Hotelier relishes new lease of life after crash wiped him out
After five years on the ropes, the poster boy of the boom years in Irish hotel industry is ready to rumble again
Frankie Whelehan: “World domination, for the moment, is off the agenda. We’ve got a second chance of life here and we’re going to make sure we hold on.”
Just two weeks ago his Choice Hotel Group was given the nod on a restructuring plan, essentially from the National Asset Management Agency, that could give it a new lease of life.
Cork-based Whelehan was a poster boy of the boom years in the Irish hotel industry, which mushroomed thanks to government tax breaks and frenzied building by developers.
The crash in 2008 wiped out his wealth and left him with debts to pay. After five years on the ropes, he’s now ready to rumble again.
“Suffice as to say they’ve taken our debt and given us a workout over the next five years,” Whelehan says of Choice’s agreed restructuring plan.
It owes €8.5 million to €9 million, he says, based on rental obligations attaching to the eight hotels that it currently runs. Nama’s involvement with Choice stems from the fact that the group owed rent to landlord developers who had their loans transferred to the state agency.
Nama is its de facto landlord, according to Whelehan.
“They’ve given me [he means the group] an opportunity of paying that down over five years,” he says.
“That depends because I’m not going to retain all eight hotels.”
This is where the story gets a little complicated, thanks to the convoluted financial and operating structures that the Celtic Tiger years blessed us with.
Whelehan’s Choice is a hotel operator and manager of third-party properties through lease and management contracts. It is also the master franchise holder for Ireland for the Clarion, Quality and Comfort Inn brands.
Planning to expand
For the purposes of this interview, the focus is on the following hotels – the Clarions in the IFSC, Dublin Airport, Limerick, Cork and Liffey Valley, Carton House in Kildare, the Croydon Park Hotel in London (where Whelehan began his career in hotel management in 1989) and the Gibson.
Choice is set to lose the IFSC from the portfolio following a recent change in ownership while a question mark hangs over its continued involvement in Dublin Airport.
“I can count on probably three or four to stay with me in the long term, hopeful of another two and we’ll probably lose two,” is how Whelehan sums up the situation.
With the workout agreed, Whelehan is once again planning to expand Choice – in Ireland, the UK and Germany.
“My hands are now free to get back out into the market place and start taking on new hotels. I haven’t been able to do anything over the past three or four years because literally it’s been like throwing water in on top of a colander. The structure wasn’t there to do it. We’re free of the shackles at this stage and can move forward.”
The workout has included a drop in most of its rents to “market rates”, although the Gibson’s remains to be agreed, he says.
In the fallow years of the crash, with Choice effectively in limbo, Whelehan diverted his energies into building up related services companies.