EVER WONDERED what you would do with hundreds of millions of pounds of free money? Ask Nic Wood for advice. The eldest son of Sir Ian Wood, Scotland's second-richest man and oil services baron par excellence, will this week reopen the Rutland Hotel in Edinburgh after buying it with his brother Garreth for £7 million last year. With its bar, restaurant, club and 13-room hotel, the brothers saw it as the ideal expansion for their Signature Enterprises chain, which started with money from the Wood Group family trust five years ago and now controls five stylish outlets in Edinburgh and Aberdeen.

When Wood, 34, came to the capital as a 17-year-old student to escape the son-of-a-tycoon tag that dogged him in his native Aberdeen, the Rutland bar and downstairs club L'Attache were among the most lucrative venues around.

The Bacardi days soon faded, however, as the brewery owner failed to move with the times and the action moved to flashier outlets on George Street.

"The breweries assumed it would always make lots of money because they owned it, but it got very run down," says Wood. "The club hadn't been open since 2003 and the upstairs bar was only open twice a week."

He and 29-year-old Garreth have spent £3.5m on refurbishment to compete with Tigerlily and Le Monde, two of the brightest jewels on George Street. The sleek black bar area soaks in sinuous trip-hop, the upstairs restaurant is all glass and chrome and the hotel bedrooms are decked out in luxury bedding and flat-screen TVs. The basement club boasts an electronically interactive bar and cavern-like booths with docking stations for people to slot iPods.

"I don't want to slag off Tigerlily, but it's quite pretentious," he says. "It annihilated Le Monde when it opened, but it's become rammed all the time and offers cheap hotel rooms to keep it busy. We want to achieve something that everyone feels comfortable coming to."

He explains that he is only sitting here in a grey pinstripe suit for the photographer's benefit, having rushed home to the city's upmarket Grange district to get out of his usual casual clothes. His family might be worth £890m, according to the Sunday Times Rich List, but he seems unpretentious and well adjusted.

"I didn't join Wood Group because that was was expected of me. Not by my father, but by a lot of others.

"I took flak from people who would say, What do you need to work for? You can always go into your dad's business'," he says, although it is one of many times when he stresses that he doesn't want to complain about his great start in life.

He studied business at Napier University and worked evenings in a busy pub off the Grassmarket. He liked the whirl of wacky promotions and rowdy women so much that he never left, rising to management in a variety of the city's drinking holes.

He eventually decided to move into pub ownership, but the Edinburgh scene was not as open as he had hoped, since most owners of plum city-centre venues prefer quiet deals with established players. Instead, an opportunity came up in 2003 to buy the Bieldside Inn, an "old man's bar" in a well-to-do district southwest of Aberdeen. With Garreth having done an apprenticeship on the Aberdeen pub circuit, they hatched a plan to turn it around by adding a fancy restaurant. They pitched to their father to withdraw money from the family trust, a process he insists is far more gruelling than people might think, and when they succeeded Wood moved back to Aberdeen. They were helped by Graham Good, a veteran Wood Group accountant. Sir Ian might have been willing to indulge his sons' property investments, but Good appears to have been the insurance policy.

The brothers and Good subsequently bought Cafe Society and Paramount Bar in Aberdeen city centre and had similar success before agreeing to sell Cafe Society to developers after receiving an "offer we couldn't refuse" late in 2005. By this time, Wood's eyes were back on Edinburgh, and he and Garreth used the proceeds from the Aberdeen sale to buy the Black Bull (Grassmarket) and Brecks (Rose Street) bars from Spirit Group.

Wood returned to Edinburgh, leaving Garreth to focus on the Aberdeen outlets, and set about revamping wisened Brecks into a style bar that he renamed Element. The Black Bull was doing well enough that it has so far been left alone.

Around early 2006, Spirit Group sold the Rutland and several other bars to Le Monde owner Billy Lowe for around £10m. It was another Edinburgh deal that nobody knew about until the ink was dry, but Wood knew Lowe from his pub management years and eventually persuaded him to sell the Rutland rather than develop it himself. He suggests Lowe might have sold because he didn't want to get distracted by having a second Le Monde, but very possibly Lowe saw the chance to offload a possibly less attractive venue for a quick profit.

Either way, it is by far the Wood brothers' biggest project yet. Wood says that the four other outlets' £3.5m turnover (he will not discuss profits, except to say that they all do well), will be doubled by the Rutland if it meets their targets this year. Fortunately or otherwise, its opening coincides with a great opportunity for those with bottomless pockets to buy bars and restaurants on the cheap as the property slump takes hold. The brothers are therefore eyeing the market, and there is also the possibility that they will team up with Graham, their 32-year-old middle sibling, who has bought an apartment hotel business in Edinburgh's Haymarket area.

Wood says his father his instilled the need to be honest and emotionless in business, but says he has no desire to equal his achievements. In any case, he laughs: "We would always be overshadowed by him ... He works incredibly hard, but I have three young kids and I enjoy spending time with them."

While insisting Sir Ian was devoted to his family at the weekends, Nic has no desire for the non-stop working weeks.

"I really don't feel I have to emulate him in any way," he says. It makes you hope, and almost believe, that he is telling the truth.