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Cliste: Maybe they’re just smarter than the average hospitality group

Cliste Hospitality boss Paul Fitzpatrick is chasing further acquisitions of four-star and five-star hotels

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Paul Fitzgerald is actively seeking new assets for domestic and UK investors. Picture by David Creedon/Anzenberger

Paul Fitzgerald is actively seeking new assets for domestic and UK investors. Picture by David Creedon/Anzenberger

Paul Fitzgerald

Paul Fitzgerald

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Paul Fitzgerald is actively seeking new assets for domestic and UK investors. Picture by David Creedon/Anzenberger

At the Radisson Blu Hotel & Spa on the outskirts of Limerick City on Monday – almost two years to the day when Covid was first detected in Ireland – Paul Fitzgerald was getting accustomed to not wearing a facemask for a two-day gathering of general managers and senior teams from Cliste Hospitality’s hotels.

It was not just the mask mandate for indoor hospitality and retail that was lifted last Monday; so too was the mood at the Radisson Blu, one of four that Cliste – Irish for ‘clever’ – owns and manages.

Fitzgerald, who runs and owns Cliste Hospitality with industry veteran Sean O’Driscoll, was looking forward to meeting 190 senior staff and management on Tuesday at the company’s first in-person management conference in two years.

This would have been unimaginable ten months ago, when the hotel was being used as a vaccination centre. But after Omicron led to a surge in infections and a grim Christmas for the hospitality industry, the ten hotels under Cliste management are now enjoying a bounce in demand.

They’re now looking forward to the new double bank holiday to celebrate St Patrick’s Day – traditionally the start of the tourism season.

“For the first two weeks after Micheál Martin announced the end of restrictions, people didn’t really know what to do,” says Fitzgerald.

“But in the last two to three weeks, we’ve seen a big difference. Our reservation teams are noticing a real pickup. The real line in the sand for people is the two bank holidays for Paddy’s weekend, and a lot of people are booking from that time onward.

“The real demand drivers are weddings, family events, girlie catch-ups, lads’ catch-ups – all those events that just hadn’t happened.”

Cliste was formed out of the limited liability entity that traded as the iNua Partnership – an asset manager set up in 2012 to capitalise on investment opportunities in the aftermath of the global financial crisis, when “the mantra was ‘never waste a good recession’”, Fitzgerald says.

A decade on, Cliste, Ireland’s newest hospitality management and consultancy company, is using another crisis – the pandemic – to chase acquisitions of four-star and five-star hotels, and ramping up its expansion.

“There are challenges in the industry,” says 46-year-old Fitzgerald. “There’s the war for talent and the challenges with recruitment and retention. There’s significant cost base inflation – and the war in Ukraine has certainly augmented that in terms of energy costs.

“But the overall sentiment in the market is good, and there is significant investor appetite to get back into the sector.

“We feel Cliste is really well positioned to meet that moment in terms of winning management contract business, helping investors to locate and acquire hotels, and carving out smaller, bespoke boutique opportunities in the pub and restaurant space.”

Cliste owns eight of the 10 hotels it manages, including the Radisson Blu hotels in Limerick, Cork, Sligo and Athlone, the five-star Muckross Park Hotel in Killarney, Kilkenny’s Hibernian Hotel, the Tullamore Court in Offaly, and the Hillgrove Hotel & Spa in Monaghan town.

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It manages the Fairways Hotel in Dundalk, the new Dublin One hotel in central Dublin, and is poised to announce an 11th hotel management contract soon in regional Ireland.

Collectively, Cliste’s properties employ around 1,300 people and include 21 bars and restaurants, seven convention centres, six leisure centres and four Elemis spas.

It plans to double its hospitality portfolio to 20 properties over the next two and a half years by purchasing regional assets on behalf of Irish high-net worth investors, acquiring Dublin assets for UK private equity firms, and by securing more hotel management contracts.

Cliste manages The Big Tree, the iconic Dublin pub on the corner of Dorset Street Lower and the North Circular Road that reopened last month after refurbishment, and Dublin One, a new 163-bed hotel that incorporates the pub. The properties were developed by the Dublin Loft Company and sold to an MM Capital and RoundShield joint venture in October. 

“It was our first Dublin property, as we were conscious that there was a real regional bias to the hotel portfolios we were managing,” he says. 

 

The Cliste CEO grew up in a working-class family in Turner’s Cross in Cork City and went to Coláiste Chríost Rí, the same all-boys school that the Taoiseach once attended.

“It’s a massive GAA school – particularly football – and the walls are very much adorned with GAA heroes,” he says. “I never had the skills to make that wall, so I leaned towards accountancy and business.”

After studying commerce at UCC, Fitzgerald joined PwC during its annual milkround and trained to become a chartered accountant.

“I got fantastic experience at PwC, across multinationals down to the SME sector, and from the pharma industry to FMCG [fast-moving consumer goods],” he says. “I got to spend time on secondments in Dublin and London.”

But Fitzgerald didn’t envision a career in practice and clinched a job as a financial accountant with the Keary Motor Group in Cork. Afterwards, he spent more than a decade at the Barry Group, a Mallow-based wholesale distributor and owner of the Costcutter and Carry Out franchises, and worked his way up the ladder to become chief financial officer.

In 2017, Fitzgerald received a call “completely out of the blue” from a mutual acquaintance of Noel Creedon, the founder of iNua Partnership, which managed the iNua Collection of hotels, because “the business was in need of bolstering at executive level”.

Later that year, he met O’Driscoll – then iNua Hospitality’s group general manager and a former GM of the Muckross Park and Brehon hotels in Killarney.

“The two of us began to build out the infrastructure required to manage what were at that stage six hotel assets – across revenue management, HR, finance, operations, IT, lean process, online, menu engineering, and food and beverage,” Fitzgerald says.

“We were really moving away from dry asset management into a proper de facto hospitality management company.”

But the founder of Cliste Consultants – the entity behind iNua – didn’t want “to be welded to an all-singing, all-dancing hospitality management company and he wanted to go off and pursue other interests”.

So Fitzgerald and O’Driscoll hatched a plan for an amicable management buyout of iNua’s hospitality management platform, financing the transaction in late 2019 with their own equity and a loan note from a group of high-net-worth individuals.

The pair had intended to rebrand the business to Cliste Hospitality in the spring of 2020. But the pandemic, and the onslaught it wreaked on the hospitality industry, postponed the rebranding by a year.

“We had to wrap up everything in cotton wool and park it because we felt it wasn’t a good time to be launching a hospitality management brand,” says Fitzgerald.

Now that the industry is back on track, Cliste Hospitality is actively seeking new assets for domestic and UK investors. It was one of the underbidders on the four-star Killashee Hotel in Co Kildare, which ultimately sold last month to FBD Hotels & Resorts for about €25m.

Fitzgerald says hotels have not been selling at significant discounts, despite expectations from private-equity firms that this would be the case during the pandemic.

He points to the sale in May of Dublin’s Morrison Hotel to London-based private-equity firm Zetland Capital for a reported €65m, and the sale of the Moxy Dublin City Hotel to the MHL Hotel Collection for about €35m.

However, he believes more family-owned hotels will go on the market.

“The vast majority of hotel stock in Ireland is trapped in family ownership, and a lot of those hotels are single hotel operators – so they don’t have the safety net of a group structure and infrastructure,” Fitzgerald says.

“They, like the rest of the industry, have had a fairly traumatic couple of years. They then will have your typical family ownership problems in terms of how you transfer the hotel asset to the next generation.  

“We think the equilibrium in the hospitality market hasn’t been reached yet. The key metrics across the industry for 2021 are very distorted, particularly from an average daily rate (ADR) perspective, which is inflated given that the industry was really only open for six to seven months and that it was really only leisure that drove demand.

“Once the wage subsidy and supports fall away at the end of this quarter, and ADR and occupancy levels start to come back into equilibrium, I think the market will start to take that pregnant pause and figure out where it’s going.

“Our sense is that when that equilibrium does hit, and hoteliers start modelling up their business plans and budgets for the next few years – without government supports and with wage inflation and cost inflation – they may have a decision to make.

“There’s also a pronounced risk that they will be unable to operate at full capacity, because if you don’t have housekeepers or food and beverage staff, you’re not going to be able to meet the demand that will slowly return to pre-pandemic levels.

“Pre-pandemic, the majority of these hotels were traded on an off-market basis – because families want the comfort that it’s not going to be making newspaper headlines – which is what Cliste does well. 

“We can be that friendly face for hotels that are in family ownership and are looking for a way out.”

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Paul Fitzgerald

Paul Fitzgerald

Paul Fitzgerald

Curriculum Vitae

Name: Paul Fitzgerald

Age: 46

Position: CEO and co-owner of Cliste Hospitality

Lives: Ballyclough, North Co Cork

Family: Married to Emer for 13 years, with three children Katie (10), James (8), and Hannah (6)

Education: Coláiste Chríost Rí in Cork City, then to UCC for a BComm. Qualified as a chartered accountant via PwC

Favourite podcast: “To zone out, I like listening to ‘Conan O’Brien Needs a Friend’, and to inform myself, I listen to ‘Full Disclosure’ with James O’Brien.”

Hobbies: “I have a mild obsession with 1970s rock music, particularly Queen and Led Zeppelin. I tend to collect very expensive vinyl records from that era – and I sometimes have to smuggle them into my house because I’m afraid my wife will ask me how much they cost. I’m also involved with coaching local GAA and soccer teams.”

Business lessons

What would you tell anyone looking to enter the hotel industry right now?

“You have to expect the unexpected. What they don’t teach you in hospitality college is that paradigms can change outside your control.

"The hospitality sector dealt with foot-and-mouth disease in the early noughties, with a global financial crisis when the vast majority of hotel stock went into receivership, with the collapse of the Irish banking sector. It dealt with Brexit and then faced the Covid pandemic.

"But the Irish hospitality sector is resilient. Despite all of those crises, it still comes up for air – and it’s now hopefully well positioned to deal with a post-pandemic uplift.”


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