The Lake District’s hotel scene is ever changing.

As places shut or are put up for sale, other hoteliers are investing millions of pounds on their top end establishments. The stark diversity in the market is clear. In just the past few months the Armathwaite Hall Hotel & Spa in the north Lakes has completed a £1.5m investment creating 12 opulent garden suites, while places like the 66-bedroomed Derwentwater Hotel in Portinscale was put up for sale for £7.25m in May and reduced its price by £2m last month. In the south of the county the Wildsmith family have put The Ryebeck hotel in Windermere on sale for around £3m and have also closed their popular Hipping Hall restaurant with rooms in Kirkby Lonsdale in July after nearly 20 years of trading.

Matthew Wellbourn, who bought his property, the Royal Oak in Rosthwaite, during the pandemic has a lifelong interest in hospitality. Twenty years ago he studied for an MBA at Leeds University Business School and wrote his dissertation on the future of middle market hotels. It’s still a subject which interests him, particularly now.

He says he and his business partner invested far more capital expenditure into the Royal Oak than they should have done, putting in a brand-new pressure water system, bespoke boot warmers, etc but it was all part of a strategic plan for the property to be at the higher end of the market.

“People are saying ‘I want it cheap, I am only there for a night before a meeting.’ They are looking for convenience, cheapness and availability. At the other end of the spectrum people are saying ‘I value myself and I want the best hotel I can afford.’ I think that’s happening in every marketplace,” he says.

“Places like Premier Inn (which opened a hotel in Keswick this year) which are not full service, well, if the price comes down you have not lost cost advantage, they still have a profit and can invest it in the business. At the other end of the market you can charge what you like. It’s the middle market which has the historic cost base and has not got the price advantage. Low earnings, high costs and the first thing they do is stop spending on maintenance and there’s a lack of development in the business. This ‘recession’ is inflation-based, your costs are going up, hotels’ utility bills have tripled. They really are in the washing machine, getting it on all sides. If you are at polarised ends of the market you can keep prices down or you have a fantastic product,” he says.

He says the fact there are so many hospitality businesses in Cumbria is good for the consumer as it leads to competitive pricing, but it doesn’t allow the owners to negotiate group discounts like the large chains. He’s also noticed a trend of large companies with cash buying up smaller properties. “Companies with cash are the corporates and they seem to be consolidating ownership. If you think Hilton 30 years ago had one brand, now it has 25 brands. That’s definitely happening. I have been in corporate hotels all my life and I was 57 when I decided to run my own business, but this was a way of changing my lifestyle, a lifestyle choice rather than growing a chain.”

He highlights Appleby Manor as a good example of how a hotel has changed its offering and become a successful business. “It’s a great hotel, they developed a spa, do weddings. The business really put some effort into creating demand drivers,” he says. Demand drivers for middle market hotels is the way he sees them surviving, although accepts that setting up spas, etc is not a cheap option. “People used to go to a hotel with a nice restaurant and that was enough. Now, unless it’s a big name chef, they want more.”

Cumbria Tourism worked hard on tourism dispersal during the pandemic, encouraging tourists to discover quieter parts of Cumbria like Copeland. Matthew says the natural demand drivers are lower in those areas but the upside is that it’s cheaper to invest so that will help generate a tourism shift. He also suggests that hotels which offer a remote facility for people wanting to work and live in a beautiful area may find a niche in the market.