I don’t think there’s any pressure starting a business at the age of 22. It doesn’t matter to you if things go wrong; at that age if you want to do something, you can and you have no constraints.
Scott Dunn started as a ski company, and the biggest challenge was to find chalets. I had a bit of start-up money and a lot of ambition, but zero credit rating and no track record whatsoever. I had to convince, charm and coerce people into giving me a chance.
I started in Champéry, Switzerland, where I was able to lease two chalets. The first one I got utterly ripped off on; I paid 25,000 Swiss francs (around £10,000), which at the time was far too much. I was naive and didn’t know what things were worth.
Also, I first visited the place in the summer, but in the winter it was very different – halfway up the side of a mountain and the accessibility in the snow was terrible. I remember having to buy foot chains for my guests just so they could get to their accommodation. Luckily, I was able to get out of that chalet after one year.
Taking a punt
I lost £7,000 in my first year, but made £14,000 profit the next. I punted the whole lot on some land right in the middle of Champéry with the intention of building four chalets. Sadly, though, I couldn’t raise the second tranche of money I needed in enough time, so I lost the whole of the deposit on the land. The lesson you learn is, make sure you have your finances sorted before rushing in.
We got back on track with a £10,000 boost from a private investor, but by the time the recession hit in 1992 we were technically insolvent. It was around the time of the first Gulf War that the exchange rate went out of the window – sterling dived. Fuel prices also went through the roof, just as we had started chartering aircraft for the first time, and suddenly we were getting hit with big fuel surcharges.
The lesson I learned there as a tour operator is not to charter stuff, or if you do then make sure you have a fuel hedge. And always hedge your currency if you’re dealing in foreign exchange.
The thing with the travel business is that you are actually cash-rich because everyone pays for their holiday in advance, so unlike most businesses you can afford to play the currency market. We played it quite well, but as you grow into a more mature business you realise that it’s not the thing you should be doing; you should fix all your costs rather than looking to see what different currencies are doing.
The lie of the land
I regret missing opportunities to buy land. There was a point at which I was offered a whole tranche in the exclusive resort of Courchevel 1850 and didn’t take it. At the time you ask yourself whether you’re a tour operator or a property company, but when you look at what has happened to property prices in these resorts, it hurts that we didn’t go for it.
Since then, the business has grown and we’re now looking for companies to acquire. We’ve made full offers but deals haven’t transpired yet. Ultimately, when entrepreneurs negotiate, there is a lot of delusion about what the businesses are worth, so the challenge is settling on something that’s a fair price for both parties.