Hotel reopens with an emphasis on true quality

Sunday Business Post - New Business Section - Apr 12 2009

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The downturn in the hospitality sector has afforded an unlikely opportunity for two entrepreneurs. For Patrick Dillon and Paul O’Shea, the opportunity to set out on their own came earlier this year, with the closure in January of the Quality Resort Hotel in Killarney, Co Kerry. Dillon was general manager of the hotel, while O’Shea was financial controller.

Following the closure, the pair agreed a lease deal with owner Hepton Developments to take over the majority of rooms, reopening the facility on the Cork Road on April 9. The new hotel will continue to trade as Quality Resort Killarney, offering the same food, beverage and leisure facilities as before, according to Dillon, who is now managing director of the hotel.

Despite its recent failure, Dillon is upbeat about future prospects for the hotel. The business strategy would, he said, be to focus on the Irish market, rather than seeking to attract overseas visitors.

‘‘Our key strategy is to focus on our core market, which is the Irish family holiday market. We are going to be chasing the local market in a big way, whereas before we were part of an international brand. Our strategy is to provide similar facilities as we did previously, but giving extra value,” he said.

Dillon said that the re-opening of the hotel created 60 jobs, while up to 200 positions would come on stream in the high season.

‘‘We had an open day for staff, and advertised online and on the Fás website. A lot of people have been handing CVs in at the front door,” he said.

Under new management, Dillon said the hotel would contribute more than €3 million to the regional economy this year alone.

‘‘This will generate more than €2 million in wages, and another €1 million to mostly local suppliers. Then there is the knock-on effect for bars, restaurants and other businesses around Killarney,” he said.

While Quality Hotel previously operated with a mix of hotel rooms, holiday homes and apartments, Dillon said the new business would operate on a more streamlined basis.

‘‘We are opening with 199 bedrooms, so it is a materially different business to what was there previously,” he said.

O’Shea is finance director of the new operation. He said the move to agree a deal with the hotel’s owners, Hepton Developments, following the collapse of the existing operator Carvanna Properties, was swift and decisive.

‘‘We knew other prospective operators were making proposals, so we said, ‘why not ourselves?’,” he said. ‘‘We believed that we knew the business better than anybody else, we had the figures and we started putting a business plan together. We approached the landlord with what we thought was a viable rent compared to what was being paid before, taking into account that we were not taking some of the rooms.”



Dillon and O’Shea have formed a new management company, Laethanta Saoire, to run the hotel. Dillon owns 75 per cent of the new company, with O’Shea owning the remaining 25 per cent. ‘‘We had to put in a certain amount of money ourselves. The banks were fairly supportive, as we had a realistic business plan. We were not looking for a large loan to redecorate, it was mainly working capital,” he said.

The new company is targeting 40,000 room nights this year. It plans to utilise its database of previous customers to drum up repeat business. ‘‘Forty-five per cent of our customers were repeat customers.

We will be doing a very large mail-shot to all of our past guests, along with general advertising.

‘‘The key message is that we are open again and ready to welcome people back.” Dillon said the hotel would compete on the basis of value for money, rather than offering below-cost room rates. ‘‘We do not want to create a business that is not sustainable. There are a lot of hotels out there, particularly in Dublin, slashing rates,” he said.

‘‘This is great in the short term, but will their businesses survive? A core part of our strategy is giving extra value to our customers so that they return.” Dillon, who has been in the business for 20 years, advised entrepreneurs in the hospitality and tourism sector in Ireland to keep costs down and prices realistic.

‘‘It is a difficult time for all businesses, and the key thing is trying to manage costs. You need to spend every penny you have very wisely. You need to have a realistic business plan and know your market. There is no point doing something one year that cannot be sustained after that. It is about being sensible,” he said.

Dillon said he expected the number of overseas visitors to Ireland to fall this year. He said this would be balanced out by the projected increase in cash strapped Irish holiday-makers opting for locations at home. ‘‘The forecasts are that the overseas market will be back by 8-9 per cent this year. The indications are that the home holiday market will be stronger this year, and that will be great for us,” he said.