Appendix 8 Kinloch Castle Market Appraisal 1. Summary:

KCFA’s preferred option for hotel accommodation at a mixed level would require:a. An investor. Most likely someone with an emotional tie to the island.b. A hotel management company. A local company will be more sympathetic to

the local community, however, their goal will be profit.c. A consistent product to market. Mixed accommodation levels may be harder

to market. Suggest traditional organisation of rooms into levels such as “rooms” and “suites” based on size and views. All rooms would need to be en suite, you can’t have one level with en suite bathrooms and another level with shared bathrooms.

d. Staffing. The lower level rooms may work better as staff accommodation.

HotelTo compete with other high quality Castle Hotels, Kinloch Castle would need en suite rooms, a fine dining restaurant and qualified hospitality staff. The grounds would need to be at a similarly high standard as would the restaurant. Though there are examples of hotels where the restaurant isn’t open to the public and residents are served at a communal dining table e.g. Amhuinnsuidhe Castle.

Self-Catered or Catered StayThe option preferred by the NTS and Landmark Trust is to rent the properties as self-catering products. This minimises the number of staff you need to run the property whilst still bringing visitors to the area who will buy from the local shops & tea rooms and go on local activities. Kinloch Castle could be offered as a self-catered property or a catered stay with a private in-house cook during guests stay.

Whole HouseA whole house package that can be tailored to the individual’s requirements is a good option. Different packages could be put together – “hunting lodge weekend”, “wildlife weekend”, “live like a laird historical weekend”.

Day VisitorsEnticing day visitors from sailing groups, cruising holidays, walking tours etc would boost numbers and give Kinloch Castle a higher profile, but the market size is currently quite small. Small boat cruises do stop at Rum and would tour the castle, but probably not use the restaurant as they eat onboard. Improved facilities would potentially expand this market - toilets, café, supplies, experiences.

HostelTaking the Knoydart Foundation Bunkhouse as a guide, hostel accommodation is a good way of creating income. The Knoydart Bunkhouse has created £30k surplus, over several years and is run by one Bunkhouse Manager (25 hours a week). The property has competition from another higher end hostel and B&B accommodation, but each accommodation type

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has its own niche. The risk factor is the need building renovations and the source of financing for this.

2. Accommodation

Options Pros Cons Est IncomeHotel Job creation.

Potential income. Ratios of staff to guests is high (roughly 1 member of staff per room). Whole package expected – rooms, gardens, communal areas, dining, customer service – all would need to be at a high level. Hospitality trained staff needed.

£120-£190 per person per night.

Self-catering or Catered Stay

This is the standard formula used by NTS and the Landmark Trust.Less staff needed.Lower guest maintenance option. Small apartments offer flexibility.

Lower income (but lower costs).Simpler model. Staffing levels not consistent.

£25-£40 per person per night.

Bunkhouse Less staffing than a hotel. Lower running costs. Allows bigger group e.g. students, activities holiday to come to the island.

Compete with current Bunkhouse. Lower income.

£30 per person per night

B&B Lower running costs due to minimal catering (breakfast only)

Competition for established B&B.

£75 per person per night

3. Market StatisticsFigures for the Visit Scotland report “Insight Department: Scotland The key facts on tourism in 2016”, published in September 2017 have been used for reference. This document summarises Visit Scotland’s research and national statistics.

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The figures above are a summary of occupancy rates for the whole of Scotland. The general trends show:

The months of July to September are the most popular for holidays in Scotland amongst both GB and overseas visitor

Hotel occupancy rates are highest, at 71% Hostel occupancy rates are second highest, at 57%

Figures available only allow us to drill down to the Highland Local Authority Level.

Highland Council Area Statistics1

Accommodation occupancy: Hotels average 67% over the year. Peaking at 88% in June, July and August. Guest houses & BBs average 49% over the year. Peaking at 87% in August. Self-catering average 56% over the year. Peaking at 97% in October (and 93% in July) Hostels average 49% over the year. Peaking at 83% in August. Camping and Caravanning average 42% over the year. Peaking at 62% in August.

Because the figures cover such a broad area and types of visitor experiences, it is difficult to predict the figures Rum. However, the overall picture shows that hotel accommodation has the highest occupancy levels.

4. Visitors

1 Tourism in Scotland’s Regions 2016 (Published Sept 2017) Visit Scotland

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a. Guided Tours e.g. RabbiesRabbies have specific “Scottish Island” tours. A prominent part of their marketing is that they support local communities. “We take you to the lesser known attractions and recommend locally owned accommodation.”

“Our small group tours let you see the Scottish islands through the eyes of a local and discover their legends, best-kept secrets, and beautiful crafts.”2

Example tour names: Geological Giants, History’s Mysteries, Wildlife Watchers.Tour areas: Skye, Mull, Iona, Orkney, and the Outer Hebrides. None of the tours currently go to Rum. Accommodation: They will book accommodation for their guests – offer a range of accommodation – Bunkhouse, B&Bs and Hotels, depending on what is available in the area.

b. Cruise Companies

The small boat cruising industry is expanding in Scotland. The Majestic Line has added two new boats to its fleet over the past 3 years (taking them from 2 boats to 4 in 2019). This significant investment shows confidence in the industry.

Example cruise: Isle of Skye and the Inner Hebrides 6-nights - From £2190.00 per person. Currently there is no stopover on Rum.

c. Activity Holidays e.g. Wilderness ScotlandThis group run sailing and walking holidays. Example Holiday: Sailing & Walking – Knoydart, Skye & Small islands. This tour includes 2 days on Rum.

Day 2 – Sail to the Isle of Rum and afternoon ashoreFollowing a relaxing breakfast we set sail for the mysterious and fascinating Isle of Rum.

2 https://www.rabbies.com/en/scotland-tours/see/scottish-islands-tours

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Figure 1 Cruising area for Inner Hebrides trip

This stretch of water is excellent for whale spotting and we are likely to see porpoises and dolphins as we sail. After lunch in Loch Scresort, we head ashore to explore Rum and its famous Kinloch Castle. (B, L, D)Walk details: 8km, approx 3hrs.

Day 3 – Walking on Rum and Sailing to the Isle of CannaWe head into the hills to explore the majestic Rum Cuillin. One possible ascent might be Hallival, populated by Europe’s largest colony of Manx Shearwater which nest in burrows high up on the mountain. Returning to the yacht amidst incredible views of Eigg and Skye, we set sail for Canna. (B, L, D)Walk details: 12km, approx 6hrs.

Meals and accommodation are included in the trip. Guest sleep and eat onboard. They also run photography trips that include Rum.

5. Hotel management companies and Investors

a. Hotel Management CompaniesICMI (Inverlochy Castle Management) are based in Fort William and specialise in small to medium size hotel businesses. They manage and market hotels which are owned by private investors and have a track recording in turning around underperforming hotels.

e.g. Cromlix, Perthshire

Owned by Andy Murray and managed by ICMI. The castle hotel property was bought by Andy Murray in 2013 and reopened a year later as a 5-star hotel with Chez Roux restaurant.

To keep up with market demands, they have recently applied to extend the hotel, adding an extra 30 beds, a gym, spa, conference room and additional staff accommodation.

June prices: £385 per room per night (£192.50 pppn)Nov prices: £235 per room per night (£117.50 pppn)

e.g. Machrie Hotel, Islay.

This hotel went into administration in 2010 due to lack of investment and a problem with water supplies. In 2011 the

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estate was bought by Gavyn Davies and Sue Nye, multi-millionaires who had a long term connection with golf on the island. It is managed and marketed by Campbell Gray Hotels, a hotel management company based in London.

It has 47 bedrooms and 60 staff (staff numbers are high due to the number of greenkeepers).

“The Machrie estate was bought by Gavyn Davies and Sue Nye in 2011 from administrators with the intention of preserving the historic appeal of the famous golf course, while renovating the hotel and clubhouse facilities to become one of Scotland’s prime golfing destinations for golfers and nongolfers alike, as well as being accessible to the residents of Islay.”3

June prices: £245 - £505 per room per night (£122 - £252 - pppn)Nov prices: £235 - £445 per room per night (£117.50 - £222.50 pppn)

b. Investors“Chinese and North American investors are expected to dominate the European hotel investment market in 2017. Some 62 per cent of respondents see China as the biggest source of inbound investment into Europe, up from 51 per cent last year.”4

If someone is going to invest, they will want an area or a location where they know they will get a return e.g. Edinburgh. The most likely private investor for Kinloch Castle would be someone who has a connection with the island.

Investing in the facilities as well as the hotel would be necessary. The rooms would have less chance of success as a stand alone offering.

6. CASE STUDIES - COMPARATORS:

Historic UK – Castle Hotels“… allow history lovers to stay in some of the most historic buildings in the country”. 5

An accommodation guide where properties pay for a listing on the website and printed guide.

a. Glenapp Castle, Ballantrae, Ayrshire6

5 star property. Restored in 1994 by McMillian family of Scottish Hoteliers. Bought in 2015 Szkiler family, who have a background in the financial services industry and have recently

3 https://www.islay.blog/article.php/new-machrie-hotel-islay-to-welcome-guests-in-20184 https://www.scotsman.com/business/companies/media-leisure/edinburgh-top-for-hotel-investors-as-china-cash-flows-1-42809255 https://www.historic-uk.com/Scotland/West/CastleHotels/6 https://www.glenappcastle.com/

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moved into the hotel industry7. Have a background in “delivering social benefits to local communities’ but primarily in developing countries.

Traditional luxury decor 17 rooms (up to 40 guests). For large private events they can accommodate up to a

further 40 guests in 5 star local cottages 36 acres of gardens and woodlands Tennis and country pursuits offered. (Local golf and spa promoted) Experiences: Garden foraging with Glenapp chef. Falconry. Gourmet Dinner. Whiskey

tasting. Afternoon tea. Fine dining restaurant.

June prices: £380 - £645 per room per night (£190 - £322 pppn)Nov prices: £208 - £420 per room per night (£104 - £210 pppn)

7 http://www.truestoneimpactinvestment.co.uk/about-us/people/paul-szkiler

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b. Amhuinnsuidhe Castle, Isle of Harris8

12 bedrooms, Dining: “In keeping with the original design and layout of the dining room, our guests

take dinner and breakfast at one sitting at the banqueting size table.” Exclusive Use – “Become a Laird for one week with up to 17 of your guests”. From

£27,691.71 to £38,272.31 per week. Weddings: Exclusive Use of the Castle which includes Full Board for up to 18 Guests.

£8,993.58 - For the First Night Sporting estate. Bought in 2003 by Ian Scarr-Hall. He purchased the estate in a joint bid with the local

community of 700 islanders. The residents bought the 55,000 acres of mountainous country that makes up the North Harris Estate, and he bought, for £2 million, Amhuinnsuidhe Castle. The purchase of the land by the islanders - with the help of National Lottery funding - was the biggest buy-out by a community. HiE's Community Land Unit contributed £400k and the SLF awarded £1.6m, the remainder came from the John Muir Trust and community fundraising.

June prices: £340.00 to £385.00 per room per night (£170 – £192.50 pppn)

National Trust Scotland – Stay in a Castle “Steeped in history, these properties provide the perfect base for a family holiday.”

Sat to Sat breaks. Or weekend (Fri-Mon) and mid-week (Mon-Fri). 14 “castle” properties. Often there are 4 or 5 rental opportunities within the same

“castle” setting – ie the wing of a castle, the lodge house etc. Estimate 100 letting opportunities in Scotland. Fewer large occupancy properties than the Landmark Trust. Average property sleeps

2-4 people. Very little availability for the summer 2018. Sept, Oct and Nov roughly 50%

occupancy.

Types of accommodation offered:

8 https://www.amhuinnsuidhe.com/bedrooms/

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Self Catering Apartments Hotel HostelThe majority of accommodation is apartments within the historic building.Have their own kitchen, dining room, lounge.Booked as the whole house/apartment.

Only one catered hotel type accommodation (at Culzean Castle)

Branded as “Base Camps”.Offer basic bunkhouse/hostel type accommodation at more remote properties such as Kintail, Torridon, Ben Lomond.Beds in dormitories which we offer on a room or bed basis.

Interview with Stuart Brooks, NTS9:Their visitors:

“As varied as the accommodation type”. Interested in history or just looking for interesting accommodation. The bulk of accommodation is let to people staying for a week on a selfcatered

holiday basis. At the cheap end for example we are catering for walkers staying one night as they

do the West Highland Way (Ben Lomond Hostel). Also offer associated services (e.g. weddings at Mar Lodge) – where the wedding

party would hire out all the flats and cottages on the estate for 23 nights.

Management They currently manage bookings in-house but are considering outsourcing the

management of the entire holiday accommodation business.

“Over the years NTS has been asked to take on Kinloch Castle a number of times. About a year ago we did an assessment and estimated repair costs in the region of £50m. “

a. Culzean Castle & Country Park estateArdlochan Lodge: Sleeps 4, 1 double , 1 twin. 1 shared bathroom. Kitchen. Modern renovation, modern decor.4 nights in Nov cost £420 (£26.25 pppn)

Brewhouse Flat: Sleeps 4, 2 double bedrooms, 1 bathroom, basement flat. Mix of modern and historical décor. 4 nights in Nov cost £437 (£27.32 pppn)

North Segganwell: Sleeps 4, 1 double, 1 bunk room. 1 shared bathroom, Kitchen. Modern furnishings. 4 nights in Nov cost £315 (£19.60 pppn)4 nights in July cost £412 (£25.71pppn)

Royal Artillery Cottage: Sleeps 4, 1 double, 1 twin. 1 shared bathroom. Kitchen. Dated décor.4 nights in Nov cost £389 (£24 pppn)

9 Interview with Stuart Brooks, Head of Natural Heritage Conservation Policy 9 July 2018,

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4 nights in July cost £480 (£30 pppn)

Beaton’s Croft, Isle of SkyeSleeps 2, in 1 twin room, shower room, kitchen. Modern furnishings. 4 nights in Nov cost £322 (£40.25 pppn)

The Landmark Trust – Stay in a Castle“…all our buildings are rich in history and atmosphere”.The Landmark Trust is a charity who restore historical buildings and rent them as holiday properties. They are given buildings, raise money to repair them and use the lettings income to support future maintenance.

Sat to Sat breaks. Or weekend (Fri-Mon) and mid-week (Mon-Fri). Styled as self-catering apartments, with the building. Have their own kitchen, dining

room, lounge. Booked as the whole house/apartment. 16 castle properties in the UK, 2 in Scotland (Rosslyn Castle and Saddell Castle). No

properties on the islands, Saddell Castle was the nearest comparator, on a peninsula. 200 buildings in the UK.

a. Saddell Castle, Argyll and ButeSleeps 8: 2 Single, 1 Twin, 2 Double4 nights in Jan costs £516 (£16.13 per person, per night)4 nights in June costs £1,611 (£50.34 pppn)Occupancy for the next year is roughly 80% already.

Facilities: 2 shared bathrooms, kitchen, outdoor space. Finished in keeping with the history of the building.

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b. Rosslyn Castle, Nr EdinburghSleeps 6: 2 Twin, 1 Double4 nights in Jan costs £528 (£22pppn)4 nights in June costs £1,001 (41pppn)Occupancy for the next year is roughly 70%

Facilities: 3 ensuite bathrooms, kitchen, garden.

Knoydart Foundation Bunkhouse

“The Bunkhouse is a community enterprise which re-invests in itself to sustain the business and gifts back to the Knoydart Foundation10 any surplus income, which is then re-invested in other projects for the wider benefit of the community. 11“The Knoydart peninsula, in the Lochaber district on the West coast of the Scottish Highlands, is not connected to the mainland road network. It can only be accessed by foot (16 mile walk) or boat.

The Foundation is a company limited by guarantee with charitable status which runs the Knoydart Estate. (Knoydart Peninsula Ltd collapsed in 1999).“As a partnership of local residents, the Highland Council, Chris Brasher Trust, Kilchoan estate and the John Muir Trust, our aim is to preserve, enhance and develop Knoydart for the well being of the environment and the people.”

Near Inverie village. 3 bedrooms sleeping 11, 8 & 7 (26 in total). Kitchen, drying room, dining room, a laundry and a sitting room with

a woodburning stove. Community broadband Wifi (in selected areas of the Bunkhouse)

Bedding provided. Practice responsible tourism – green hydro power, recycling etc. £18 per person per night. Book whole bunkhouse for £395 per night.

10 http://www.dtascommunityownership.org.uk/sites/default/files/0114_DTAS_Case_Study_Knoydart.pdf11 http://www.knoydart-foundation.com/about/about-the-foundation/

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1 member of staff runs the hostel. £15,600 pro rata (£11,334) per annum.24 net working hrs/week average (2014 figures).

The bunkhouse created a £30k surplus income between 2012 and 2015 (no figures for 2016+)

The current bunkhouse is “in a state of disrepair” and there is a plan to build a new bunkhouse, though an investor is needed. The old bunkhouse would be changed into housing and the foundation wishes build a conference and education centre to increase our earning potential.12

There is a second privately run hostel on the peninsula, Knoydart Lodge, which sleeps up to 20, in higher standard accommodation at £30 per person per night. “Knoydart Lodge offers private rooms whilst maintaining the shared experience with a communal kitchen, lounge and outdoor space, and the opportunity to meet new people and share the adventure.”13

There is also a pub which offers 6 rooms on a dinner, bed and breakfast basis. The accommodation is in “The Old Byre”, a ten minute walk from the pub. £110 per person per night. The peninsula is comparable to Rum due to its lack of road access, small population (est 120), activities and private and community run hostels. There is a Primary School, Post Office, Community Shops, Knoydart Pottery & Tearoom, The Old Forge pub and is a pier for boat access to and from the peninsula.

Visitor growth is predicted at 2.7% annually to the bunkhouse and the area as a whole. 14

12 http://www.scottishcommunityalliance.org.uk/anchor-orgs/2971/13 http://www.knoydartlodge.co.uk/14 https://www.localenergy.scot/media/98338/UoF-Report-Knoydart-2013-.pdf

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