Despite the challenges facing the hotel industry in recent years, Pat McCann has ambitious long-term plans for the group. Expanding the company's inns concept is the key, writes Jane O'Sullivan, Markets Correspondent

Three years into his job as chief executive of Ireland's largest hotel operator, Mr Pat McCann has his hands full.

A brief honeymoon period after he took over at the helm of the Jurys Doyle Hotel Group in May 2000 abruptly came to an end with the outbreak of foot-and-mouth disease in early 2001.

Since then, the hotel and leisure industry has faced a number of unprecedented challenges, including the terrorist attacks on the US later that year.

The knock-on effects on the hotel business of the economic slowdown and the threat of war in Iraq are just the latest problems with which Mr McCann has to contend.

Some might call it a baptism of fire but the 51-year-old Sligo man remains unruffled. Even the possibility of war in the Gulf does not totally faze him.

"Jurys Doyle has developed its ability to manage in a very difficult environment. We are not sitting comfortably about it but we can manage whatever the world may throw at us," he says.

The company's recent track record is good. It has weathered the storms in its sector well and has just announced a return to modest profit growth in the first half after two half-year periods of decline.

The hotel group's healthy business mix has served it well. Some 50 to 60 per cent of its business is derived from the corporate market with 25 to 30 per cent coming from tourism and the remainder is accounted for by event-related activities so the group is not entirely reliant on any one sector.

Its geographic spread, with operations in Britain and the US as well as the Republic, has also helped, while the resilience of its inns, the three-star brand that now accounts for more than a third of operating profits, has been a key support for the group.

Undaunted by the short-term difficulties, Mr McCann remains focused on his ambitious long-term plans for the group over the next decade.

"I would dearly love to see it as a major European player and I think it has the capacity and capability to do that," he said.

"We're not going to be a world player over the next 10 years, that's not on, but we can be a very serious European player."

Expanding the company's inns concept is key to the group's plans. First introduced in 1993, Jurys currently has 11 inns in operation in Britain and the Republic and five more in the development stage. Earlier this week, it announced plans for its third Dublin inn, on Parnell Street.

Like its other two inns in the capital, near Christchurch and on Custom House Dock, the new inn is planned for an area undergoing major urban renewal.

But unlike them, it is being financed through a 35-year operating lease, an arrangement the group has used only once before, in developing its Edinburgh inn.

However, operating leases are likely to feature far more in the group's financing plans in the future as it attempts to speed up the roll-out of its inns brand in Britain, a move analysts believe could lead to a re-rating of the Jurys share price.

Mr McCann says Jurys can only build three inns every two years out of its cashflow. It also has the capacity to borrow to fund its inns programme but is reluctant to overstretch its balance sheet.

"Operating leases are an attractive way of getting the inns built in the UK," he says.

Its next inn is due to open in Newcastle in February, with inns in Glasgow, Leeds and Chelsea to follow by spring 2004, while the Parnell Street outlet is set to open in the summer of next year.

But the group's plans do not stop there. It has two full-time staff, backed by external search agencies, constantly scouting for the right locations in the right cities.

Jurys favours downtown locations in cities with good commercial activity, close to access points such as railway stations. According to Mr McCann, there is no shortage of such locations in Britain, a market he knows well after spending nine years in London in the 1970s when he was part of the team that opened the London Ryan Hotel.

"There are 70 locations where we could locate inns. We are not going to put in 70 but it just shows you the extent of the opportunity that exists for us. There are so many good cities like York, Hull, Northampton, Nottingham, Sheffield, Leicester, Southampton, Reading and Swindon."

However, Anfield regulars who have noticed the close correlation between the location of the Jurys inns and UK Premiership soccer teams will be disappointed to learn that Liverpool is not on the list.

Jurys has inns in Manchester, Birmingham and Islington in London, near the Highbury grounds of Mr McCann's favourite team, Arsenal. It is also opening them in Newcastle, Leeds and Chelsea but Liverpool is not yet on the list.

"We have looked at one or two projects there but haven't found any. Some day we will be in Liverpool but it won't be our next announcement. There are other cities that are more suitable at the moment," he says, though he remains coy about naming them.

But Mr McCann's expansion plans don't end with the inns.

Jurys remains on the lookout for opportunities in the four-star hotel sector in Britain while it is also keen to expand in the US. It is looking to add to its hotels in Washington and its planned new hotel in Boston but is also aiming to get a toe-hold in New York.

While the group would love to be in places like Paris, Amsterdam and Brussels, Mr McCann concedes those markets are well served and the cost of entry is high. Instead, when its UK expansion is complete, the group is likely to turn its eyes to central Europe.

"We believe that the Polish, Czech and Hungarian markets will be good markets for our inns brand in particular at some stage in the future," Mr McCann says.

Closer to home, re-development is on the agenda. The group expects to complete plans for re-developing its Cork hotel by May.

"We also want to look at the Ballsbridge/Berkeley Court site and we want to look at the Burlington, where we have a lot of surface car parking and where we can attract greater returns from those sites," he said.

From Bunninadden, a small village in Co Sligo, Mr McCann's entire career has been spent in the hotel business or, as he puts it, "the business of hotels".

"I have always treated them as a business," he says. "One of our shortcomings in Ireland is that we never treated our industry as a business but as an extension of the family home because a lot of the companies involved are small. But that is changing quite dramatically."

He believes Ireland still has a lot to offer in terms of quality as a holiday destination and says he gets aggrieved about some of the negative comments about the tourist industry here, particularly relating to its cost.

"As somebody who travels a lot, both for business and pleasure, I find that sometimes I can't equate to it at all," says Mr McCann, who visits every Jurys property twice a year and embarks on regular investors relations trips in Europe and the US.

He concedes that certain things are cheaper elsewhere, such as eating out, but argues that these are not like-for-like comparisons as VAT rates and labour costs overseas are often lower.

While he is pleased with the way Tourism Ireland is shaping up - "I like its focus on the marketing effort" - the lack of a national conference centre remains a bugbear for him.

"If ever there was a disgrace that's it," he says, noting that many secondary cities in the UK have conference centres. Birmingham's centre is estimated to bring in as much as £100 million sterling (€154 million) to the local economy each year, Mr McCann says.

He also notes that Ireland will host the EU Presidency next year.

"There will be two summits, maybe three, and they are going to have people in marquees down in Dublin Castle, which I think is wrong, whereas if we had a national conference centre we could do it proudly," he says.

The day job and the frequent travel do not leave a lot of time forother pursuits, Mr McCann admits. "I suppose one of things you find about a job like this is that it does devour you but you have to make time to do certain things.

"I love sport, I'm a great spectator of sport. I read a lot and I walk a lot. I like to walk, I think it's good for the soul and good for the mind," he says, as he gets ready to jet off to Edinburgh for yet another round of meetings with investors.

PROFILE

Name:

Pat McCann

Job Title:

Chief executive, Jurys Doyle Hotel Group

Background:

First began working in the hotel business as a fourth-year secondary school student when he took a part-time job in the Yeats Country Hotel at Rosses' Point in Co Sligo

Career:

After his Leaving Cert, he began a three-year hotel training management programme with the Ryan Hotel Group and went on to work for them in various capacities up to general manager for the next 20 years

In 1989, he joined Jurys as general manager of its flagship hotel in Ballsbridge, becoming group general manager three-and-a-half years later. In 1994, he joined the board of Jurys as operations director and in 1999 he was appointed chief executive designate, taking over the top job in May 2000

Why he is in the news:

Earlier this week, Jurys announced plans to open a new 3-star inn on Parnell Street in Dublin and reported a return to profit growth in the first half

Family:

Married to Ann, with three children, Louise, Michael and Sarah