More than 30 years ago, a large detached house, covered in ivy at the front, with lawns, gardens and a tennis court at the back, stood out near the junction of Oak Lane and Oak Avenue.

It looked like a Hollywood mock-up of an old mansion off Sunset Boulevard where a reclusive star from the silent movie era might live.

Today, the 38-bed Dubrovnik Hotel stands on the site. Part of the original fireplace is visible in the bar, and the tennis court is occupied by a £1.4m extension built in the early 1990s by the first owner of the family-run enterprise, Bogdan Basic.

He named the hotel after the catering school he attended in Dubrovnik, Croatia, then part of Yugoslavia. Mr Basic came to Bradford to work at the Victoria Hotel, and also to improve his English before spending six months in France and then Germany.

But he met his wife-to-be Maria in Halifax and stayed, buying up the old mill owner’s property and converting it into a 12-bedroom hotel. Mr Basic has since passed on; his wife is now the owner of Bradford’s biggest privately-owned hotel, and their sons Neb and Ned run it.

They both got degrees in business studies at Bradford University; but whereas Neb took a year out afterwards to go travelling, Ned, who was born in 1971, went into the family business.

Five of the bigger en-suite rooms have just been redecorated at a cost of £80,000. Armchairs have been tastefully re-covered and the wall behind each king-size bed has Italian wallpaper patterned to match the curtains of the big sash windows.

“Even in these testing times, the customer still wants facilities and the service,” Ned Basic said, before showing me the improvements.

He estimates that the hotel, with more than 20 full-time and part-time staff, costs around £400,000 a year to run.

The hotel is currently taking part in a pioneering energy-saving project to reduce its £60,000 annual power and water costs.

Solar panels and recycled rainwater are just two of the ideas Mr Basic hopes will be in place by the end of next year. He likes the idea of the Dubrovnik being an ecological trendsetter for other hotels.

If nothing else, the investment in bedrooms and the energy-saving plans indicate a degree of optimism about the future of the business.

He said: “Last quarter we had a take-up of 55 to 60 per cent, Monday to Thursday. A lot of companies are being just a bit wary of spending money on conferences, dinner dances and entertaining as such. We will know pretty much by March next year what the Government’s plan is for running the country.

“We have had dips and recessions before in this country. This is our third recession since the 1980s. We have a good track record for coming out of these dips. I think the quicker the Government puts its plans into place the better; it will give the business sector a measuring tool to go forward.”

By an odd coincidence, the Victoria Hotel, where his father learned his craft, had just gone into administration. What does this portend for Bradford’s hotel businesses?

“If there are more hotels granted in Bradford, I don’t see there is a need for them. The whole of Europe is over capacity with hotels, never mind Bradford. I wasn’t surprised about the Victoria, but I was surprised by the rates they are charging in the city centre – too low.

“The sum of £45 for a double room and breakfast was what my father was charging 20 years ago. What’s happened is the worldwide web: people are using hotel rates as a measuring tool. Hotels are lowering their rates.

“Rather than compete on price, we offer complementary add-ons – our big band nights on Mondays and our salsa dancing on Tuesdays,” he added.

Tucked away down Oak Lane, the Dubrovnik has flourished. When Bogdan Basic started his hotel, a good deal of the surrounding area was well on the way down.

But in the past 15 years, startling and very visible improvements have been made to Lister Park, Manningham Mills, Challenge College, St Joseph’s College, Bradford Grammar School, as well as parts of Oak Lane going up the hill and Manningham Lane.

“My father chose this area because the houses were quite opulent – in size – and lent themselves to conversion. This was close to the city centre and yet quite far out. The Five Flags was too far out for the corporate traveller,” Ned Basic said.

The Dubrovnik not only has a database of clients going back 30 years, it trades in the surrounding economy. Mr Basic reckons the hotel buys in its food and drink from suppliers within an eight-mile radius. Shortages are made up by enterprises in Oak Lane.

Likewise, the recent upgrading of the five bedrooms was carried out by local carpet fitters and upholsterers, he added.

Times are tough. Beyond January’s VAT increase, nobody really knows what the next 12 months are likely to bring, although economists err on the side of caution by forecasting the obvious – harder times are just around the corner, perhaps.

What are the advantages of being a small, independent business in such uncertain circumstances?

“Without shareholders, without investors, we can think and act off the cuff,” Ned Basic said.