three weeks nonstop and go back to the states for four or five days. I tend to be fairly mobile. I’ve got an office in London just around the corner but I tend to do most of my work from the hotels. So through the week we’ll bounce around a few hotels, and at weekends I tend to visit two or three hotels in Scotland, the north, Brighton,” explains Davis.
Over coming months, Davis will also be dedicating more time to identifying potential hotel sites in the UK, Europe and the US in line with the group’s growth plan.
“I’ve spent the last 25 years travelling the world, so people ask how do you jump on a plane on Friday and come back Monday, I’m just used to it.
“Over the next 12 months we will be getting every opportunity we can in the UK, and making sure that we get the right development opportunities in Europe and the US, that we pick the right location.
“Because we have a strong ownership group now in KSL, we’re no longer limited by investment, it’s a matter of limiting ourselves in terms of where should we be and where are the good places to extend the brand,” he asserts.
But with ‘Dare to be different’ as a brand statement, how will Davis manage global growth of the chain while maintaining the unique characters of each hotel in it?
“We like unique buildings, so we’re not building impersonal bedroom blocks, each hotel is very different and very personal. We have a reputation for sleek, moodier, sexier hotels, so we’ll keep that going but we need to make sure each hotel project is designed differently according to the local market, the architecture of the hotel. That’s how we’ll keep up our identity, which we’ve built up over the past 20 years,” he concludes.