'Bad service is what freaks me out'

Some people are affected by a little known neurological condition. We call them hoteliers. A funny breed, their brains are wired differently to most. A normal person walks past a table set for dinner without giving it a thought.

Hoteliers, meanwhile, are obliged by their affliction to stop and straighten the cutlery, obsessively ensuring the bottom of each implement is equidistant to the edge of the table.

No counter top is safe if a hotelier is nearby. They will wipe it to within an inch of its existence. Also, hoteliers don’t simply make beds. They construct them, obsessively folding sheets into geometric patterns so precise that it’s hard to know whether to sleep in the bed or display it at the Tate Modern.

Cork accountant Dermot Crowley has in the past worked for financial firms, make-up makers, car dealers, and in private equity. Last month, he was appointed chief executive-designate of Dalata Hotel Group, the stock market-listed company that is the largest hotel operator in Ireland. That makes him now Ireland's most important hotelier.

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For years, Crowley has developed and closed deals for hotels all over Ireland and the UK for Dalata and, in a prior role, Jurys. But is he an actual hotelier in the neurological sense? Is he a compulsive chair straightener? He certainly looks like one, with his immaculate manners, sharp suit and a tie so straight you could plumbline with it.

“When I go to a hotel with my wife, she says I’m terrible for watching things,” admits Crowley. “Bad service is what freaks me out. The thing I hate the most is when you have to look for the attention of the person serving you. They’re the one supposed to be watching out for you, not the other way round.”

Rather than obsessively straightening cutlery, Crowley says he likes to sit in airports and hotel lobbies and watch how people behave when ordering coffee, or entering a restaurant, or paying a bill.

“You get ideas from it and you learn. I love doing that.” Not classic hotelieritis, but possibly a variant.

Retiring

Towards the end of this year, Crowley will take over from Dalata’s high-profile founder, former Jurys Doyle boss Pat McCann, who is retiring. He was McCann’s deputy chief executive until March, responsible for finance and development at the company which is valued at close to €1 billion.

With 9,261 rooms across 44 hotels in Ireland and Britain and another dozen or so in the pipeline, Dalata is the biggest hotel operator in Ireland and, it says, the fastest-growing in Britain. Its two main brands are Maldron, a mix of three and four stars, and the four-star Clayton, which is more focused on service. Both brands target busy urban areas with a mix of corporate and leisure business.

You would expect the biggest hotel operator to have had the biggest exposure to the wrecking ball that is the pandemic. But Dalata has negotiated the crisis relatively calmly. It raised €94 million from investors last year to fund further expansion in the UK. Dalata still had a cash and overdraft cushion of €272 million in March, a year into the crisis.

“In theory, we have enough resources there to keep us going under the current lockdown conditions until the second quarter of 2023,” says Crowley, adding quickly that he would likely go mad long before then.

Main motivation

Dalata’s main motivation for maintaining such a strong balance sheet is that this goes down well with the big fixed-income investors, such as Germany’s Deka Immobilien, with which it often partners to develop or acquire hotels.

A fund may buy a hotel and give it to Dalata to operate on a long lease. Deka did this at the outset of the pandemic with a €65 million deal for the Clayton Charlemont, which sits beside the landmark Barge pub at the Grand Canal in Dublin, close to Ranelagh. Better relations with the big funds may mean more leases, and Dalata is targeting further growth in the UK and, eventually, in continental Europe.

“We have good relations with those kind of investors. We are the only large hotel company across Europe that has paid all of our rents throughout the crisis, and never threatened not to pay them. There will surely be a dividend from that as we go forward.”

Today, the Clayton Charlemont is almost deserted, ahead of the sector’s planned full reopening, set by the Government for June 2nd. Like most hotel businesses, Dalata will look to domestic tourism to salvage something from 2021, while it waits for corporate and international leisure markets to return.

Dalata owns 29 of the hotels that it operates and leases 12, running another three under management contracts although it is no longer chasing that kind of business.

It has 31 in the Republic, close to the limit of what it can do here. It operates 13 in the UK, the focus of the next stage of its expansion plan. Another 13, mostly in the UK, are at various stages of planning and construction.

Three are under development currently in Dublin, including the Samuel, which will sit within the developer Johnny Ronan's Salesforce headquarters tower in Dublin's docklands. It is slated to open in November. What was it like working with Ronan, a man known to frequent the odd hospitality outlet?

“Fine, no issues. He was anxious that the food and beverage offering at the hotel was at a higher level than what you’d normally get at a Maldron ground floor. We tried to combine that with the Maldron operating model, and decided to create a new brand for it. We named it after the nearby Samuel Beckett bridge.”

He says the brand could come in handy for future projects in London.

It is also planning a new hotel beside Croke Park, which is probably three years away, and construction is well advanced on a Maldron on the site of the old Tara Towers hotel in Dublin’s Booterstown. Dalata would also like to do a hotel in Galway city centre, but that will be broadly be its lot for the Republic.

Hipster hotspot

The UK is worth 25 per cent of its business. This will grow to 50 per cent within the next five or six years, says Crowley. It has five hotels opening there over the next 12 months, in locations such as Glasgow, Manchester and Bristol. It is also building a hotel in the east end of London hipster hotspot, Shoreditch.

“Brexit and Covid have probably narrowed the focus for us a bit in the UK. We will never have enough sites in London but some secondary cities that we thought might have worked before, now we’re saying they’re a bit small for us. I’d have a concern over some places such as Sheffield.”

Dalata sees an opportunity to challenge independent hotels in the UK’s four-star market in the same way that chains such as Premier Inn and Travelodge hit independent budget hotels over the last 20 years.

“About 40 per cent of the four-star properties in the cities we are going into are over 40 years old. Those properties are more expensive to maintain and they often don’t meet the environmental and sustainability standards that corporate clients expect these days.”

The UK is the “prime focus” but Dalata under Crowley is also, in the longer term, targeting lease deals in big European cities: “That takes time and you shouldn’t feel rushed about it.”

It is in Europe, where investors such as Deka own swathes of hotels, that Crowley is betting its relationships with such institutions could really pay off. He name checks potential locations such as Amsterdam, Brussels, Madrid and several cities in Germany.

Does he feel under pressure to spend the firepower on its balance sheet? “I never feel pressure to spend money because that’s when you make bad decisions.”

Crowley was drafted into hotels only later in his career. The son of a Cork motor factor, he studied commerce at University College Cork, before training as an accountant at a firm that later became part of PricewaterhouseCoopers.

He moved to London with his wife in the early 1990s, finding a job as a financial analyst with brands behemoth Proctor & Gamble, which later employed Paschal Donohoe, the Minister for Finance. One of Crowley’s roles with the firm was as a financial analyst for P&G’s make-up brand Max Factor.

“It was popular with women my mother’s age. I once got stopped in the airport on the way back from London. I had 10 lipsticks in my bag that I was after buying for her in the staff shop.”

The lipsticks showed up on a scanner in the shape of bullets: “They pulled me into a room and took out all these lipsticks. I said they’re for my mother!”

He returned to Ireland for a three-year stint as financial controller of the Shelbourne hotel in Dublin, where he also did occasional duty management shifts and “got bitten by the hotel bug”. Between 1998 and 2000, he was finance director for Bill Cullen’s Glencullen motors group.

“Bill’s a very nice man, a very generous man. But it was very different because he’s very entrepreneurial.”

Eccentric

That sounds like code for eccentric. Was it his job to deliver bad news to Cullen? “Yes, it probably was,” he laughs.

In 2000, he moved to the Jurys hotel group, where McCann was then managing director. Crowley, along with Shane Casserly (who is now Dalata's development director), spearheaded the rollout of the Jurys Inn hotel concept devised by McCann and Peter Malone, who was McCann's predecessor.

While at Jurys, Crowley oversaw the sale of the group's Ballsbridge hotel to Sean Dunne in 2005 for €258 million, which proved to be one of the high watermarks of the Celtic Tiger property bubble.

“I did that deal directly across the table from Dunne. I’m big into Cork GAA (he also assists with underage players at Kilmacud Crokes in Dublin) and that weekend that he was named preferred bidder, Cork were playing Waterford in the All-Ireland hurling quarter final.

“We worked all through the Saturday trying to finalise the deal. Then I told him ‘I’m not available from 11am-6pm Sunday’. He said: ‘What do you mean you’re not available?’ I said: ‘I’m going to Croke Park and that’s it. So we need to get an agreement by 11.’ ”

After a six-year stint in private equity with Ion Equity, during which he worked with Topaz and also Pillo Hotels, Crowley met his old mucker and neighbour McCann one day for a pint in the Leopardstown Inn, and agreed to join Dalata, which McCann had founded in 2007. They saw an opportunity to snap up assets in the wake of the crash and quickly build a hotel company of scale. It floated on the stock market in 2014.

“From then on, the idea was to buy as many distressed assets as we could. There was a window of opportunity that would only last so long.” Dalata is still growing.

It is likely to be 2023 or 2024 before the sector fully recovers from the pandemic and, even then, Crowley says consumer behaviour may differ somewhat from how it was before. But essentially, he believes, people will always want to travel and stay in hotels, and corporate travel will bounce back because people are “sick of Zoom”.

International travel

Any return of international travel will see an immediate bounce in the moribund Dublin market, he says. And Dalata’s regional hotels are set for a busy summer with domestic holidaymakers.

The group was among the bidders recently for the State’s mandatory hotel quarantines (MHQ) contract for isolating incoming travellers from many countries. It only wanted to do the hotel component of the contract, preferring to leave security and transport to others. The Government wanted a single operator for the lot, so the contract went to Tifco instead.

“MHQ is a tough one. We’re used to taking care of people who want to stay with us. You have to change your whole way of service for MHQ because people arrive and they don’t want to stay with you, understandably.”

Towards the end of the conversation, just as Crowley is contemplating how the handover from McCann will pan out, there is a knock at the door. Speak of the devil. It is McCann, avuncular as ever. He confirms his last day at Dalata will be Christmas Eve, when he intends to operate the switchboard, as he does every year on that day.

He also brings Crowley the good news that Liverpool football club manager Jurgen Klopp left chocolates for the staff at the group’s Clayton property in Birmingham after the team stayed there following a recent match against West Bromwich Albion.

Crowley is a huge Liverpool fan. Merseyside is listed on Dalata’s development plan for a new 260-bedroom Maldron hotel. Crowley will surely enjoy the opening of that one, whenever it happens. Perhaps he will even try to speed it up. There must be some fringe benefits to taking over the top job.