News Source: www.irishtimes.com
Reluctant hotelier takes path from the classroom to the boardroom
News Source/Courtesy: www.irishtimes.com

Courtesy: Mark Paul | News Source: irishtimes.com

With average occupancy approaching 90 per cent, Dublin hoteliers are beating back custom with proverbial sticks. The city’s newest large hotel, the €50 million, 234-bedroom Hyatt Centric in the ancient Liberties quarter, opened its doors last month, arriving just at the right time.

In business, timing is everything. But times can also change. Just ask John O’Sullivan, the kindly, gregarious chairman of the family-owned Hodson Bay hotel group that owns the new Hyatt. It might be all fun and games now, as his impressive new property struts into the hottest hotel market in Europe. But back in the middle of the last recession, times were different for the Kerry-born, Westmeath-based developer.

Back then, he led a consortium that lost control of the huge Athlone Town Centre mixed-use development, which ultimately entered receivership with more than €200 million in debts. That must have been a tough time?

“Oh Jesus, don’t talk to me,” says O’Sullivan, chatting in the lobby of the new Hyatt. He keels over the side of his chair in mock exhaustion.

“It was a tough time. Without doubt the toughest I have had. But when you’re having a tough time, what do you do? You do something that you like doing. I like finding sites and developing them.”

O’Sullivan grins that his hobby is, metaphorically, “buying sheds and converting them”. This obsession led directly to the Hyatt.

As he wrapped up the odds and ends of Athlone Town Centre at the end of the bust, he was travelling regularly up to Dublin “where most of the accountants and lawyers are”.

“Every now and then, just to cheer myself up, I used to go out and keep an eye on sites. I went everywhere, down the docklands, into the Liberties. Everywhere. But the sites were all owned by the banks and they wouldn’t sell them for all sorts of reasons. It was quite difficult to acquire property in that period.”

On one visit, O’Sullivan came across a one-acre site at the entrance to the Coombe district, directly across from St Patrick’s cathedral. It is one of the most historic areas of the south inner city. Vikings once lived here.

“It had been derelict for 20 years because of the complexities involved. The plots were all in disparate ownership through various funds, banks, and the council. It came in 10 different parcels. I started assembling them. I asked myself if I was stone mad. But the truth is I was enjoying it.”

O’Sullivan approached so-called “vulture fund”, Cerberus Capital Management, to buy the loans of a developer who owned part of the site. Eventually, he gained control of the whole plot – the city council was the last to sell its bit, and only once it was sure O’Sullivan had ownership of the rest and could forge ahead.

As the recession’s nuclear winter gave way to the green shoots of a recovery spring, O’Sullivan, whose hotel group already owned two hotels in Athlone and one in Galway, planned its first in the capital.

Following a battle with An Taisce and a few trips to An Bord Pleanála, O’Sullivan finally secured permission for the new hotel, which is built on top of an old Viking street.

Solidifies

The addition of the Hyatt Centric, the US brand’s debut in the Irish market, solidifies Hodson Bay’s position as a medium-sized group by Irish standards. It already owns the eponymous, lakeside Hodson Bay resort in Athlone; the Sheraton Athlone, which the group salvaged from the town centre development; and the Galway Bay hotel in Salthill.

What impact will the new property have on the group’s finances?

“Ha! I knew you were going to ask me that,” laughs O’Sullivan, triumphantly whipping a cheat sheet of numbers out of his pocket. “I got Padraig [Sugrue, the group chief executive] to dig these out for me.”

Before the new hotel, the group had sales of about €32 million, with Ebitda (earnings before interest, tax, depreciation and amortisation – a standard returns metric) of €6.5 million. Including the new hotel, the group will have sales of €50 million and Ebitda of €12 million.

Total staff numbers are close to 600. The group’s accounts also show it has shareholder funds of €18 million. Hodson Bay has done well for the O’Sullivan family since he established it in 1990.

“Historically, most of our growth was organic, rather than buying new hotels. I used to say that, if I worked for a PLC, I’d be sacked, we grew that slowly.”

It was never a part of the plan that O’Sullivan would end up a hotelier. Although now based in Athlone, he hails from Waterville in Kerry, hometown of GAA great Mick O’Dwyer. “His father and my mother were cousins.”

He attended the regional college in Athlone, where he met his wife Mary, and then Bolton Street college in Dublin, where he trained to teach engineering. He began teaching at Tallaght community school, where he stayed for five years.

“The summer holidays were so long, I was doing bits of development on the side. We had a little building team in the school. In 1977, I built a house outside Dublin for €12,000 and sold it for €72,000. We made nice money.”

Mary’s father passed away suddenly and she wanted to move back to Athlone, where O’Sullivan landed a job teaching at the college.

“The difficulty was that you could build a house in Athlone for €72,000, and sell it for €12,000. So I bought an old pub in the town instead, as well as the buildings beside it, and knocked them all into one.”

He built the Castle Inn, which remains a landmark pub in the town. He intended selling it once it was finished, but hadn’t realised pubs are hard to sell unless they are open and trading.

“So I ended up in the pub business for four years,” he says.

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News Source: www.irishtimes.com

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