'My parents would rent out our house and we'd move into a caravan' - Armada Hotel owner John Burke on conquering Everest and financial pressures
Armada Hotel owner John Burke conquered Everest and financial pressures, he tells Fearghal O'Connor
Struggling up Mount Everest, west Clare hotelier John Burke knew he couldn't go on and collapsed in a heap.
Above him loomed the summit - one of his two big goals in life. The other goal - the continued success of the hotel his family had built back home on the rocky Spanish Point shoreline - had brought its own anguish in the months before.
Two years on, walking around the Armada Hotel on a beautiful Spring morning, he tells both stories as if they were the same challenge to overcome. He exudes confident pride as he walks into the hotel's main function room, which looks out on two sides at huge Atlantic breakers and which regularly hosts weddings for well over 300 guests.
It is now one of the most popular wedding venues in the west of Ireland. Since 2013 the turnover of the business has consistently grown by 10pc to 12pc a year and will be close to €8m this year.
"The views, the food, the customer care, the creativity of our product is driving it on. We'd a great year last year and this year is super again," says Burke.
Back in May 2017 Burke - who is married to actress and Dancing With The Stars finalist Aoibhin Garrihy - had pushed himself step by step up Mount Everest in a state of pure exhaustion, driven on by the thought that if he could endure the stress the hotel had thrown at him over the previous two years then he was not going to let the mountain beat him.
In 1968 his father, Johnny, had bought an old shebeen on a site that had the remnants of a spa resort built in 1808 for the British gentry.
"My Dad loved the business. He worked in the clothes labels factory in Milltown Malbay and everything he earned there he spent on this place."
Cycling furiously between the factory and his shebeen Burke senior would come skidding to a halt using just his feet. "Jesus, Johnny would you just fix your brakes," the locals would laugh at him.
"I'm saving my money," he would answer. "Wait till you see, I'll own a hotel someday."
Over the following 30 years Burke's parents extended when they could, added live music and then discos. "The disco kept the doors open, but it was very tough work," says John.
The family lived overhead and gave up their beds when guests wanted to stay.
"My parents eventually built a house up the road but during the summer we'd rent out the house and move into a caravan."
By the time Burke headed off to study hotel management in Shannon his father was already confiding in him with him the details of the business. "One wedding a month will keep the bank off our backs," his father told him after adding a banqueting suite and new bedrooms in the mid-1990s.
When Burke qualified he worked first with Sheraton in Brussels and Forte in London. But he came back home to get involved in the family business - alongside his two sisters - in 1999.
"Things needed to move to the next level and by 2001 the focus was on becoming more of a hotel than a nightclub, which was closing. We built a 61-bedroom hotel with a new, modern banqueting facility. But it meant taking on a lot of debt and there was only so long my parents could put in the hours we were putting in. They needed to see some light at the end of the tunnel. It was time for me to step up to the plate."
So in 2001 Burke took over the reins. By 2008 the Armada had gone from a wedding a month to a wedding a week.
"Spanish Point has a nice name, but it is not a destination like Clifden or Dingle or Doolin or Killarney. We really had to sell it."
But when Burke's father sadly passed away in 2006 things were going well with the business.
"I remember talking to him about the figures more or less on his deathbed. It might seem strange that these were some of our parting words, but I wanted to let him know that what he had built and started was really strong and in a really good position. Things were on a high, but if he had lived longer there were definitely more difficult days to come."
The following year Burke made the decision to bring the Armada up to four-star hotel standard, its biggest transformation to date and a €3.5m investment. Just as the wider economy was about to go into freefall. "The loans for the work were approved in 2007 when things were still good, but the timing was great and horrible in equal measure. If I hadn't got the money when I did I wouldn't have got it later. It meant that going into the recession the hotel was in pristine condition, as good as it could have been. It felt like a new hotel."
The downside, of course, was that Burke was loaded up with debt: €8m in total. "For a hotel in west Clare it was hair-raising. Our valuation at the time was probably €1.5m to €2m, so I was at least four times over in terms of debt-to-equity."
All around the country hotels were going wallop. As many as 30pc of hotel rooms nationwide ended up going into Nama by 2011, says Burke. But the Armada was not one of them.
"The turnover here never dropped. Since I started here in 1999 - and long before that - our turnover has never dropped in a year and it continued to grow even during the recession."
But to keep down prices to attract price-sensitive guests Burke had to run an extremely tight ship at the Armada. He had no personal mortgage, so was able to stop paying himself a salary for a few years. Every cost was managed in minute detail.
"Lights were only on if they needed to be on. If a boiler was left on overnight there were follow-ups to see who had left it on. The carvery had to be switched off 20 minutes before it ended because I knew it would stay hot."
The penny-pinching worked, bank repayments were met monthly and the hotel doors stayed open.
"All it had to do was support itself. I didn't have investors to support. I was on a good repayment schedule with the bank that was manageable because the turnover was growing. I never missed a repayment. It was my Dad's ethos: every penny you borrow you pay back."
But he was to soon find out that the business's good track record would count for nothing and he was about to face by far his most difficult time. As recession began to turn to recovery for the economy in 2015, the Armada's interest rates were "very keen".
"Too keen for the bank," he says. "We had been 'top of the class' with the bank right through the recession, but when things started to improve across the board, there was a lot of pressure to restructure loans into new packages with 2pc or 3pc interest rate increases and refinance when it wasn't necessary."
Burke felt that he was being unfairly treated as a hostile borrower. "I'd been involved way back in the disco days in breaking up brawls in the car park... but nothing compared to the stress of 2015 and 2016," he says. "There were meetings, reviews, external advisers, take-it-or-leave-it loan offers ... at every twist and turn a little bit more pressure came on. They would say 'this needs to be done to secure the future of the business' when actually the future of the business had never been as bright."
The situation with the bank overwhelmed him and impacted every facet of his life: "It was having consequences on me and I was really feeling the stress of it. I wasn't able to sleep at night, my diet was gone, my relationships with people around me were gone, everything was affected. Medically, it was safe to say I was suffering from anxiety."
He had taken up mountaineering in 2007 and had been working hard for a decade towards his dream to climb Everest. But all of that fell aside as the stress of the business took its toll. There was tragedy in the family too. His brother-in-law took his own life and it too had a big impact on Burke.
In the early days of running the hotel for his parents he had lived upstairs in a converted storeroom. With pressure mounting over the loan situation he started sleeping more and more in the Armada, never escaping to catch breath.
"I became a workaholic and was back to 80-hour weeks, living, eating, sleeping and breathing the place."
Eventually the bank - which he declines to name - presented him with an ultimatum to restructure. "My financial adviser was clear. 'John, this is wrong, you shouldn't be signing this and you shouldn't be restructuring loans, but have you deep enough pockets to battle this?'"
Burke signed the papers and once he had he began to move on with his life. The hotel continued to grow and within a year a different bank - Bank of Ireland - agreed to refinance the loans.
"It went from a dark period to one of the most fulfilling moments of my career. I now have a very supportive, positive relationship with Bank of Ireland. They have a hotel industry expert who comes and meets us on site, who understands our needs and gives us real solid advice," he says.
As work stresses began to lift, Burke took hold of his personal stresses too. He got back into mountaineering and worked hard to fulfil his Everest ambition. By May 2017 he was on the mountain, but his struggle to acclimatise to the altitude had turned the adventure into a nightmare. "My body let me down," he says. After a tortuous struggle for Burke, his climbing group was heading for the third of four camps on the mountain. After lagging behind the previous day he had begun that day's climbing by forcing himself to stay out in front. That lasted about 300m.
"I fell on the ground absolutely distraught because I wasn't able for it. My legs were completely dead and the lads were passing me one by one."
But as the last Sherpa passed him he leaned over and whispered in his ear: "One step at a time."
"I had been too focused on the summit of the mountain way up above me. I needed to break it down into mini-goals - 50 metres, 100 metres. Eventually, step-by-step, I reached the summit."
It was, he says, a lesson he took with him from the mountain to use in his life and business.
At the Armada, an extensive investment programme is under way, with €3m invested from cash resources. Two-thirds of its 86 rooms have been completely modernised. A further €2m investment will complete the rest and add a new brasserie-style casual dining restaurant by early next year. A spa will follow in 2022.
"These days people want a more casual buzzing environment. The formalities are disappearing, which suits us perfectly. It's less about 'Good evening, sir or madam, how was your day?' and more about 'What's the craic? How did you get on today?' That's part of our positioning. People come to west Clare for personality and that is what we want to create."
When Burke finally told his previous bank of the new refinancing deal that would allow him to move his account to a new bank and continue with his ambitious plans for the hotel, a group of relationship managers were quick to show up in Spanish Point. Previously Burke had always been summoned to Dublin for meetings.
"They had never shown an interest before in coming on site and our relationship manager had changed four times in two years," he says.
It was a testy meeting. But at the very end the mood lifted when one of the bank officials congratulated him on his recent Everest climb.
"I have to thank you," said Burke. "Your bank was a big part of my success on Everest," he told them. Before heading to Everest a sports psychologist had advised him he would need one word as a mantra for when he needed to dig deep.
Burke wrote the letter E - for 'endure' - on his climbing glove: "If I could endure the difficult times your bank put me through then I knew I could climb Everest," he told the bemused official, as he felt the pressures of the world lift off his shoulders.
Name: John Burke
Position: Proprietor, The Armada Hotel
Family: Married to actress and Dancing With The Stars finalist Aoibhin Garrihy. Their daughter, Hanorah, was born last year.
Education: St Flannan's College, Ennis & Shannon College of Hotel Management
Favourite book: Tom Crean: Unsung Hero by Michael Smith
Favourite movie: Life is Beautiful
Favourite holiday destination: Dingle, Co Kerry
What is the best advice you have ever received?
Take things one step at a time.
What advice would you give a business person starting out?
Be really sure of your brand and what you stand for, in terms of your product and the people you have around you.
Your wife Aoibhin has a high-profile career. Does she get involved in the hotel business?
She is a great adviser, but we try not to work together too much. We are both very intense people when it comes to work, so we help each other out. However, we also like to have stuff to talk about at home which is not necessarily work-related, which is good because work is such a big part of our lives.
She is incredibly hard-working and has a lot going on in terms of her own career, but she does help out a lot here as a creative adviser. With her arts background she has that incredibly creative streak. Her family are from west Clare, so she really understands how we should be positioning ourselves.
In terms of decisions about future developments — such as our brasserie restaurant and our spa — I could have no greater sounding board than Aoibhin.
Sunday Indo Business