Business

Sunday 27 May 2018

Crash opened door to ownership for Choice Hotel boss

Interview: Andy O'Neill

Andy O’Neill
Andy O’Neill
John Mulligan

John Mulligan

Andy O'Neill's dad went mad when he said he wanted to leave school after the intermediate certificate, at the age of 15.

"He was disgusted," he recalls. "There was a lot of argy-bargy in the house."

But it was his mother who soothed things, arguing that their son should be let work where she did - at what was then the only hotel at Dublin Airport. They'd give their youngest of six (and the only boy) a year to see how he got on, reasoning that he could always go back to school after if things didn't work out.

He'd done well at his intermediate certificate, including an 'A' in honours maths, but didn't like the structured learning environment.

"I couldn't stay focused. I didn't like being stuck in a classroom. I'd sit in a class and I might start singing to myself. I found conventional learning boring," says the larger-than-life character (44), who's now chief executive of Choice Hotel Group, a company he owns virtually all of.

Since this year, Choice manages hotels including the five-star 'G' and Hotel Meyrick in Galway (both bought last year by a consortium including Alanis Capital, Choice, and cinema operator Lorcan Ward), and owns the Woodstock Hotel in Ennis.

In the summer of 1989, O'Neill got his first taste of the hotel sector, clearing tables and polishing cutlery. He'd later end up as general manager at the swish Morrison Hotel in Dublin opened by the late publican and hotelier Hugh O'Regan in 1999.

"I loved it," says O'Neill of his early days in the business, as he sips coffee at the down-at-heel Waterside House Hotel on the beach front in the commuter town of Donabate in north county Dublin.

The hotel, bought just earlier this year by Choice Hotel Group, will soon benefit from a €1m revamp. It badly needs it.

The irony for O'Neill was that for a student who couldn't sit still in school, Forte Hotels put him into apprenticeship training that included doing a hotel management course at Cathal Brugha Street in Dublin. He disliked the lectures, but out in hotels as part of his course he was in his element, he says.

He later trained with the Forte group in the UK but returned to Ireland in 2000 to join Choice, working at a Clarion in Dublin's IFSC before later heading to the Morrison.

The hotel, with its John Rocha-designed interior, was a landmark of the heady days of the Celtic Tiger, but the whole economy was sprinting towards a precipice.

Tax breaks had seen hotels built all over the country, some in places that were barely sustainable.

Once domestic spending dried up receivers and examiners began to appointed as banks, and Nama, swooped.

As it turned out, the crash handed O'Neill an opportunity he may not have got otherwise.

Choice Hotel Group was founded and owned by Frankie Whelehan. It was predominantly a lease and management company. It had the lease for the upmarket Gibson Hotel in Dublin's docklands, as well as Clarion properties. At its peak, it operated 24 hotels.

But after the recession hit, Nama was effectively running the show.

"They broke our back on the deal they got," recalls O'Neill.

"They weren't a pushover. They were extremely tough. We got a solution and they got a solution."

Nama receivers put the Clarion in the IFSC up for sale in 2013, which Choice had been managing, they sold it for €33.3m to US-based Patron Capital. Choice had teamed up with a private investor but was outbid.

"They still didn't give it to us even though we'd been running the business," he says.

O'Neill thinks that maybe Nama appointed receivers too quickly early in the downturn, but admits the agency "gave us wiggle room to survive".

"Our saving grace was that all of our lease debt was with Nama. There was no BOSI in the middle [Bank of Scotland (Ireland) - one of the biggest lenders to hotel projects in Ireland during the boom]," he adds. "I don't think we'd have got the same audience if there was another lender in there, or if Nama was afraid that a bank was going to move on us."

With Nama eventually appeased, leases on four properties, including the Gibson and two Clarion-branded hotels, in Limerick and Cork, were sold by Choice to Dalata in 2016 for €40m.

It left the company with a skeleton complement compared to its heyday.

But the deal with Dalata, says O'Neill, left him with a few million in cash, and ambition.

As the recession bit, Frankie Whelehan had been unable to give O'Neill a pay rise, and instead gave him shares in Choice.

"There was no value in them then," O'Neill recalls. "But it became a journey and we worked hand-in-hand on that business."

After the massive reorganisation, Whelehan left and O'Neill injected capital he received from the Dalata deal into Choice. He now owns more than 90pc, with management owning the remainder. He'd like to see them eventually owning 20pc.

"That's there for them, based on them hitting targets, growing the business and treating it like their own," he says.

Choice now has seven hotels. The ambition is to get to 10 by the end of the year, or March next year at latest, according to O'Neill.

"My car is only 10 months old and I've already clocked up 51,000km on it," he adds. "I try to be at every hotel every week. You can't affect them or change them if you're not in them."

Meanwhile, he and his wife Deirdre have other irons in the fire.

On a visit to the United States for a convention, he stumbled upon a coffee brand that he became enamoured with - Fonté.

Founded by its chief executive, Paul Odom in 1992 in Seattle, the coffee roaster now supplies its products to hotel chains including Westin, Four Seasons and Regis.

But when O'Neill tracked Odom down, the American had no interest in exporting the brand. Over drinks watching a rugby match in a north Dublin pub, O'Neill finally got him to crack.

Last year, O'Neill and his wife opened a Fonté shop in Dublin city centre. A coffee chain isn't the objective. The brand is being introduced to the Choice hotels and to offices. The shop is a training centre.

As if he wasn't busy enough, O'Neill spent a good number of years scouting players for Mick McCarthy, the former Ireland player and manager who until recently was the manager of Ipswich. He may have to do a bit of scouting for a successor for his own job too.

Maybe one of his two kids, who already earn some pocket money helping out occasionally, will leave school at 15 and join the business?

"Not a chance," he grins.

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