Interview

15 June 2005

Jane Fenwick talks to JEREMY WAUD, managing director of Incentive FM, the maintenance and engineering service provider at Gleneagles Hotel which next month hosts the G8 summit

Next month the world’s leaders will meet in the G8 summit in Gleneagles in Scotland. Bush, Blair, Chirac and other world leaders will take centre stage in the highest level meeting of global power.

As the UK currently holds the Presidency of the G8, the annual Summit will take place at Gleneagles Hotel in Perthshire. Gleneagles will not only offers the leaders a ‘retreat’ location for their discussions but also top class food, wine and service, and sports and leisure facilities including its three 18-hole championship courses - the King’s Course, a former venue for the Scottish Open, and The PGA Centenary course which will host the Ryder Cup in 2014.It has a Shooting and Fishing School and The Gleneagles Equestrian Centre, all weather tennis, squash, swimming, croquet, salmon and trout fishing, cycling, off road driving and putting contained within 850 acres and 24 buildings.

For Incentive FM’s managing director, Jeremy Waud, the spotlight will also fall on the performance of the hotel’s facilities for which his company provides maintenance and engineering services. Incentive FM has created a niche for itself in the top class hotel resort sector with not only Gleneagles but also Chewton Glen, the luxury 5 star country house hotel on the edge of the New Forest, among its hotel client list of six in total. Waud knows how demanding the hotel environment can be but he can demonstrate how applying FM techniques to the ‘back room’ areas of hotels can bring benefits to areas that the customers see and experience.

At both Gleaneagles and Chewton Glen, Incentive FM handles the full building maintenance and engineering services. For both hotels it is the first time that these services have been outsourced. As Waud explains, “It is the exception where hoteliers have an interest in the fabric of the buildings that the guests do not see. Maintenance and engineering are non-core functions in the hotel business, but the spend on these areas is huge. Compliance issues for hotels are complicated but because they are not focused on this, the control tends to be poor.”

He continued, “Hotel sector culture is such that they are generally not interested in building systems and plans, but more focussed in occupancy levels. Furthermore, there is a constant progression of staff moving on – about every two years hotel managers move to another hotel. Top hotels change their maintenance engineers regularly too so there is little consistency, little knowledge about the buildings is passed on and the document trail is also poor. However, people are now realising that the greatest risk to management of a hotel is the loss of knowledge vested in their facilities or engineering manager.”

He was keen to point out, however, that Gleneagles is one of the most prestigious hotels in the UK, and retains its people for longer than average. “Top hotels are difficult and demanding clients and there are always more things to mend, paint and repair that they have money to spend on this,” he said. “Outsourcing works in hotels because it extends their knowledge of the peculiarities of the engineering of the building and the refurbishment history. Instead of having a single point of failure in site engineering managers who leave at regular intervals, we can build up site history in not only the local facilities manager, but also the regional manager and operations manager, all of whom are familiar with the site. When someone leaves it is not so devastating.”

Waud admits that hotels have been slow to catch on the benefits of FM and then only for a limited range of technical non-core activities. The relationship that Incentive FM has built up with Gleneagles has been a good one since the start of the contract in 2002 and talks are underway to extend the scope of the contract. “We brought in the management and support skills it lacked, and we sharpened up the supply chain. Local suppliers regarded Gleneagles as having ‘deep pockets’ and there was a ‘Gleneagles price’. We have changed some suppliers and introduced more competition, with the result that we have managed to save the hotel £1.75m a year on the cost of its refurbishment project work.”

As Waud explained, Incentive FM has brought both technical and business skills to the management of the hotel resort complex and improved the profile of the team within the organisation to be more integrated with the business. “Hotels spend their whole life reacting to requests – the response to customer requests must be immediate. The pressure on our team to get everything ‘just so’ is extraordinary. We introduced our web-based help desk and asset management system for planning maintenance and also as a route for anyone to request minor maintenance items – anything from chipped paint to dripping taps. We have been able to give the client accurate statistics for the first time and show how much the frequent use of specialist contractors, each charging a minimum call out fee even for minor jobs, actually costs.”

In the context of the hotel sector this is money that can be put into updating and refurbishing hotel rooms and front of house facilities. As Waud explains, “Hotels typically struggle for enough cash for refurbishment activities. It is a very big capital investment and this is where hotels need to get more efficient. They want to spend money in the rooms and reception areas that the clients will see. “

Despite these financial pressures, Incentive FM has persuaded the hotel to install a wood-fired ‘eco’ boiler to provide 85 per cent of its heating requirements. It’s a £300,000 investment that will reduce the hotel’s CO2 emissions by 2000 tonnes, and provide payback over seven years. The existing oil fired boilers will be retained to support the ‘eco’ boiler and provide additional redundancy.

“By the time the G8 leaders arrive in July, we must have the hotel in absolutely peak order. It is more of the same but busier to get the hotel ready on time,” said Waud. “It’s a high profile event for not only the hotel but also for Scotland.”

It would be wrong to suppose that luxury hotels have become Incentive’s FM’s core FM business. It is developing a number of ‘niches’ as well as providing FM support services to office and HQ environments. Among these are Nottingham Building Society for which Incentive FM handles FM for its branches in Nottinghamshire, Derbyshire, Lincolnshire and South Yorkshire and its three HQ office buildings; Colgate Palmolive in Guildford, and Eurodis Electron in Reigate. Incentive FM also recently acquired its first public sector client. At The National Archives in Kew it will manage a major refurbishment project in its restaurant facilities. It also has contracts in the retail sector including the Elmsleigh Centre where it is integrated service provider for the managing agent, CBRE, and at conference and exhibition venue, The Deco in Northampton.

More surprising, however, is Incentive’s foothold in industrial FM, where rather than leading with non-core soft services, it is responsible for maintenance and engineering services for the process lines at the Portsmouth based US engineering firm, Pall. As Waud explained, “Pall wanted to reduce its supply chain and costs of core engineering and maintenance. We took over the shop floor maintenance team of nine and inherited 160 suppliers of products, parts and repairs to machine tools. We said we could make savings of about £50,000 – which we did in just 18months - as well as provide soft benefits such as asset management, reporting and criticality analysis.”

Waud explained that by putting PCs on the shop floor, cell managers could log their own maintenance requests and the maintenance team would attend to make a ‘first time’ fix, and only when that was not possible, would expert contractors be called in. This strategy and the application of planned maintenance regimes has not only saved money but improved machine uptime with a consequential impact on the manufacturing processes. The partnership is developing and the scope of the contract is expanding.

From these niches Waud expects to take Incentive FM from a £10m business today to £100m in 10 years, incentive enough for its shareholding management team.

“Maintenance and engineering are non-core functions in the hotel business, but the spend on these areas is huge. Compliance issues for hotels are complicated but because they are not focused on this, the control tends to be poor.”

“Top hotels are difficult and demanding clients and there are always more things to mend, paint and repair that they have money to spend on this.”