Investing in Holiday Accommodation

A natural fit for many traditional farm businesses when they are looking at diversification is holiday accommodation. The farm often has property and open space suitable for such an enterprise and a situation in the countryside which is an appealing destination for visitors. Stephen Melville of Cuplahills Farm in Fife started a tourist accommodation enterprise almost ten years ago after looking for a new enterprise which would add to the income streams of the farm. The location of the farm and the ability to create a fantastic hilltop site with views over Eden Valley towards St Andrews meant that holiday accommodation units were an obvious choice and so St Andrews Country Lodges was born. Stephen takes up the story, “I was keen to do more with the farming asset we are privileged to own and secure its financial viability for future generations. Although we didn’t have surplus farm cottages to utilise we did have a fantastic site, so I looked into sourcing various types of accommodation units and eventually decided on the specification which I felt would suit the farm and the type of guest we were looking to attract. The units had to be affordable and functional, but also capable of providing the level of luxury today’s discerning guest expects.”

“I didn’t want to burden the farm with huge debt, in fact the reverse is true because the whole point of diversifying was to improve the financial viability of the whole farm business. Fortunately, we embarked on the project at a time when SRDP funding was available, so we were able to take advantage of that. I had to strike a balance between the capital injection needed to establish the new enterprise and the financial risk that would involve. Happily, the enterprise got off to a good start with strong bookings from the outset.”

Throughout the process of planning and establishing the new enterprise Stephen and his family had to consider the appropriate structure for the business and decided that this should involve different family members to the farm business. Since establishing St Andrews Country Lodges with two lodges in 2012, a further two lodges have been added. The business has also recently incorporated to become a limited company.

Farming remains at the heart of operations Cuplahills and visitors to the lodges enjoy the experience of being on a working farm. The lodges are very much a complementary enterprise alongside the farm business.

On-farm tourist accommodation provision, or agritourism, is now a sector recognised by the Scottish Government and sits within the umbrella of the Scottish Tourism Alliance. More information can be found at www.scottishagritourism.co.uk. If you are considering establishing a holiday accommodation or tourism enterprise on your farm, speak to your professional advisors at an early stage to ensure that you receive advice in relation to the most suitable business structure for your business and the tax implications of your plans.

To contact St Andrews Country Lodges, visit www.standrewscountrylodges.co.uk/.

■ St Andrews Country Lodges