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Between 2004 and 2011 MWB rapidly expanded HduV by a further eight sites. Following minor adjustments to its operating model, the new owners were keen to continue to exploit the intangible assets of HduV, closely following the winning formula of the brand, namely hotels in historic buildings within essentially provincial towns and cities with year-round demand. It is clear from key individuals within both HduV and Malmaison that during this rapid expansion and consequent organisational restructuring there was a focused endeavour by the new owners and managers to simultaneously retain the ‘culture’ of both brands.

The key challenges faced by the two companies follow- ing the merger were as follows: 6

● Ensuring the values and cultures of both Malmaison and Hotel du Vin were not diluted whilst bringing the two workforces together under the same operational leadership

● Managing signifi cant growth from 11 hotels to 27 hotels in less than four years, creating over 1500 new jobs

● Creating a continuous learning culture while meeting the needs of the guest, the group, the local hotel and the different learning styles of the people in the business

● Protecting the ‘DNA’ of both groups (the people) to secure the groups’ success.

In addition to the branding and human resources chal- lenges posed by the merger, MWB was also faced with the task of marrying two managerial and operation styles. Talking of the differences existing between the two brands following the merger, Warren describes Malmaison as hav- ing more of a centralised corporate structure compared to HduV’s management style:

‘My view is that one of the brands was too systematic and too procedural and had too much bang-bang-bang- bang-bang, and the other didn’t have quite enough. That was the big difference, you know, and . . . some of the systems and procedures in Malmaison were essential and were very good, you know, for managing . . . cost perspective and purchasing . . . but some . . . were not, and were less human, they didn’t take account of, per- sonality, you know?’ 7

Sustaining entrepreneurial innovative energy following the chain’s sale

Following the sale to MWB in 2004, Hutson remained with HduV for a few months to oversee the transition and development of the Henley site. With the exception of the operations director, all the key directors from the board left the business. However, rather than being severed after the sell-off, the network ties of the directors were reworked and reformulated. Hutson, Basset, Chittick and Levett all pur- sued new entrepreneurial enterprises within the industry. These entrepreneurial relationships – based on reciprocal links between the new business ventures – meant that, with the exception of Basset, each has at some point been involved with no fewer than two companies founded by another member of the original HduV board.

Many of the new business ventures of the HduV directors are characterised by hybridisation – that is to say, they appear to straddle the divide between the original HduV concept and intimately related spin-off concepts. One example of this would be Hutson’s new venture ‘The Pig’ proto-chain, envisioned as a ‘Hotel du Vin for the country’ and drawing heavily on its predecessor’s core strategy, that is providing luxury without formality, shabby chic design and quirky idiosyncratic buildings set in locations which have the potential to offer year-long demand. This chain, which by 2013 was three hotels strong, has by common consent phenomenal potential to expand. Indeed, Peter Chittick, who was involved in the fi nancial strategy of the chain, believes that, like HduV earlier, it could be ‘easily rolled out in up to eight to ten locations in the UK’.

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HOTEL DU VIN 633

Hotel du Vin and Malmaison: future strategic challenges

By 2010–11 the combined turnover of the two hotel groups had exceeded £160 million and both chains shared similar high occupancy rates of around 77%. HduV con- tinued to win critical acclaim and accolades after its sale to MWB, such as the Guardian ’s and the Observer ’s ‘Best UK Hotel’ title which it received between 2004 and 2009. See Table 1 for key performance indicators.

The successes of both the HduV and Malmaison chains have been paralleled by the acute fi nancial problems faced by their parent company MWB Holdings, which collapsed into administration in November 2012 following a dispute between the group and its subsidiary, the offi ce space provider of MWB Business Exchange, to which it owed £8 million. Shareholders Pyrrho Investments, the Hong-Kong-based fund which owns 24% of MWB Group Holdings, blamed the ‘poor corporate governance’ of former group CEO Richard Balfour-Lynn, who resigned from the company in March 2012.

Despite debts in the order of £230m, Malmaison and HduV Chief Executive Gary Davis stated that the collapse of the parent company would not impact on day-to-day operations and that, following strong business perform-

ances from both hotel chains, the group plans to continue expanding both brands with the launch of 12 new hotels over the next 10 years, with a new Malmaison to open in Dundee in 2013.

Finally, in reviewing the growth of HduV post-sale, Hutson offers his thoughts on how the chain has been able to sustain its strong business performance and continue to expand, despite facing the strategic diffi culties that follow a shift of governance towards a larger corporate structure:

‘It’s the graveyard of many a good entrepreneurial business, isn’t it, sort of going from that small . . . small hands-on approach into something more corporate. With the Hotel du Vin I think because the concept was strong enough, it seems to have weathered [that transi- tion] reasonably well.’ 8

Notes and references 1. £1 = $1.53 = €1.17. 2. R. Hutson, personal communication, 2011. 3. M. Warren, personal communication, 2011. 4. Robert Cook, Directors Magazine , June 2008. 5. Robert Cook, personal communication, 2011. 6. Sean Wheeler, Group Director of People Development at HduV and

Malmaison, quoted in Leader Magazine , 2008. 7. M. Warren, personal communication, 2011. 8. R. Hutson, personal communication, 2011.

Table 1 Key financial and performance data of HduV and Malmaison

Year Total revenue (£000) Operating EBITDA (£000) Occupancy rate (%)

HduV Malmaison HduV Malmaison HduV Malmaison

2004 – 32,628 – 8,568 82 78 2007 37,074 58,198 9,143 14,761 83 78 2008 45,314 62,322 9,927 16,526 81 79 2009 50,763 60,271 11,221 15,366 81 78 2010 50,385 60,815 11,507 16,268 78 77

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