THE FRIDAY INTERVIEW: Pat McCann, Maldron Hotels:IT'S MID-MORNING in Dublin and the spanking new three-star Maldron Hotel in the docklands is an oasis of calm. Just a handful of people are dotted around its expansive lobby and adjoining bar, a sign perhaps of the changed economic times.
Standing beside the reception desk, veteran hotelier Pat McCann has a welcoming handshake. January will be a quiet month, he admits, with average occupancy rates of 60-65 per cent. Last year it achieved an average of 76 per cent. But he remains upbeat, in spite of the doom and gloom hanging over the economy.
"People tend to think that the world has stopped but it hasn't," he says. "There's still business to be done. Trust me, things go in cycles. Besides, what's the alternative? Don't get out of bed in the morning?"
We meet at the Maldron on Cardiff Lane, just south of the Liffey and almost directly opposite Treasury Holdings' new National Conference Centre, which is due to open in 2010 about the same time as the new Lansdowne Road stadium. "Despite the gloom, there are a few positives happening, particularly for Dublin," he adds. "The new O2 is a very significant event for Dublin and for us. It will host 26 events between now and the end of May. We didn't have that last year."
That's not to say that the recession isn't biting at Maldron, a chain of 11 of what McCann calls "three-star, budget-plus" hotels with 1,500 bedrooms that rebranded last year. Bonuses have been cut, some of its 700 staff have been placed on a three-day week and, like virtually every other business in Ireland, there's no new hiring taking place.
Plans to put some retail on the ground floor of the Cardiff Lane hotel were scrapped in favour of a conference facility that will open in September.
When asked about what impact the recession will have on revenues, McCann licks the index finger on his right hand and pokes it in the air as if measuring the wind. "If I could answer that one...," he says cryptically.
Maldron had turnover last year of €55 million and McCann says he'd be happy to replicate that performance in 2009. Similarly, he'd be chuffed to repeat last year's average room rate of €85.
"We certainly won't grow that. If we can maintain that level we will be doing well. There's no doubt that 2009 and 2010 are going to be two tough years."
Maldron is the new kid on the hotel block in Ireland. McCann was part of a consortium - that included listed investment group TVC Holdings and Davy private clients - that bought out the Quality and Choice hotel chains in August 2007 at a cost of €46.4 million from Paddy Kelly, Frankie Whelehan and members of the McCormack family, who themselves have taken an interest in the new entity.
At the time of the deal, investors were guided that the hotel chain would more than double in value by 2012. This was predicated on an aggressive expansion into the UK and buoyant economies on both sides of the Irish Sea.
Times have changed and its launch into Britain has been delayed.
"The strategy remains intact today but the timing has changed," he concedes. "There are seven or eight sites in the UK where we'd like to open but the ability of the developers to get funding will probably be more difficult. The timing will be slower but we have some great projects if they can get funding," he says.
Those sites are in Belfast, Birmingham, Cardiff, Coventry, Edinburgh, Glasgow, Manchester and Sheffield.
While he waits for those projects to come on stream, McCann has developed a "parallel strategy" that will see the company take on management contracts to run hotels in Ireland. It recently took over the running of the Tower hotel in Tallaght, opposite the new Shamrock Rovers stadium.
"I will certainly have more properties under our management in the next six months, no question about that," he says confidently. "I have probably turned down five hotels already because there isn't sufficient income coming from the property for me to get money and for the property owner to get a return.
"It's a case of not jumping on every log in the river but of choosing carefully."
Many of the hotels that are offered to McCann were built with tax breaks and are dotted across the country. They were products of the Celtic Tiger and the insatiable appetite of developers and investors alike to milk the system for tax breaks.
The result was an explosion in the number of hotels around the State, many in locations that will struggle to support them, especially in a recession.
Indeed, Maldron's Cardiff Lane hotel was built with tax incentives. "I've 86 landlords here," McCann says.
During his time as chief executive of Jurys Doyle hotel group, McCann was often critical of the way these breaks were handed out and the lack of strategic thinking behind hotel development here. What does he think now? "There's no doubt there will be casualties in the business," he says. "There has to be. Even in the good times, the market wasn't there to support some of these properties but there was a kind of euphoria around. It just wasn't going to last."
Maldron, McCann says confidently, is here for the long haul. "We operate in the mid-scale market where you still have lots of activity going on and business still has to be done.
McCann also takes comfort from Maldron's low gearing. Its net debt is just €10 million.
"We have a nice strong balance sheet and it's a matter of taking advantage of other opportunities when they arise. We have a lean and fit business."
McCann personally invested €1 million for a 13 per cent stake in the business. It marked his re-emergence into the world of business after a couple of years kicking his heels following his "retirement" as the boss of Jurys Doyle, where he spent 17 years.
"I had this idyllic notion that I would retire, but me and retirement didn't go well together. In reality, it was never going to be a long-term solution. I wasn't mentally ready for it and I don't think my wife was ready for it either."
Many thought that he might have a run at buying the three-star Jurys Inn chain when it was put on the blocks in 2007. Did he enter the bidding? "No comment," he says with a twinkle in his eye.
Sources at the time suggested that he was advising a UK group but the bidding got too rich for their blood. Derek Quinlan ended up paying €1.165 billion for the inns.
McCann now finds himself in competition with Jurys Inns. "We'd say we sit a notch above them," he says with a cheeky grin.
McCann has no regrets about the timing of the Maldron deal or the sum they paid. "I'm not sure you would get it for a lot less today," he says. "The potential for the business hasn't changed that dramatically."
How much is his €1 million investment worth now? "I have no idea. I wouldn't even attempt to put a valuation on it. We have a five- to seven-year window of return for investors. We can be medium to long-term holders ."
ON THE RECORD
Name:Pat McCann.
Position:Chief executive Maldron Hotels.
Age:57.
Family:Married with three children.
Lives:Foxrock, Dublin.
Hobbies:Loves football, GAA and rugby and enjoys reading.
Something you might expect:He is a season ticket holder with Arsenal FC in London, having bought an apartment at its old Highbury stadium a few years ago.
Something that might surprise:"I have an ambition to drive on Route 66 in America. Bits of it are still there though parts of it have disappeared completely. It's just one of those things I have in my head . . . it's something different."
