Key locations help Moran buck trend in volatile hotels industry
Like a car without a reverse gear, this hospitality group refuses to step back and is looking forward to a bright future, writes Laura Noonan
Published 13/01/2011 | 05:00
TOM Moran spent four decades building up his hospitality group the old-fashioned way, shunning tax-relief projects and development plays in favour of carefully calculated acquisitions like the €570m Bewleys hotels deal.
The results of his efforts speak for themselves -- while rivals are collapsing all around him, Mr Moran has managed to keep his 10-strong chain on terra firma despite the €670m debt legacy largely inherited from the Bewleys deal.
But for one bride-to-be, the Limerickman's 40 years of playing it safe were undone by a news bulletin that lasted mere minutes, as the words "the Moran Red Cow Hotel" and "receivership" were echoed in the same breath.
The context was in fact an employee meeting for Ivan Yates' collapsed Celtic Bookmakers, which was being held at the iconic hotel, but the detail was lost in translation.
The next morning, the bride -to-be picked up the phone to the Red Cow and demanded the return of the deposit on her upcoming wedding -- on the grounds that "the hotel is in receivership".
The affable Mr Moran laughs heartily as the story is recounted, but the underlying message of the story is undeniably serious. These are times of unprecedented volatility for the hotels industry; all bets are off.
Mr Moran is visibly affronted at the suggestion that there are no guarantees his hotel group will not follow the receivership path that's already been ploughed by more than 40 hotels.
"Ah god no," he says. "I wouldn't even have to think about it, we won't."
His chattier sidekick, Moran Hotels finance director Pat Power, cites the group's recent performance as evidence that their hotels are "different" from the industry at large.
Mr Power's team is putting the finishing touches on accounts for the year ending January 31, 2011. The figures will show turnover holding steady at about €80m, arresting a 13.5pc fall in the 2009/10 year.
Occupancy rates are on the rise, coming in at 65pc for the 2010/11 year.
The fall in the average price of rooms has been contained to just 1pc.
Crucially, all properties will post operating profits for the year. "There's not many hotels can say that," says Mr Power.
Mr Moran isn't a big man for talking about the figures and is far more comfortable pointing out the key differences between his properties and those that have failed.
The D4 hotels, which were bought out by developer Sean Dunne and are now under the control of Ulster Bank, were "great successes" when they were "run professionally by Bewleys" but are languishing without a hotelier owner.
Comparing those properties to Mr Moran's Bewley's Ballsbridge hotel a few hundred metres down the road is "horse for courses", he says.
To the uninitiated, the Citywest hotel, whose massive debts were laid bare last week, is in the same general neck of the woods as Mr Moran's Red Cow and Newlands Cross hotels. But Mr Moran begs to differ.
"If you want a country hotel, Citywest is ideal," he says. "It's a lovely hotel but it's quite a distance from the city centre . . . You can see for yourself that the Red Cow roundabout is the best location in Dublin."
Mr Moran is also enamoured with the location of his Dublin Airport hotel -- which was bursting at the seams over Christmas thanks to the big freeze -- and his Silver Springs hotel on the way to Cork.
"There are threats to the hotel industry, but the well-located hotels will always be a success," he says, insisting that while Ireland could stand to lose about 10,000 hotel rooms, he won't be cutting a single one from any of his six Irish properties.
By the end of January 2012, his group will have suffered bottom line losses of about €200m over a two-year period, but the Limerickman seems undaunted. "Lots of people have lost money, it's about surviving the loss," he says.
As he continues talking, Mr Moran seems like the hotelier version of a car without a reverse gear -- having spent so long building up his business, cutting it down is something he just won't countenance.
The recession has been looming since he did the Bewley's deal in 2008, but he's still upgrading the properties, adding a function room to the Dublin Airport Hotel and to Bewley's Leopardstown.
This year's to-do list includes convincing the moneymen to give him €12m to add another 100 rooms to a hotel in London -- so far three of his four banks are on board and he's hoping the 2010/11 results will convince the last.
The expansion bug, which bit him with the Bewley's bid and inspired a failed attempt to buy the Great Southern Hotels, still has a hold on him.
"I only wanted one hotel to start with, then I wanted two, then I wanted three," he says. "I could never answer that question for you [about when I have enough]. I'd hope to increase rather than decrease."
He stresses that he has "always been cautious" in his approach to expansion. The Bewley's deal catapulted him to the national big leagues, but Mr Moran had been learning his trade since he bought his first pub in London in 1971.
And he'd been playing with the big boys since 1988, when he paid £1m for the Red Cow Inn and became the first buyer to ever splash out more than £1m on an Irish pub.
"I never feared we were taking a big risk with Bewleys," he says. "There were six of my children involved at that stage, I wanted something more meaty for them, and I felt they were very good at what they were doing."
While €570m looks like a "big price" now, Mr Moran stresses that "every bank" wanted to finance the deal at the time and was happy to do it on traditional terms with "no question" of a personal guarantee.
The money to buy more hotels wasn't the only thing banks wanted to give him in the good old days.
"They were asking me all the time to invest in this, invest in that," he says. "I take exception to that. I prefer to invest in our own business, not in somebody else's business down the road."
In more recent times, the banks' attitudes have changed, but Mr Moran's hasn't. "One came back recently and looked for a personal guarantee," he says. "No I did not give it to them. There's no need for it -- we're not in this thing to fail."
For Mr Moran, the success or failure of the business is deeply personal.
Not only has he poured his life into it -- he'd rather "be carried out than walk out" -- he's also staked his family future on it.
His seven children began earning pocket money by sorting bottles in the pubs at four years of age, and six of them have joined the family business (while the seventh is busy designing dresses for Lady Gaga).
The grandchildren, the eldest of whom is only 10, are the next target and may even give Mr Moran a diplomatic way out of picking a successor from his sons and daughters.
"That's an awful way off, I'm only 60, but it might be like the queen," he says. "We might leave it to the next generation."