Despite competition from international chains, the family-run Kelly's Resort Hotel has been named AA Hotel of the Year, writes Ciarán Brennan

With the proliferation of international hotel chains setting up in Ireland and the large number of property developers entering the hotel business, a casual observer could be forgiven for thinking that the days of the standalone, family-run hotel are numbered.

But Bill Kelly, general manager of Kelly's Resort Hotel in Rosslare, Co Wexford, does not regard himself as an endangered species just yet.

While the new entrants to the market may be turning up the heat in terms of competition, Kelly says there is still room for a family-run operation that offers superior service.

"The globalisation of the hotel business means a lot of the hotel products, whether you go to New York or Dublin, end up looking the same," he says. "That offers us the opportunity to give a unique product and service to customers."

It seems to be paying off for the Wexford outfit, which this week picked up the AA Hotel of the Year Award.

Kelly puts the award down to the staff and the service offered at the hotel, which has seen it win many repeat customers.

"We have more than 70 staff who have been with the hotel for at least 15 years and, in total, we have 1,690 man years within the whole staff team," he says.

"Our success over the years is that we have had a lot of return customers. That is the key ingredient."

He says that, quite often, too much emphasis is put on marketing to get the business in the door, instead of looking after the customers when they arrive and ensuring that their experience will entice them to come back.

"The lifetime value of a customer just cannot be over-estimated," he says.

"We have one customer who, over the past 10 years, has left us a quarter of a million euro. That's a lot money if you lose that business: you tend to regard you've lost a weekend's business - €300-€400 - but in fact you've lost the next 10 years' business, along with the fact that the customer hasn't recommended you to more of his friends. Over one incident, you could be losing a million euro."

Bill Kelly is the fourth generation of his family to run the hotel, which was initially set up as modest tea room in 1895.

Along with his wife Isabelle, he took over the running of the hotel in 1987 and, with the management team, has overseen a range of developments at the hotel.

These include the development of the Aqua Club leisure centre and La Marine bar and restaurant, the the addition of 30 rooms, the redevelopment of the gardens, children's area and reception, and the creation of a new spa.

According to Kelly, being a small, family-run business offers a level of flexibility that bigger organisations sometimes cannot match.

"You can look at an independent hotel as being an advantage or a disadvantage, but we treat it as an advantage. I can do what I want tomorrow. I don't have to go back to a central office to look for permission," he says.

One disadvantage, however, is that the company is competing against players with much deeper pockets. Nevertheless, the hotel has not been found wanting in the investment stakes, having spent €7 million on the new spa and 16 rooms, largely financed through bank borrowings.

"It is up to us to make sure our product is up to standard and also to make our product unique from a physical and service point of view," says Kelly.

Despite the investment, margins in the business would be appear to be slim enough. The latest accounts available for the hotel show a gross profit at the end of 2004 of €7.7 million, but an operating profit of just €274,242.

However, Kelly says 2004 was slightly unusual in that parts of the hotel were closed to facilitate the building of the new spa. Profits for last year are likely to be in the region of €700,000, while 2006 could see the hotel approaching the €1 million profit level.

The hotel industry in the Republic has not escaped the criticisms of rip-off that have been levelled at other sectors of the economy, but Kelly believes hotels in the Republic are offering value to customers. "I would argue with anybody who says there isn't value to be had in the Irish hotel business," he says.

"I don't think there is any hotel in the country over the past three years that has increased prices over the rate of inflation. We are driven by competition, not just in the home market, but we are also competing against other products in the European market such as city breaks in Prague, Paris or Budapest."

But increased costs, particularly costs he terms as "invisible or of no benefit from the customers' perspective" such as rates, insurance and refuse, are putting pressure on the industry.

"From our end, you're talking €9,500-€10,000 a week on those costs," he says.

To cut down on its refuse costs, the hotel has put in its own recycling centre to reduce waste and a large composter where it can compost up to four tonnes of food waste a week. It has also installed a woodchip burner at a cost of €100,000 to replace oil. Kelly expects payback from this within 18 months.

Given the costs of running a hotel today, has he ever considered outside investment?

"It is not something that has ever entered my mind but we have never been approached either," he says.

"If we were doing a larger project or doing something that was beyond our scale in our area, I definitely wouldn't count it out or say never, but it is not something we envisage in the near future."

He adds: "I was handed over the hotel at a young age and I would see my role as being able to pass the hotel on to the next generation."