Yahoo Finance Champneys boss: 'If you don’t invest, you’ll find people don’t come’
If Stephen Purdew was seeking to make Champneys, the health spa group beloved by celebrities, a little more private, he may have received some unexpected help with the group’s latest purchase.
Eastwell Manor lies off the M20 motorway near Ashford, Kent. Yet one well-known mobile phone satnav has a tendency to deliver guests to a locked gate on the far side of the 3,000-acre estate, instructing them to walk the rest of the way up a ramblers’ path.
It’s probably not how David Beckham, Naomi Campbell, Piers Morgan or other members of the jet-set who enjoy Champneys’ hospitality want to arrive. Yet taking Champneys a little off the beaten track may not be a bad idea, given some of the publicity its clientele have attracted in recent years.
Six years ago, Metropolitan Police commissioner Sir Paul Stephenson resigned over a controversy, inevitably dubbed “spa-gate,” around a 20-day stay at Champneys’ flagship spa in Tring. The stay, which was while the senior policeman was recuperating from hospital treatment, was paid for by Purdew, a family friend.
It hit the headlines because Champneys’ public relations adviser at the time was the former News of the World executive editor Neil Wallis, whom the Met was investigating over the newspaper’s phone-hacking scandal. Wallis had also been hired as Stephenson’s PR consultant. He was tried for conspiracy to hack voicemail messages but found not guilty by an Old Bailey jury.
Purdew and his family don’t shy away from the limelight. His wedding to Isabelle was attended by celebrities from Liam Gallagher to Frank Bruno and former Arsenal goalkeeper David Seaman. He has holidayed with former Sun editor Rebakah Wade, partied with the late George Best and allowed the cameras into his health spas for two fly-on-the-wall documentaries.
Right now, however, Purdew is basking in the addition of Eastwell, which was given its own £3m spa makeover earlier this year.
“If you go back in time, rich people have always chosen the right spot for a house,” he says on the 62-bedroom hotel’s terrace. “And when you see where this is sat with a hill behind it and then this view here, they certainly picked the right spot here to build the best house in Kent. It’s amazing.”
Eastwell, on which Champneys has taken a 99-year lease, is the fifth property in the group, which is owned by Purdew and his 85-year-old mother Dorothy. She began the empire with slimming clubs and moved into spas with her husband Robert Purdew in 1981, buying Henlow Grange in Bedfordshire. After Robert’s death, Stephen took over managing the business, adding Springs Health Farm in Leicestershire in 1990 and Forest Mere in Hampshire in 1994. Then he bought Champneys in Tring from the Saudi Arabian royal family in 2002,
Since then, Champneys has had to weather the global financial crisis and a dispute with its former bank, Lloyds, that was settled out of court.
How close did Champneys come to going out of business? “Closer than we would have liked,” admits Purdew. “It was getting to the point where we were finding finance was nearly non-existent. It was a very difficult time. Lloyds wanted to charge me 12pc interest because they said we had broken a covenant but it was a ridiculous situation.
“We had covenants restricting our capital investment expenditure to £400,000 a year when we know we have to spend £4m a year. If you don’t invest, you’ll find people don’t come.”
Champneys, which is still 2pc owned by the Saudi royal family, has restructured its business, selling leased day spa sites in Brussels, the West End and the City and shelving plans to open in Marbella.
It still has day spas in Chichester, Enfield, Guildford, Milton Keynes, St Albans and Tunbridge Wells and obtains around half of its £60m turnover from licensing arrangements such as a deal with Boots to sell beauty care products under the Champneys name. Underlying earnings have doubled from £4m to £9m, while new banking arrangements with Santander and Coutts have enabled the Eastwell investment.
“This is a hotel with a Champneys spa,” says Purdew enthusiastically. “It’s our only hotel. The others are health resorts with nutritionists and doctors.
“This is our first acquisition since 2002. We got it in November and we straightway refurbished the spa because that’s our heritage.
“Now we’re going to spend about £10m altogether, adding 45 rooms to the property and refurbishing the 26 rooms in the main house and the lounges and bars. It will all be done by this time next year but most of it will be done by September.”
The luxury spas market, he says, is “very buoyant” with 17pc revenue growth in 2015 and 12pc in 2016.
The group is investing £10m a year across all its properties, including a planned refurbishment of Henlow Grange, and says revenues are up about 9pc so far this year.
However, Purdew says maintaining the growth is hard, with rising costs across the business. “This year is tough,” he says. “We employ 1,000 people. We pay the living wage, which I think is essential and necessary but does add to the costs. Our food costs are 15pc higher this year. There are a lot of cost increases everywhere. It has just got tougher and tougher.”
Purdew is opposed to Britain’s planned exit from the European Union and worries about the continued ability to employ foreign staff.
“I think it’s madness for most small businesses,” he says. “There has been no assessment of how it’s going to affect small businesses, which are the backbone of this country. I’m not here to do a political speech but Nigel Farage lives just up the road and he is not welcome. He can keep away from here.”
Purdew chuckles as he says this, though, and is upbeat about Champneys’ expansion. He is now on the lookout for West Country sites.
“It’s tougher out there, so if people are not running these operations as well as we think we can, we’ll be able to go and make some acquisitions. I want one or two in the next 12 months. We want properties that are a bit special, like this one.
“I think this place is going to absolutely smash it. We have 23 treatment rooms here. There’s not a hotel in Miami that has 23 treatment rooms. I don’t think any other hotel in the UK has got a spa that is that big and that good. But this job will be done in a year so we need to make another acquisition.”
Champneys’ own health is clearly on the mend. Now he just needs to fix that satnav problem.
