An Employee Ownership Trust has been formed and holds 100% of the shares on behalf of the employees. The deal was structured in order to make it affordable to the business without affecting its ability to reward the team and reinvest for the future. It marks the first time a hotel or resort in Scotland has become employee-owned.
Commenting on the decision, co-founder and managing director Linda Johnston said: “We first started looking at employee ownership in 2015 and the first formal meetings were held in early 2016. Many exit options were considered over the years but none protected the ethos of the company, the existing team or the community use of Auchrannie’s facilities for future generations like employee ownership did.
“The team have been involved in the process from an early stage and were given the opportunity to input throughout. They have very much embraced the concept of employee ownership and are extremely excited about it. They are delighted that Auchrannie’s legacy will be protected and that they have the chance to play an active part in, and benefit from, Auchrannie’s future success. They also realise that what each of them does will affect the future success of the business and that this is directly linked to their own success, so they have already become more engaged in making the business better and understand the power and influence each and every one of them now has on their own future. There is no, ‘them and us’ now, we’re all in this together.”
Linda Johnston and the rest of the Auchrannie management team will remain in place and the day to day operation of the business will not change.
Auchrannie’s transition to employee ownership was supported by Highlands and Islands Enterprise (HIE) and Co-operative Development Scotland (CDS), with the process managed by Co-ownership Solutions LLP and legal services by Burness Paull LLP.
Linda continued: “The transition has been pretty smooth despite the fact that Auchrannie is a complex business; we have been well supported by HIE, CDS, Co-ownership Solutions and Burness Paull. The help we received was invaluable in enabling us to put together the team who lead us through the whole process seamlessly. Although there have been a number of hurdles to jump over, there have been no real lows.”
By transferring their shares to an Employee Ownership Trust, the ex-shareholders have also protected Auchrannie’s contribution to the island. It is very much part of the community and provides essential wet weather facilities, other amenities and support to the island’s residents and its visitors.
Sarah Deas, director at Co-operative Development Scotland, the arm of Scotland’s enterprise agencies which promotes employee ownership, said: “Being on an island, a change to the ownership of a resort like Auchrannie could seriously affect the economy of the whole island. The change to employee ownership means that the team at Auchrannie and the community of Arran can relax knowing that it will always remain an independent, locally run organisation with community values at heart.”
Jennifer Nicoll, HIE area manager for Argyll and the Islands, added: “Employee owned companies generally achieve good results and have a motivated, innovative, productive workforce with profits retained locally. The model also often appeals to potential future employees. It’s great to see Auchrannie complete the transition. The business is a big part of Arran’s tourism offering and the island’s future prosperity and community resilience. The move to employee ownership provides a sound basis for future growth.”
Linda concluded: “Employee ownership will give the whole Auchrannie team a stake in the continued growth of the business. All of us will work together to build a more efficient, sustainable and profitable business. We are all excited to continue on our journey in which we strive to lead the way in Scottish tourism and create amazing experiences for our guests and an awesome place to work for our team.”
The latest figures show that there are 92 employee-owned companies operating in Scotland, with approximately 7,000 employee-owners generating a combined turnover of around £930million.
About Auchrannie – the journey
When Iain and Linda Johnston founded Auchrannie 29 and a half years ago, they did not intend to develop a resort, they just wanted to build a swimming pool!
As an ex Tourism Officer for the Island, Iain saw that without wet weather facilities, the Island would never develop as a tourist destination and Linda as an ex PE teacher, wanted to have a pool for community and education purposes.
So they bought Auchrannie, which at the time was a 16 bedroom guest house, with aspirations to build a business which would pay for a swimming pool. Not for one minute did they think that Auchrannie would end up with two pools and that the resort would need to grow to its current size in order to fulfil their dream.
When the business started back in 1988, Arran’s economy and the tourism industry were struggling. Quality accommodation, eating places and visitor attractions were few and far between, whilst wet weather facilities were non-existent. There was no distillery, brewery, chocolate or cheese shop. The tourism season started at Easter and finished at the end of September when all the businesses closed and the locals headed off for their annual break.
Today, the island is a vibrant and lively place with great facilities, businesses and products, a better place to live and an important, quality, year round tourist destination. This is certainly due in part to the Auchrannie Resort, its facilities and its community ethos.
Co-operative Development Scotland (CDS) is the arm of Scottish Enterprise working in partnership with Highlands and Islands Enterprise that supports company growth through collaborative and employee ownership business models.
An employee-owned business is one in which the employees hold the majority of the shares either directly or through an employee benefit trust. Selling to employees allows owners to manage their exit and achieve fair value while safeguarding the long term future of the company. Employee ownership gives employees a meaningful stake in their organisation together with a genuine say in how it is run. It roots business in Scotland, drives performance and delivers economic wellbeing.
For further information on CDS see www.cdscotland.co.uk or call on 0141 951 3055. Follow CDS on Twitter @cdscotland or look at the blog www.cdsblog.co.uk