David Collins and David Byrne launched Great National Hotels & Resorts in the teeth of the last recession.
Almost a decade on, they're not just surviving, but thriving.
No clients. No funding. No staff. And it was 2010, when the tourism industry was on its knees in the middle of the economic crisis.
That was the moment when David Collins and David Byrne decided to launch a completely new hotel brand in Ireland. Oh, and the banks wouldn't touch them.
"The core of the industry was sound. Ireland as a tourism destination is one of the best in the world. There were 900 hotels in Ireland then, probably 200 too many," says Collins.
It's hard now, after another year of record visitor numbers, to remember how difficult times were for the hotel industry. Back then, many properties had been shuttered, some midway through development, and others were struggling to keep the doors open. Collins says he and Byrne saw an opportunity here to develop their idea.
In less than a decade, Great National Hotels & Resorts has grown to be one of the biggest owners and managers of, and service providers to, the hospitality industry in Ireland and Britain. In September 2018, the company pretty much doubled in size following a deal to buy Classic British Hotels, which brings the stable of properties we work with to more than 130 across Ireland and Britain. That's more than 8,000 bedrooms.
Collins adds: "We stabilised a lot of the properties we worked with through Nama and receivers, and they then went on to employ more and more people and thrived as businesses. We thought: if we could develop a reputation for managing properties as well as providing management services, could we have a broader business? And we did."
Although we own seven of our own hotels and manage the others, the bulk of the Great National Hotels' business is providing services. These can range from minor things such as helping to make procurement cheaper (those little bottles of shampoo in the bathroom) to the bigger stuff, such as taking control of reservations, marketing and distribution. Collins says this is the area indepenent hotels struggle with most.
"The last time you checked into a hotel, the person is checking you in and then the phone rings and it's someone wanting to make a booking. So that person is not just dealing with you, but is also now the marketing resource. And that will impact on profitability in six months because they gave the wrong rate or couldn't deal with the person still in front of them. We take all that away. Our hotels are seeing consistent double-digit growth across occupancy and room rate."
The upshot for the hotel's owners is that they then have a growth story on which to build investment in their properties and expand.
Technology has long since disrupted the booking process and the search for rooms is dominated by the big online travel agents. That has prompted many hotels to upgrade their own websites and mobile apps in order to take bookings faster and better. Not every hotelier has the time and money to spend on this, or the budget to ensure the hotel stays at the top of the Google search rankings. Great National Hotels can provide this service. For every additional sale they generate, the company gets up to 10 per cent commission.
"We get control of the room stock the hotel has, identify where it is being distributed either directly or indirectly and achieve a better mix, so you are not distributing too much through online travel agents. Hotels are very, very busy place and it is not often that a hotel is looking 90 days or six months out. Simple things like underpricing or overpricing can make a difference".
It's also about making sure that hotels aren't too reliant on either leisure travellers or business customers. Getting that mix right can make or break hotels.
Is it hard to go into a hotel you don't own and tell the owner what they need to be doing differently?
"Being a branded property wasn't going to fly with every hotel. If you want to be branded you can be branded, and if you decide you want to retain independence you can retain that non-branded position in the marketplace and we will still provide the range of services. You can have it closer to the surface and just have central purchasing, so in the bathroom you have toiletries, or you can have our brand over your door."
Since 2010, the company has grown quickly and profitably, although for four years Collins and Byrne didn't take a salary. They now employ 55 people directly from their base in Ennis, Co. Clare. A couple of dozen more are employed in Britain, and obviously that number will grow with the deal with Classic Hotels.
"We started the business debt-free and we are still debt-free. We took the position that we will take all the cash we generate and put it back into the business. We had an equiety event last October and that allowed us to fund the acquisition."
Which prompts the question, is it not a strange time for the company to be adding to its exposure in Britain? The comapny already works with more than 30 clients in Britain. That will be over 100 with Classic British Hotels, whose portfolion consists mostly of four and five-star resorts. There's the not-too-small matter of Brexit coming down the line.
"The curious thing about the British market is that they are having a bumper year because of the fall in sterling," Collins says.
Talks with the Hotel Partnership, which owned the Classic British brand, began last year. The deal was sealed over the Summer. A non-disclosure agreement means Collins can't reveal the price of the deal, but it is significant enough. The company raised money last year from Enterprise Ireland and also from Rachel Howes, a former managing director of Booking.com.
"We had a foothold in the British market through our 35 properties, mostly in the Midlands. But in order for us to consolidate, what we needed was an established brand with a strong management team who wouldn't need a huge amount of investment. That was the key driver. We didn't want to take eight or nine years to achieve what we've done already."
The properties under the Classic British brand are mostly aimed at business customers, so host plenty of conferences and events. Getting that spread of different types of guests will help the company's existing hotels as will the ability to offer a mix of three, four and five-star properties.
The scorching Summer weather has certainly drawn the tourists. American and European visitors are visitng Ireland in record numbers. However, the bedrock of the industry is business and leisure travellers from Britain. The fall in sterling makes it more expensive for the visitors to come here. While American and Chinese tourist numbers are growing, British visitors' booking habits make them more profitable as they book at short notice, which increases the room rate.
"You only have to look at Lahinch promenade and count the number of British-registered cards. You don't see them any more."
Collins also believes the tourist numbers don't tell the full story of the year. The country has had three significant weather events and the Ryanair strikes, all of which make people in the industry nervous.
The hotels industry, though, is expanding once again. The number of new hotels either built or planned is 75, according to consultants, and there is a requirement for as many as 8,000 new rooms to be added to the existing stock to meet demand.
Collins, though, is wary of predictions of unending growth. It is not that long since the hotel industry recovered.
"The trouble I have is that I think there are vested interests promoting that. Some of those [planning applications] are probably genuine, some of them probably are. But some of them are probably a bit pre-emptive. In other words, one, [they are designed] to secure additional value having achieved permission; but also secondly, it could be a means of heading off any compulsory purchase orders: this is intended to be developed as a hotel because I don't want to be acquired by the government to solve this housing crisis. So there could be a level of pre-emptiveness there. I'm not sure it's a very good indicator of the strength of the demand," he says.
With the ink drying on the Classic British Hotel takeover deal, Collins is already working on the next one, which he hopes to announce early next year and which will require another fundraising drive.
It's all a far cry from 2010.
Interview with Ian Guider, Sunday Business Post, 21.10.2018
Photo Credit: Alan Place