Reluctant hotelier takes path from the classroom to the boardroom

Hodson Bay group chairman John O’Sullivan oversees the opening of the new Hyatt Centric on old Viking territory in Dublin

John O’Sullivan at the newly-built Hyatt Centric Hotel in Dublin. Photograph:  Crispin Rodwell

John O’Sullivan at the newly-built Hyatt Centric Hotel in Dublin. Photograph: Crispin Rodwell

 

With average occupancy approaching 90 per cent, Dublin hoteliers are beating back custom with proverbial sticks. The city’s newest large hotel, the €50 million, 234-bedroom Hyatt Centric in the ancient Liberties quarter, opened its doors last month, arriving just at the right time.

In business, timing is everything. But times can also change. Just ask John O’Sullivan, the kindly, gregarious chairman of the family-owned Hodson Bay hotel group that owns the new Hyatt. It might be all fun and games now, as his impressive new property struts into the hottest hotel market in Europe. But back in the middle of the last recession, times were different for the Kerry-born, Westmeath-based developer.

Back then, he led a consortium that lost control of the huge Athlone Town Centre mixed-use development, which ultimately entered receivership with more than €200 million in debts. That must have been a tough time?

“Oh Jesus, don’t talk to me,” says O’Sullivan, chatting in the lobby of the new Hyatt. He keels over the side of his chair in mock exhaustion.

“It was a tough time. Without doubt the toughest I have had. But when you’re having a tough time, what do you do? You do something that you like doing. I like finding sites and developing them.”

O’Sullivan grins that his hobby is, metaphorically, “buying sheds and converting them”. This obsession led directly to the Hyatt.

As he wrapped up the odds and ends of Athlone Town Centre at the end of the bust, he was travelling regularly up to Dublin “where most of the accountants and lawyers are”.

“Every now and then, just to cheer myself up, I used to go out and keep an eye on sites. I went everywhere, down the docklands, into the Liberties. Everywhere. But the sites were all owned by the banks and they wouldn’t sell them for all sorts of reasons. It was quite difficult to acquire property in that period.”

On one visit, O’Sullivan came across a one-acre site at the entrance to the Coombe district, directly across from St Patrick’s cathedral. It is one of the most historic areas of the south inner city. Vikings once lived here.

“It had been derelict for 20 years because of the complexities involved. The plots were all in disparate ownership through various funds, banks, and the council. It came in 10 different parcels. I started assembling them. I asked myself if I was stone mad. But the truth is I was enjoying it.”

O’Sullivan approached so-called “vulture fund”, Cerberus Capital Management, to buy the loans of a developer who owned part of the site. Eventually, he gained control of the whole plot – the city council was the last to sell its bit, and only once it was sure O’Sullivan had ownership of the rest and could forge ahead.

As the recession’s nuclear winter gave way to the green shoots of a recovery spring, O’Sullivan, whose hotel group already owned two hotels in Athlone and one in Galway, planned its first in the capital.

Following a battle with An Taisce and a few trips to An Bord Pleanála, O’Sullivan finally secured permission for the new hotel, which is built on top of an old Viking street.

Solidifies

The addition of the Hyatt Centric, the US brand’s debut in the Irish market, solidifies Hodson Bay’s position as a medium-sized group by Irish standards. It already owns the eponymous, lakeside Hodson Bay resort in Athlone; the Sheraton Athlone, which the group salvaged from the town centre development; and the Galway Bay hotel in Salthill.

What impact will the new property have on the group’s finances?

“Ha! I knew you were going to ask me that,” laughs O’Sullivan, triumphantly whipping a cheat sheet of numbers out of his pocket. “I got Padraig [Sugrue, the group chief executive] to dig these out for me.”

Before the new hotel, the group had sales of about €32 million, with Ebitda (earnings before interest, tax, depreciation and amortisation – a standard returns metric) of €6.5 million. Including the new hotel, the group will have sales of €50 million and Ebitda of €12 million.

Total staff numbers are close to 600. The group’s accounts also show it has shareholder funds of €18 million. Hodson Bay has done well for the O’Sullivan family since he established it in 1990.

“Historically, most of our growth was organic, rather than buying new hotels. I used to say that, if I worked for a PLC, I’d be sacked, we grew that slowly.”

It was never a part of the plan that O’Sullivan would end up a hotelier. Although now based in Athlone, he hails from Waterville in Kerry, hometown of GAA great Mick O’Dwyer. “His father and my mother were cousins.”

He attended the regional college in Athlone, where he met his wife Mary, and then Bolton Street college in Dublin, where he trained to teach engineering. He began teaching at Tallaght community school, where he stayed for five years.

“The summer holidays were so long, I was doing bits of development on the side. We had a little building team in the school. In 1977, I built a house outside Dublin for €12,000 and sold it for €72,000. We made nice money.”

Mary’s father passed away suddenly and she wanted to move back to Athlone, where O’Sullivan landed a job teaching at the college.

“The difficulty was that you could build a house in Athlone for €72,000, and sell it for €12,000. So I bought an old pub in the town instead, as well as the buildings beside it, and knocked them all into one.”

He built the Castle Inn, which remains a landmark pub in the town. He intended selling it once it was finished, but hadn’t realised pubs are hard to sell unless they are open and trading.

“So I ended up in the pub business for four years,” he says.

He finished teaching and continued with development. He also set up a business providing security camera services to multinationals such as Wang Laboratories in Limerick and Digital in Galway.

It was successful right through the 1980s. He sold it in 1994. By then, O’Sullivan was, somewhat reluctantly, a hotelier. He had bought a shuttered old hotel once owned by PJ Lenihan, a former TD and father of Mary O’Rourke.

‘Hotels suck you in’

O’Sullivan wasn’t thinking about reopening the hotel – he saw it as a good development site. But he eventually entered a public-private partnership to develop a conference hotel, partly with grant money. He linked up with his neighbour, the accountant Sugrue, to open the Hodson Bay hotel in 1990.

“In my naive head at the time: you built it, handed the keys to a manager, and off you went. But I soon learned that’s not how it works. Hotels suck you in. We had to run it ourselves. I had never been a hotelier. I can’t even boil an egg.”

O’Sullivan focused on developing a progressive working culture based around the value of respect – that remains one of his favourite creations – and the hotel was a huge success. It has been expanded several times since.

When Albert Reynolds was Taoiseach in the early 1990s, he used to drink tea there and O’Sullivan would join him to talk business.

“Albert used to say he wanted to do something for the Shannon. So I told him to introduce accelerated capital allowances for development, with the write-off upfront. He set up a group to design the scheme and I was on it.”

Suddenly, Reynolds was out of government. In the next administration, an enthusiastic new tourism minister, Enda Kenny, lifted the accelerated allowances plan, and transplanted the idea to his native western seaboard.

O’Sullivan was subsequently able to avail of the allowances scheme that he had helped design. In the mid 1990s, he spent €14 million to build the Galway Bay conference hotel: “The day we opened it, we got €2 million off the loan under the allowances, and another €2 million reduced interest.”

He next built the large Manor Mills boomtime development in Maynooth before flipping it to builder Ray O’Rourke. Then he built Athlone Town Centre. The group’s Sheraton hotel opened in 2008, just before the crash hit.

With three of his children prominent on the senior team – sons Johnny and Aidan, and daughter Ciara – Hodson Bay group rode out the storm. O’Sullivan went on his Dublin walks to cheer himself up, and now here they are with the new Hyatt Centric.

Artefacts

The hotel, which uses the US brand under licence, is stunning. The developers have incorporated the history of the site and the local area through artwork and artefacts displayed throughout.

As O’Sullivan tells the story from his lobby perch, he breaks away to greet the project’s archeologist, who happens to be wandering through.He explains that, during construction, they found a 1,000-year old piece of art on a slate; old Viking houses, wooden bowls and spoons from around 1170, and the course of the old Coombe river. This all sounds expensive for a construction project.

“Bloody sure it was,” laughs O’Sullivan. “It put the price up by a fortune, but it was worth it. The choir that recorded Handel’s Messiah (first performed nearby in 1741) lived in a house on this site and they used to practice out the back. That held us up no end. But we got through it.”

The modern, sleek design of the hotel, with a few medieval twists, is meant to appeal to millennials whom, O’Sullivan says, “want to be where all the action is”. The public areas of the hotel have been designed as gathering places.

The bar and restaurant have a separate entrance to tempt locals. There are myriad nods to its ancient heritage, such as a preserved old well in a courtyard off one of the meeting spaces. Most bedrooms have stunning views of the oldest part of the city.

“The building is designed not to threaten. It is supposed to invite you to stay,” says O’Sullivan. He owns 100 per cent of the hotel’s equity himself, financed through “savings and that sort of thing”. His family now controls the group.

True to form, with this project only just finished, O’Sullivan is already looking ahead to the future. Doing his walks. Making his plans. He sees the group’s future in the hands of his children.

“It would be unfair to say I built this hotel. I only found the site. They [his children and Sugrue] designed it, researched it, and procured every bit of it. My job was just to roar at the builders.”

O’Sullivan has advised his family that the group’s future expansion should include partnerships. The partner puts up the capital and gains a hotel industry expert. The group identifies a development opportunity, builds it, finds a brand, and runs the property.

“We have all the skillsets in-house to do that. Let’s focus just on the development and management in future. We’d expand the business faster; it wouldn’t be as capital hungry.”

O’Sullivan has already spoken to potential partners. At the end of our chat, his son Johnny, the group operations director, arrives to lead a showaround. He smiles knowingly at his father, who is laying out the future plans.

“Let’s bed this one in first,” smiles Johnny. “Typical. We’re still finishing up the dinner, and he’s already sniffing around for the breakfast.”

CV

Name: John O’Sullivan

Age: 67.

Position: Chairman, Hodson Bay hotel group.

Home: Athlone, Westmeath.

Family: Married to Mary, they have three sons, one daughter.

Something you might expect: A native Kerryman, he is a distant relative of GAA legend Mick O’Dwyer.

Something that might surprise: He can’t cook.

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