Good figures at Jurys prove wisdom of Doyle acquisition

The general perception may be that Jurys paid top dollar for Doyle Hotels when it lashed out £247 million (€314 million) in cash and shares to the Doyle family. But Jurys's recent excellent figures and the impact of the Doyle acquisition on the current year trading suggest that the merged group will generate pre-tax profits of over £35 million in the year to April 2000.

ABN Amro has reiterated its buy recommendation on the merged group and is expecting turnover to be more than £160 million. Jurys valuations are attractive relative to British and European hotel groups and its occupancy rates are high - boosted by the growth in both corporate and tourist markets.

The Irish operations alone account for 58 per cent of Jurys room stock, and with medium-term growth forecasts of 56 per cent and a targeted 50 per cent growth in tourist numbers by 2006, the domestic sector will probably be the driving force behind Jurys growth over the next few years.

Margins may be trimmed in the current year as the lower margin Doyle operations are integrated into the merged group, but ABN Amro expects margins to recover to just less than 30 per cent and rise above that figure the following year.

Jurys's domestic rival, Ryan Hotels, has of course been something of a poor relation in recent years, showing none of the aggressive growth of Jurys. That comparatively inferior performance is reflected in the ratings for the two publicly-quoted hotel companies, with Jurys trading on a forward p/e of over 13 with Ryan on less than 8.5.

For that reason, it was refreshing to see Ryan in negotiations with Michael Holland and Brendan Gilmore to buy the Metropole Hotel in Cork. A price tag of £7 million-£10 million has been mooted for the Metropole which would give Ryan a belated presence in the State's second-biggest city and one of its major tourist destinations.

More moves in the hotel sector are likely once consultant Arthur Andersen completes its report on the future of the Great Southern Hotels (GSH) group. The Minister for Public Enterprise, Ms O'Rourke, has made it clear that she wants to see employment maintained at GSH if it is sold and this suggests that a break-up sale of the group is unlikely.

The GSH management is understood to be keen on putting together a management buyout package which would preserve the group in its entirety. And there is no shortage of venture capital money to support an MBO. Outside buyers - Fitzpatrick Hotels is mentioned most often in despatches - are likely to be keen on only selected hotels in the main tourist centres and the airports. It woul d not be keen on the GSH hotels which have a largely seasonal clientele.

Putting a value on GSH is made more difficult by the seasonal nature of a good part of its business. But with after-tax profits last year of over £3.3 million, a price tag of over £40 million and possibly higher seems reasonable.