Sean O’Driscoll, Director of Hotels for CLISTE HOSPITALITY talks to Ciaran Hancock of the Irish Times about navigating the Hotel Sector
‘The reason Aerial House attracted us was its great reputation.’ Sean O’Driscoll of Cliste Hospitality at the steps of the Ballsbridge hotel. Photograph: Alan Betson
The property is managed by Cliste on behalf of the proprietor, Jennie McKeown and her family, who own Kilsaran concrete. “Jennie would have asked us coming out of Covid to look after the management of it,” says O’Driscoll.
“We’ve done a lot of refurbishment in the property in the past year, and we’ll be doing more rooms this winter. The reason Ariel House attracted us was its great reputation. It’s among the top locations in Dublin to stay, great address, a great location … trading well … with really strong occupancy.”
O’Driscoll says hotels are still enjoying strong post-Covid trade. “At the moment, everywhere is doing well. We had occupancies of 90 per cent-plus during the summer months.”
But he adds a note of caution, given that the State or local authorities are holding about 15 per cent of the available bedroom stock across the country for refugees and homeless people. “It’s not spread evenly across the country,” he says. “When I saw the figures for quarter one, 50 per cent of tourism beds in Donegal were under contract [to the State], 40 per cent in Clare and 40 per cent in Sligo.
Sean O’Driscoll on the VAT increase: ‘We’ve absorbed some of that. We are conscious of food prices.’ Photograph: Alan Betson
“We need to be conscious of the long-term effects that has on tourism. There’s travel agents and tour operators that used to book Ireland year in, year out. They can’t get capacity. They may not come back. And it will have long-term effects for tourism, where we may lose those some of those contracts.
“Equally, I feel for the bar, restaurant, cafe providers and attractions because you have a situation where you have 50 per cent fewer tourists in Donegal. So they’re all going to feel that impact. I feel the Government are out of touch on that issue.
“I’m originally from Youghal, Co Cork. There are two hotels under contract there, which means there’s no tourists coming to the town. That has a big impact on the small businesses, on the main street, the gift shops, the cafes, the restaurants.”
At the end of August, the Government allowed the special 9 per cent VAT rate (reintroduced during Covid) for hospitality to expire and return to 13.5 per cent, much to the chagrin of the industry. O’Driscoll accepts that hotels are doing well at the minute but describes it as a “hammer blow” to a lot of small businesses in hospitality, who will also have to cope with a likely 12 per cent rise next year in the minimum wage next year.
Has Cliste passed on the VAT increase? “We’ve absorbed some of that. We are conscious of food prices. We’ve very loyal food and beverage customers in the hotels that come in day in, day out. So we’re trying balance it by absorbing half of it and passing on half of it by trying to get better deals, by looking at our menus and what items we’re using.”
Unless you’ve been paying very close attention to the hospitality sector, you’ve probably never heard of Cliste but you will recognise the individual property brands. O’Driscoll and his business partner, Paul Fitzgerald, own Cliste between them and it directly employs 55 staff who work across revenue management, marketing, digital marketing and operations.
Ariel House is one of 19 venues that form part of its portfolio, some of them owned by a related entity, Inua plc, and some under management contracts. Others include the five-star Muckross Park Hotel & Spa in Killarney (previously owned by Bill Cullen and Jackie Lavin and where O’Driscoll served six years there as general manager), to the Radisson Blu properties in Athlone, Cork, Limerick and Sligo, the Tullamore Court in Offaly, the Gateway in Dundalk, and the Big Tree pub near Croke Park in Dublin.
There are eight hotels owned by Inua plc and between them they generated €65 million in revenue in 2022. This year O’Driscoll expects 10 per cent growth to bring the figure to €71 million, with Ebitda (earnings before interest, tax, depreciation and amortisation) of €11 million-€12 million.
Add in the other properties and the revenue figure is likely to hit €100 million this year. It employs 1,600 staff. He says Covid cost the business about €70 million in lost revenue and €20 million in Ebitda.
The average net room rate (after breakfast and VAT) will be about €131 per night for its eight owned hotels this year, O’Driscoll says.
On a positive note, the energy bills across those eight owned hotels has come down by 20-30 per cent from the peak of last year, when the cost hit €4 million, double the pre-Covid level. “Hopefully we’ll finish somewhere between €3 million-€3.2 million,” he says.
From an island of Ireland point of view, I think 20-25 hotels would be the ambition. Places like Galway have escaped us. Very little has come on the market there in the last 10 years — O’Driscoll on Cliste’s plans
He says food price inflation was running at about 15 per cent in the first half of the year while labour costs are 10 per cent higher. A 12 per cent rise in the minimum wage slated for January will put further pressure on payroll costs. “You have to be conscious that when the minimum wage goes up, everyone’s rate goes up.”
To help keep a lid on costs, the company has developed online check-in, “buffets are back at breakfast” post Covid, and it is looking at ordering apps for some of its food and beverage outlets.
“That won’t work in every property. There are certain venues where it’s about convenience, and corporate guests want to know its 40 minutes for lunch, but you won’t see that if you go to Muckross Park in Killarney.”
O’Driscoll is hoping to add another couple of properties to the portfolio in the near term, with a deal close on one that would involve the group jointly owning the venue with a fund (the Warren Private family office).
“We will definitely have 14 hotels going in to Christmas,” he says.
One property that he insists Cliste won’t be involved in acquiring is the five-star Park Hotel in Kenmare, which is being sold by the Brennan brothers. “No. I’d be a good friend of Francis Brennan all right. But no, we’re very happy with our five-star hotel in Killarney.”
Cliste was an offshoot of iNUA hotels, which was founded by Noel Creedon in 2013. O’Driscoll joined the business two years later and with pension money from small “mom and pop” investors, eight properties were purchased by iNUA. O’Driscoll and Fitzgerald did a buyout of the management operation, named it Cliste and have gone on to establish it as a platform for managing hospitality venues on behalf of various owners.
“We would have made more progress only for the two years of Covid when we decided to bed down and concentrate on the hotel assets we had,” he says.
It’s the variety of the job. No two days look the same. Every hotel is different. The first hotel I worked in was like a family. It was a lovely atmosphere — O’Driscoll on the appeal of hospitality
O’Driscoll is one of four children. His father worked in Cobh, Co Cork, for Irish Fertiliser, “which is long gone”, while his mother worked in the home.
He started his career in the Walter Raleigh hotel in Youghal at 15, collecting glasses and slowly catching the bug for hospitality. “I moved up to work behind the bar and really enjoyed it.”
He chose hotel management in Galway, spending a year as part of the course working at the Intercontinental hotel in Geneva. “I really enjoyed that. The Swiss have a long history of hospitality and I learned a lot over there.”
He graduated and returned to Ireland to work for the then Great Southern Hotel group (owned at the time by Aer Rianta, with 11 hotels), where he worked at its properties at Dublin Airport; and in Galway; and Parknasilla, Co Kerry.
In 2004, he moved to the new four-star Brehon Hotel in Killarney as deputy manager. Within a couple months he found himself promoted to the top job after the general manager left.
“I was 24 years of age… and ended up as general manager there for seven years. There was such a shortage of staff in the industry [at the time] that it was easy to move up the ranks quite quickly. For me, it was probably too much pressure to have as a as a 24-year-old. I learned on the job. When mentoring final-year students now, I’d advise them to enjoy life for a couple of years before taking on the big job.”
In 2011, at the height of the State’s EU/IMF bailout and with the economy in a slump, he was approached to run the Muckross Park in Killarney, then owned by Cullen and Lavin. It later went into receivership before being acquired by iNUA.
“We kept the doors open, we kept everyone working… people who worked in Muckross Park for a long time and relied on it for their income and built the business up.”
From there he went to work for Creedon in iNUA before the management buyout that created Cliste.
Why a career in hospitality, which can be tough with unsocial hours?
“It’s the variety of the job. No two days look the same. Every hotel is different. The first hotel I worked in was like a family. It was a lovely atmosphere. Everyone loved to come in into work, everyone was happy to be there. It’s just a nice environment. It doesn’t feel like hard work a lot of days.”
Despite the headwinds facing hospitality right now, O’Driscoll remains confident about the outlook. “The Irish economy is strong right now. At the moment, there’s nothing to concern us about 2024. It’s looking exceptionally strong.”
How big can Cliste become?
“From an island of Ireland point of view, I think 20-25 hotels would be the ambition. Over the next three or four years, we’re working to do more in Dublin, working to go into Northern Ireland while places like Galway have still escaped us. Very little has come on the market there in the last 10 years. We do still have areas of the country where we would like to have more of a presence. We’ve built a big hospitality team at group level to allow us to take the opportunities.”
CV
Name Sean O’Driscoll
Job Chief executive of iNua Hospitality Plc and director of hotels with Cliste Hospitality
Age 43
Lives Douglas, Cork
Family Wife Marie O’Driscoll and two cocker spaniels.
Hobbies Travel, walking the dogs and all types of music.
Leadership style “I am ambitious and really passionate about what I do. Tourism has its ups and downs – I believe I am pragmatic, decisive, and resilient. I spend a lot of my time as a leader developing and empowering the team.”
Something you might expect He began working in hotels aged 15 collecting glasses and working in a cloak room.
Something that might surprise you “I took my first hotel general manager role at the 125-bedroom Brehon Hotel, Killarney, just before my 25th birthday.”
