Posted 27 June 2008 by Alison Tyler

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If there's one positive to come from the credit crunch it's that the hospitality industry is forced to get creative and raise its game.

Gastro pubs were the response to the recession in the 1990s, and once again, pubs are leading the way - this time with rooms.

Last week I visited the Ragged Cot, a new-wave inn tucked away in one of the prettiest and poshest corners of the Cotswolds - just up the road from Prince Charles' residence in Tetbury and around the corner from Zara Phillips' pile Gatcombe Park (she's a regular, apparently).

The honey-coloured Cotswold stone coaching inn was once a garish B&B, unloved and untouched for years, until Ian Rayner and Miles Johnson who own the Kings Arms in Litton Somerset, snapped it up and revived the interior with aged leather club chairs and banquettes, old church chairs and wooden tables, contemporary prints, tartan woolen blankets and lashings of Farrow and Ball.

The dining room feels airy and relaxed, a sign above the door reads "wellies and children welcome" while dog baskets invite our canine friends. The menu is very local, with an emphasis on seasonal modern British food - many of the pub's suppliers are regulars who drink in the bar. And the informal style even extends to the opening hours: the Ragged Cot does breakfast, lunch (until 5pm) and supper.

And the rooms? Cleverly named after classic novels, the nine bedrooms are simple, elegant and cosy - think woolen carpets, White Company bed linen, shabby chic armchairs and slate bathrooms with heavenly This Works products (a cut above the usual B&B). It was a shame not to have tea and coffee making facilities in the room, but Shaun the manager couldn't have been more accommodating in the bar, rustling up pots of tea and biscuits, and a platter of cheese and cold meats for us in the evening.

This all-encompassing, all-welcoming attitude creates an eclectic and vibrant atmosphere, where farmers and dog-walkers prop up the bar alongside tourists, local diners and the Cotswolds' smart set. And even on a Sunday night, there was no evidence of the credit crunch here.

It's a model that many pubs could replicate, diversifying their business and widening their audience, and one that we'll surely see a lot more of.

This summer The Crazy Bear restaurant with rooms opens in Beaconsfiled, Pub du Vin, a new pub-with-rooms offering from the Hotel du Vin chain has just opened its doors in Brighton to attract a younger, less formal crowd and The Star Inn at Harome is refurbishing its rooms this summer. 

Real ale and a room for the night - it's a winning combination.

The Ragged Cot, Cirencester Road, Minchinhampton, GL6 8PE. 01453 884643, www.theraggedcot.co.uk

Rooms from £120 B&B