In for a pound
As a 30-year-old newlywed working as a regional brand manager for Coca Cola in London, Matt Spence got a call from his mother, who still lived on the family’s 80-acre sheep farm. Spence and his wife Zoe, whom he’d met while he was playing rugby for the London Scots, had just returned from their honeymoon in Yosemite National Park. Zoe booked the trip as a surprise, even though Spence had already paid for a holiday in Ibiza, because she knew of her husband’s obsession with the American park system, something leftover from childhood vacations with his family to Yellowstone. As a schoolboy, while his schoolmates gathered scrapbook journals of football teams and pop stars, he documented our parks, poring over books describing the benevolence and foresight of the Rockefellers, Carnegie, and Muir.
His father died in a car wreck when Spence was 14, and rugby was his ticket out of Yorkshire. Spence’s older brothers stuck around, but he wound up being loaned by his rugby club, Hull City, to clubs in the U.S. before turning down a scholarship offer to UC-Berkeley in favor of returning home to finish college at University of Leeds. Then it was off to London, as he made a seamless transition from professional athlete to corporate executive by being gregarious, pugnacious, and competitive.
At the family meeting, his mother told him and his two older brothers, Simon and Richard, that it was time to give up the farm, or at least time to stop farming it, and she wanted to know if any of them had a good idea about what to do.
“One of the downsides of our honeymoon was that the standard of accommodation was just dreadful in the national parks and in the gateway towns,” Spence said. “Best Western was the best rooms we could get. Zoe just kept saying wouldn’t it be great if we bought a gas station and made a first-rate accommodation.”
Spence told his mother and brothers they should build high-end cottages on their farm and rent them to park visitors.
“My mother said, ‘Don’t mess it up, and if it works build one of the cottages for me,’” he said.
This was in 2003, a decade ago and a million miles away, considering what’s happened in the vacation real estate market, global travel, and Internet marketing.
At the time, Spence had no experience in real estate and didn’t even own a home, but that didn’t stop him from giving notice at Coca Cola. When he took his idea to the town officials in Richmond to request a zoning exception, they told him it was impossible. English national parks are comprised entirely of private holdings and rural farmland is strictly regulated. According to the letter of the law, which Spence hadn’t looked into, he couldn’t build any additional structures on his land.
Richmond is a picturesque Georgian village that had fallen on hard times, like most of the rural north. Spence didn’t want to go back to the corporate world and he wanted to save the family farm, so he channeled his inner rugby fullback, using a combination of guile, ferocity, and agility to break through what looked like an impenetrable wall of obstacles.
“There wasn’t one single place you could stay overnight within 15 miles that was five star,” he said. “All there was was budget. So I tried to explain to the town that if all you’ve got is budget accommodation, then all you’ll have is budget travelers. And they don’t spend money.”
Eventually his message got through to the right people, but it was the type of small town fight that brought neighborly nastiness right to the surface.
“What I learned is that the people who were getting in my way for doing something good would get in anyone’s way for doing anything,” Spence said.
After a decisive town hall meeting during which he presented his vision to the community, Spence got planning approval in 2004 to build 18 cottages on his farm. He and his brothers hand-built the first 10 and named the company Eco Build. The cottages had cedar roofs and their water was fed by a local spring, that once it was excavated, revealed a wooden piping system that ran all the way to a fountain in the town center.
The cottages had a distinctly green feel, mainly because Spence was trying to save money and use the resources at hand. Also, because he recognized that moneyed tourists who came to the Yorkshire Dales wanted to be part of the environment.
“It’s amazing how much the world’s changed in 10 years,” Spence said. “Eco was still sort of berry-eating, sandal-wearing tree hugger, you know? It wasn’t smart, good dinner discussions. We had living roofs and it was a platinum LEED build.”
The plan worked, in part because Spence had contacts and savvy in the marketing field. He picked a fight in the press with legacy tour operators, got his website out, and told his story. The cottages, spread over 60 acres, were 70 percent occupied in the first year. The business model was a good one, but it was modest. These days the Yorkshire Dales cottages bring in around $750,000 annually; about a third of that is profit. But Spence’s mind was still on his father and their trips to America’s parks.
“Some communities have got gold, some have got oil. This community had a national park and was in the middle of a fast-flowing river. So its natural resource was its beauty,” Spence said. “How do you farm that? How do you drill for it? How do you make it a commodity so the community can prosper? And really the world hasn’t gotten to grips with that yet. There are good examples of it, but the communities who come to grips with it will do really well.”
Spence wanted to turn the family business into a corporate success story, so in 2005 he hired Ewan Kearney, an old friend from his rugby days, away from his job running tours in Africa for luxury travel firm Abercrombie & Kent. Together, they renamed the business Natural Retreats, with the idea of buying up farms near British parks and building vacation cottages, and based the company in Manchester, where Zoe’s family was.
By 2006 they’d raised 4.5 million pounds from 30 friends and they were up and running. In the summer of 2007 financing construction was impossible, so the company owned sites it wouldn’t be able to develop right away. At Coca Cola, Spence had made connections in the hotel industry, and he began to get word from friends that things were looking bleak in Ireland, as the national bank continued to repossess high-end projects that were over-extended. After sniffing around for a few months, he eventually signed up five operating agreements with residential resort communities in Ireland, including the K Club in Kildare, which had hosted the Ryder Cup but whose 54 multimillion dollar homes were just gathering dust.
“They weren’t even worth $500,000 and it had cost them $2 million to build each one,” Spence said. “It’s hard to describe what trouble Ireland got into. It was horrible to see. It was way worse than the Great Depression. Not in terms of starvation but in terms of values and suicides.”
Operating agreements were key to Natural Retreats’ success. Spence figured out how to market and rent properties for resorts that couldn’t sell them at a time when there wasn’t a lot of competition in the market. The Internet was changing the game, so you didn’t have to be Hilton to get your name out there.
Spence didn’t like the price tag or performance of the existing booking softwares, preferring instead to hire a friend to build one from scratch. By 2008, the company operated six sites and had three development properties. He wanted to keep growing but the banks weren’t lending, and when he talked with major players about partnering, they always wanted him to put up 15-20 percent of the money.
He needed more capital, so he created a new company, Natural Assets, and went looking for it.
About that time he got a contract to operate a 34-room home development in Cornwall that had been built by a successful London venture capitalist. With three offers from private equity partners, he was close to signing one to get the capital when the owner of the Cornwall property said he’d agree to the terms of the best deal on the table and give Spence the money up front. It was Spence’s “first Hollywood moment,” a life-changing deal negotiated with a handshake over a bottle of expensive Bordeaux at a restaurant in Mayfair. Natural Retreats and Natural Assets had become in industry lingo “an op co/prop co,” meaning it both owned its own properties and operated ones that belonged to other people. With the company on solid footing, Spence turned his sights on the U.S.
“I always felt our brand was even more relevant in America than it was in the UK, because of the National Park system and how they were founded. Yellowstone and Yosemite were Yorkshire Dales on steroids,” he said. “The visitors were five times in a month what they were in a year. I knew domestic tourism was a huge market that was relatively untapped. And I knew that Americans would be traveling abroad less.”
In April of 2011, Spence negotiated a deal to take over operations of South Fork Lodge. Located on the Snake River in Idaho, the property had been developed by Mark Rockefeller, who invited Spence to 30 Rockefeller Plaza on the 56th floor. After a six-hour conversation, the men agreed to terms. “The site he’d chosen was classic Rockefeller. It was the Wrigley Field of fly fishing,” Spence said. “It was right on this oxbow of the greatest dry fly fishery ever. It still needed some improvements and branding and all that sort of stuff, which we brought, but that really helped us leverage some credibility. If we’ve passed the Rockefeller sniff test, at least there’s something real there.”
Aside from giving Spence confidence that he could get his hands on good properties in the U.S., the deal gave him another success story to tell. Natural Retreats now owns 75 percent of the property and it’s making money, which it hadn’t been before. Spence booked subsequent deals: operating The Greystone Inn on Lake Toxaway, high on the Blue Ridge close to the town of Cashiers, North Carolina as well as Tsaina Lodge in Valdez, Alaska, a jumping off point for helicopter skiing and fishing trips, and a ski property in Taos, New Mexico.
Spence has bet on beautiful places, but his love affair with Charlottesville comes back to something cozier and less exotic. He believes in the intellectual capital, the values, and the aspirations of its professional class.
“The families I’m meeting are amazing. They’re all in the same fight trying to bring up children in a busy life. Bring their kids up with good manners and they generally do care about their town,” Spence said. “And I’d like to hear them all have more of a voice and start pushing the other people to the side. And just say, ‘If you’re not going to do anything, then get out of the way please, cause it’s not your town.’”