After all the disruption caused by the UK going in and out of lockdown over the past 18 months, luxury Scottish retreat Gleneagles is firing on all cylinders again. Andrew Seymour sat down with managing director Conor O’Leary to find out how the business came through the most challenging period it has ever faced and whether the experience is causing it to do things differently as it plots a new chapter of growth…
Of all the decisions that Conor O’Leary has had to make since the Covid-19 pandemic turned the hospitality sector upside down, switching off the lights and locking the front door of the iconic Gleneagles Hotel was arguably the most difficult.
But we are not talking about March 2020, when the British government ordered all hospitality businesses to close. Oh no, this is November 2020 and for several months Gleneagles has been thronging with British-based guests grateful for the chance to lap up everything the ‘Glorious Playground’ has to offer following months of living under coronavirus restrictions.
Voluntarily shutting up shop with the lucrative Christmas season on the horizon might sound like complete madness for a hotel business, but with Covid cases rising amid concerns of an imminent second wave and talk of further government actions growing louder by the day, the managing director of Gleneagles felt the business needed to take ownership of the situation, rather than wait to see where things ended up.
It was a bold, if not risky, move, but one that every instinct told him was right. “I remember very well the call to the owners saying, ‘I believe we should close for Christmas and January’,” recalls O’Leary. “I am not a scientific expert but you could see where things were heading. Our customers were uncertain about whether they would be allowed to come here even if they wanted to. We didn’t want to take deposits and we knew that people were nervous to give deposits.
“For us to be certain of making that investment in Christmas, such as decorations, trees, staffing — which is at least a month to six weeks out — we needed to know that customers could come. And if we couldn’t be sure that they could come we couldn’t be sure about investing something in the region of £300,000 on our Christmas activities, so there was a commercial benefit to it. We knew that things seemed to be getting worse at that time so it just gave certainty to our customers and it gave certainty to our staff.”
While Gleneagles didn’t particularly want the ignominy of being the first major hotel in Scotland to close without any government instruction, O’Leary had at least experienced what mothballing such a gigantic operation entails having done so six months earlier.
He admits those initial few weeks of the first lockdown served up unknown challenges every day. “18 months ago, nobody had heard the word ‘furlough’ before. Suddenly we were all experts in furlough, but we had to become experts real quickly. We made sure the team was settled and understood what was going to happen during the next few weeks and months. Obviously we had to contact all our guests and cancel bookings. Then we had this period where we were getting costs out of the business.
“We still needed to keep an eye on the place, look after the animals and the estate grounds. Then we felt ‘ok, we are now lean and we can ride this out’. We trusted that we would open again. Gleneagles has been here 97 years so you assume it is going to come back, but we didn’t know any more than anyone else; we just had to wait it out.”
Set among the rolling hills of the Perthshire countryside, barely an hour’s drive from Edinburgh, Gleneagles boasts a loyal customer base of guests devoted to returning as often as they can, and a team of 1,000 employees, many of whom grew up locally. Consequently, Gleneagles enjoys fantastic support from a community that it has considered itself an intrinsic part of for almost a century. “I think with those strong anchors we knew we would be okay, but we had to just focus and be ready for when that opportunity came again,” says O’Leary.
Since April 2021, when the hotel was officially allowed to open again, the hustle and bustle of hotel life that was missing for so much of last year has returned. Its reputation for outdoor activities left it perfectly placed to capture the summer ‘staycation’ crowds, while the introduction of features such as a seafood shack and ‘drinks on the lawn’ supplemented an already compelling al fresco proposition.
“It has probably been one of the busiest summers on record here,” reveals O’Leary. “Normally we have about 65% repeat business and 35% new, from all over the world but particularly from Britain. Two-thirds of that would also be British normally. This year, we have been 100% British and 50% are new customers.
“We have had lots of old friends visit us but we have picked up lots of new customers that would normally go to Europe or the Caribbean or somewhere else. I have asked lots of guests, ‘what made you choose Gleneagles?’ And they’ve said, ‘well, we have been watching your social media, we have seen a few of the things that you’ve being doing and we have always been meaning to come so this year is the time to do it.” Hopefully a lot of those guests will come again.”
As the man at the helm of one of the most prestigious hotel properties in the UK, O’Leary’s sense of responsibility to both staff and guests is understandably enormous. A world-defining event, such as a global pandemic, must surely have led to some moments of profound reflection, not least in the way he manages. Was that the case?
“I think certain things that I might used to have thought were risks or significant decisions or maybe things that I’d have got anxious about, there is a little bit more calmness and perspective now. In the whole scheme of things, some decisions are actually very short lead time decisions and in the fullness of time it will all be alright in the end. So we have certainly got a much longer term view of what we are doing and the decisions we are making. There is comfort in that decisions which might have caused anxiety before don’t cause so much anxiety in the whole scheme of things now.”
One aspect that O’Leary was very explicit about from the outset of the pandemic was the need to be completely transparent with staff. Employees were kept abreast of developments every step of the way and the company used the furlough scheme to retain its workforce. As a result, it didn’t need to recruit entire departments from scratch when the property emerged from lockdown, unlikely many of its counterparts in city-based locations.
This, too, has played a part in instigating a slight shift in strategic approach, with the company opting to manage its business levels according to its staffing levels. O’Leary explains: “We have decided to graduate our sales to make sure it meets our staffing level. We are not capping the business as such, but we are not selling freely and then working out how we deal with it. We are selling to a level and checking that we can deliver the experience we want to.
“In days gone by we would have just opened the books and sold the rooms. Now we are being very strategic in how many rooms we sell in a particular month and we will only shift that as and when we feel comfortable to deliver the experience we believe customers are paying for and should receive.”
O’Leary’s own personal view is that it could take up to three years before things resemble what they did before the pandemic and even then it would be naive to think the ‘new normal’ will look exactly as it did pre-2020. In terms of customer profile, pent-up demand from Brits desperate to go abroad could impact domestic demand in the near future, but equally one would expect to see an influx of traditional European and American business return to Scotland again.
“We will have to see how that works out in the next couple of years,” he says. “I think it proves to us that we definitely don’t want all our eggs in one basket. We have evolved the Gleneagles customer over the last five years anyway, just through a slight evolution of positioning. We haven’t changed, we’ve just grown — we’re very family focused in holidays, we want to appeal to leisure couples; people with enthusiasm to explore and do things differently.
“We like to bring them here and show them all the things on offer, so I think that will just continue. You have to be agile but we have hopefully got decent footing in various markets following our branding and PR activity in the last few years.”
It is impossible to sit in front of the managing director of Gleneagles without bringing up the subject of golf. The hotel is famously home to three of the most acclaimed golf courses around, including The King’s Course, its James Braid-designed masterpiece, and The Queen’s Course, one of the finest par-68 heathland courses in the UK.
While the hotel is fiercely proud of its golfing heritage it does faces a constant challenge to “educate” customers who are put off visiting by the false belief that it is purely a golf resort.
“Historically, there has never been more than 10%-15% of our hotel guests playing golf,” says O’Leary. “Everyone normally comes to eat, drink and use the spa. We have a great golf facility that has had the Ryder Cup and the Solheim Cup, and people come from far and wide just to play golf but don’t necessarily stay here.
“I agree that in the past Gleneagles might have been rested on its laurels of being known for golf, so why change that? We are really just educating that actually the things to do here are vast and varied and I think we are getting to that now, and people are seeing it. And going back to that audience that have come up this year for the first time, they are saying, ‘wow, I didn’t realise you had all these grounds and all these activities, all these restaurants and bars, a great spa, so many kids activities.’ We now do beekeeping for kids, we teach them how to pot plants and about the ecosystem of the bees, the plants and the honey. We have still got a job to tell people that story.”
Accounts filed with Companies House don’t yet show the exact impact of the pandemic on Gleneagles finances. Its latest results for the 15 months to 31 March 2020 (following a change in year end from December) show an operating loss of £600,000 on sales of £66.4m, but this only really goes up to the point in which the first lockdown came in. Prior to that, it made a £3.5m operating profit on sales of £55.3m for the 12 months to 31 December 2018.
For the last six years, Gleneagles has operated under the parentage of Ennismore, the London-based hospitality real estate group that is currently in the process of merging with European hotel giant Accor. Ennismore has invested heavily in Gleneagles from the moment it acquired the business, with new F&B offerings, leisure facilities, shooting lodges, hair salons, spa, kids club and bedroom refurbishments all evidence of its desire to create a winning destination.
So, what sort of owner has Ennismore been during the pandemic given the chaos inflicted on the hospitality sector? “They have been incredibly supportive,” answers O’Leary. “It is a family-owned business. They bought and invested a significant amount of money for the long term. They want to be part of this evolution of Gleneagles. They don’t consider themselves owners of it, but guardians of a Scottish brand and product.
“As soon as the world changed they said, ‘whatever we can do to support the team, we will do’. They continued to invest through lockdown and beyond. They feel it is a long term journey, not a short term win, so if it was important for us to do it before the pandemic, it was still important for us to do.
“Just this week we have signed off a multimillion project to refurbish our staff accommodation and that’s after the hardest year in Gleneagles’ history. The owners are still committing to saying, ‘we want to invest, particularly in people and in the product to be the most exciting, engaging estate in Europe’.”
Guests that have been flocking back to Gleneagles since restrictions lifted would find it hard to disagree.