Property Focus: The Castle at Porlock

It made Fawtly Towers look like the Ritz. Tawdry 1970s décor, avocado bathroom suites and beds propped up on bricks, no two bedspreads matched. And that's exactly what attracted the Hitchings family to the Castle at Porlock in Somerset.

They could see that with the right investment the pub, which has nine letting rooms, could be a real goldmine - and six months later they've proved themselves right.

They've also justified the decision of Scottish & Newcastle Pub Enterprises (S&NPE) to buy the Castle last year. The pubco is keen on sites that can provide multiple income streams that can generate a sustainable long-term business for its lessees.

And now, as licensee Gareth Hitchings puts it, "this is like three businesses in one".

Gareth, who has 12 years' experience as a manager and tenant, most recently with Greene King, runs the pub with partner Rebecca Otley, while the lease is held by his parents, Anita and Graham.

A joint investment with S&NPE of £250,000 upgraded the rooms and now accommodation is the core of the business, accounting for 30 to 40 per cent of turnover and also driving trade in the bar and restaurant.

It was very different when they sold up their homes and arrived at the pub in March this year.

"We knew it was in a bad state - that's what sold it to us," says Gareth. "It was at the bottom of the pile. People were still staying here but it was so bad most of the time they were asking for reductions to the bill and they never came again."

Over the first couple of months the family refurbished the accommodation room by room, putting in modern furnishings and décor, and installing new en-suite bathrooms.

"It's had a massive impact," Gareth confirms. "We've had to turn people away in the last two or three weeks and we've already got a lot of bookings for Christmas. People are keeping in touch and we are getting regular residents."

The Castle is on Exmoor, and as well as attracting holidaymakers through the summer it brings in birdwatchers and older couples looking for a quiet break all year round.

Residents keep the restaurant, which seats up to 100 people, busy. From doing four or five covers a day it is now fully booked at weekends and Friday nights. Guests get a 10 per cent discount "but I'm thinking now that they'd probably eat here anyway if we didn't do that," says Gareth.

The Castle has a website and a good relationship with the local tourist information office to help market the rooms. It also works with other hotels in the area. The pub recommends them when its rooms are full and in return the hotels suggest the pub as a good place to eat.

Running a pub with letting rooms for the first time does bring its surprises though.

"There are few overheads we hadn't thought of," says Gareth. "A lot of the cost is the laundry - they don't tell you about all the towels you need! Any licensee considering letting accommodation needs to think about these kind of things. You need the right equipment to do this properly - that was a real eye-opener for us."

It only needs one extra member of staff, though. The Hitchings kept on an excellent housekeeper who battled with the place before the refurb, but the pub staff all help out with the rest of the hotel duties. "People see the same people at the bar as they see cooking their breakfast the next morning," adds Gareth. "They like that."