On the back of an eighth acquisition, Sean O’Driscoll from iNua Collection talks to Hotel & Catering Review about the regional hotel industry and why the onus is on hotels to diversify
iNua Collection employs over 1250 people across regional Ireland. That responsibility and commitment to areas outside the capital is something that’s taken very seriously by the group which recently acquired the four-star Tullamore Court Hotel, bringing its already impressive hotel portfolio up to eight.
iNua was set up in 2012 by former banking investor Noel Creedon. His first acquisition was the Radisson Little Island in Cork, quickly followed by the Radisson in Limerick. Sean O’Driscoll, Chief Operating Officer, came on board in 2015 with the purchase of Muckross Park Hotel. The biggest difference between iNua and other hotel groups is, says Sean, its regional focus. “There has been a lot of talk in the industry about Dublin and the need for hotels and that’s certainly true but early on, we recognised that international tourism into Ireland is about seeing the whole country, not just its capital. We identified an opportunity for a regional hotel group and so from the start, we focused on the regions,” said Sean.
In 2018, turnover at iNua totalled €50 million while group occupancy came in at a very healthy 74%. “As a regional hotel group, we’re very strong in food and beverage, meetings and events as well as rooms. We saw €21 million in room revenue last year, €25 million in food and beverage and €5 million in leisure and spa. We’re very much focused on ground floor business at the moment as we know levels of growth in room revenue are set to decrease.” Earlier this year, the group held a conference on innovation within the food and beverage space. As a result, the group has plans in place to roll out coffee lounges across six of its hotels. “We’ve just announced a contract with Java Republic to achieve that. Trends have changed across mainland Europe; people socialise in different ways now and although that change is happening in Ireland that bit slower, it’s still happening. Our coffee lounges will reflect that change. Hotels need to respond to these changes or be left behind.”
An innovation conference, also held recently by the group, threw up more ideas as to how changing consumer needs can be catered to. “That was about finding out what our ground floor staff think, not just management, so we organised innovation teams to brainstorm how we can futureproof our business. We discovered that the trends of what people are eating for lunch have changed dramatically over the past 10 years. Vegan is huge so we’re we’re looking at developing more vegan dishes. Another strong trend is non-alcohol drinks so that’s another area we’re exploring. Kids clubs and a greater range of outdoor activities is also high on the iNua agenda. We’re constantly striving to adapt to these changes and adapt our business.”
The VAT increase and stricter drink driving laws impacted the group’s food and beverage in the first quarter of 2019. “We expect food and beverage to grow by only 1-2% this year. There will be a slowdown and I don’t think it’s just the VAT increase. Changes in drink driving laws are having a fundamental effect on people coming out to watch a match and have a pint in the evenings. I’m also Vice President of the Irish Hotels Federation and I’m hearing about the impact of these regulations all the time.” As a PLC with over 900 rooms, iNua’s size and scale helps when it comes to factors affecting the industry. “However, I think it’s very tough out there for smaller businesses. I’m very concerned about the effect these issues are having in individual cafes and restaurants. I think the drink driving policy happened at the wrong time in terms of Brexit and in light of the current slowdown that’s happening in economies in Germany and mainland Europe.”
A lack of understanding about the relationship between regional Ireland and seasonality has helped create the tenuous situation that so many hotels outside Dublin are facing. “I lobbied a lot of politicians, as did the IHF. There was a huge focus on Dublin and the lack of hotel rooms in the capital but I feel there was a real slowness in getting those rooms built. A lot opened last year and there are more due to open this year but I felt that rural Ireland was being punished on that issue. The tourism sector has been hugely important to the recovery of the country; we created 50,000 jobs and we’ll continue to do so but the change in VAT is going to cause a slowdown in food and beverage and I think it will particularly affect independent restaurants and cafes that don’t have scale. There just wasn’t the will to support the tourism sector despite the fact we’ve proved that we deliver jobs.”
Marketing for regional hotels is key, particularly during the off-season. “When the international numbers slow down in mid-October, there’s a long period until the 1st of May when those visitors start to arrive again. We create a lot of leisure packages and our own events, we have concerts in off season and weddings are of course a huge part of our market. We do about 350 weddings a year across the group.” There are several criteria that need to be met before iNua makes an acquisition; a stable business mix consisting of corporate business, domestic leisure business along with some international business, weddings and strong loyalty in terms of local food and beverage. “We’re not afraid to spend money in our hotels. Over the past three years, we’ve spent €10 million in capex and we’re spending 2.5 million this year on capital projects across our hotels.” In relation to Brexit, Sean is keeping an eye on the situation at the border. “In Sligo and Monaghan in particular, we get a lot of business from Northern Ireland so we’re closely monitoring the effect of Brexit on the border. At the moment, we’re pleased to say that occupancy in both hotels is holding up very well. We’re not really exposed to the UK market but the concern there would be that hotels that do have a lot of UK visitors will feel a downturn and that will create more capacity.”
So what’s next for iNua? ‘We have eight hotels at the moment and we have no set number in mind. It’s about jumping on the right opportunity when it presents itself. We certainly have the appetite to do another deal in 2019.” Although iNua is regionally focused, Sean and the team haven’t ruled out participating in the Dublin market. “We have the expertise to offer consultancy to companies so we’re open to lease or management contracts in Dublin, although we’re not looking to buy there currently.”