In 1999, the acquisition of the Doyle Hotel Group by rival Jurys Hotel Group Plc created a giant among Irish hotel operators and set the stage for further expansion abroad, with the focus being placed on the US this time.
Jurys paid IP187.6 million (US$254 million) in cash and stock for Doyle, and in the process, Jurys has gained several landmark Dublin hotels and a presence in the U.S. market.
"It's an excellent strategic move for Jurys," says Enrique Curran, an analyst at NCB stockbrokers in Dublin. "They now have approximately 9% of the Irish hotel room stock and about 22% in Dublin. You're now looking at an enlarged company that has real scale." He says the combined Jurys Doyle group enjoys occupancy rates of about 80% and the ability to achieve consistent room-rate increases.
Jurys Managing Director Peter Malone is confident about the increased size of the group, which posts annual revenues of about IP140 million (US$190 million), will make it more attractive to investors and help the share price. "Now with the euro and the European stocks," Malone says, "people are going to look at us and say, 'There's a good play on the Irish economy, a good play on good city centres, and a good play on America.'"
How was the process conducted – problems or successes that were encountered & action that may have needed to be taken such as legal or environmental problems, cultural problems, language issues, relationships between Irish (home) employees and local employees. Techniques used to promote brand awareness and enter market successfully. How sales and profits fared.
Following the founding of the Jury Doyle Hotel Group in 1999, Mrs. Bernie Gallagher, Chief Executive Officer of the Doyle Hotel Group, said "The Doyle family is delighted that these two great hotel groups have come together to form an Irish-based operation of international scope. The Jurys Doyle Hotel Group will combine the proven skills of the Jurys' team with the expertise of the Doyle family and staff, which made the Doyle Hotel Group a highly-successful and prestigious operation in Ireland and overseas. As significant shareholders in the enlarged entity, the Doyle family looks forward to making a positive contribution to the future success of the new group."
With the closely formed union of these two companies, overseas expansion seemed as if it would be a seamless transition for Jurys. However several external factors have created huge hurdles in recent years for Jurys and the hotel industry as a whole.
Firstly, in 2001, the UK hotel market was hit by foot and mouth disease. This particularly affected hotels in rural districts but at the height of its attempted containment, hotels in both urban and rural district suffered equally.
Then terrorist attacks on the US on 11th September 2001 were an even greater blow, depressing international travel and causing a sharp fall in tourism receipts. In particular, the performance of the UK hotel industry has been under pressure since the events of September 11 as visitor numbers have dwindled. The impact has been most severely felt in London, where numbers declined by an unprecedented 34.7 percent in October 2001 and the occupancy level in 2001 hit a seven-year low. Encouragingly however, is the performance contracted each month between November 2001 (-27.5 percent) and February 2002 (-14 percent). Unfortunately, the trend has reversed again in March with numbers declining 16.0 percent.
In 2002 Julia Felton, director of the Andersen Hotel Industry Benchmark Survey commented, “The timing of the Easter holidays this year has caused an aberration in the pattern of the general recovery that we have been witnessing in hotel performance. In 2001 the Easter holidays fell in the second week of April whilst this year they fell in the last week of March. The Easter holidays are always a period of softer demand for hotels in London, particularly those with a high reliance on commercial business. Consequently, London hotels have experienced two weeks of relatively low demand and price sensitivity. We therefore anticipate that April results should show a marked improvement over March, and so continue the gradual improvement that we have been experiencing in the market”.
Since September 11th the subsequent downturn in the global economy has been further cause for concern. In response to these factors, many hotel companies have frozen or reduced expenditure programs and cut back on investment.
There has also been competition in the leisure market, with hotels seeking to compensate for the fall in corporate expenditure by raising consumer revenue. Companies have also focused on other areas, such as the smaller conference sector. Generally speaking, London hoteliers remain optimistic about the underlying recovery in the market. With improving demand levels, they hope to soon be in a position to curtail future price discounting.
March 2002 hotel performance
Source: Andersen Hotel Industry Benchmark Survey (all analysis in UK£)
The Jury’s Doyle Hotel Group, speaking about operations in Ireland, the UK and the US, described 2003 as 'challenging' due to the effects of the war in Iraq, the outbreak of SARS and the strengthening euro against sterling and the dollar. It said it was 'cautiously optimistic' for the year ahead.
Group turnover totalled €253.8m and adjusted diluted earnings per share were 64.6 cent. Comparisons with the previous year's figures were skewed by Jurys Doyle switch to a calendar fiscal year during 2002, but the results were slightly below market expectations and showed a 13% fall in profits.
The group's Washington hotels were also hit by unusually bad weather in 2003 and they have warned shareholders that underlying pre-tax profits for the first half of this year will be 'marginally down' on the same period last year.
Chairman Richard Hooper told the company's AGM in Dublin the recent SARS outbreak had hit long-haul airline traffic into the important London market, while global economic activity remained subdued.
He said that against this background, trading conditions were likely to remain challenging, adding that full-year profits would also be affected if these trends continued for the rest of the year.
In 1996, Jury’s commenced a programme in to convert to clean Technology in the form of combined heat and power systems in their hotels. This has the effect of retaining and reusing the heat which can otherwise be lost in the generating of electricity. The positive consequences of this are that there is a substantial reduction (approx. 7000 tonnes per annum) of carbon into the atmosphere by the more efficient use of energy. In addition to this all Jury’s properties in the UK have signed up to the Hospitable Climates programme (sponsored by the UK dept of Environment) to meet the EU targets for reduction of Greenhouse Gas. Plans are underway to introduce a similar programme in Ireland during 2004.
Assess the overall success of the undertaking by the firm – main conclusions, was it a smart move?
Jurys Doyle Hotel Group fought against increased costs and a challenging trading environment to achieve growth in turnover and profits.
The group, which operates hotels in Ireland, the UK and the US, suffered during the early part of 2003. A pick-up in the second half was hit by a failure to achieve revenue growth. Jurys said small increases in room rates in the UK and US were offset by a small reduction in the rate in the Irish hotels.
Shares in the Jurys Doyle Hotel Group have slumped by over 10 per cent, despite recording a pre-tax profit of €45.8m last year.
The company said it was 'cautiously optimistic' for the year ahead. Group turnover totaled €253.8m in 2003, slightly below market expectations.
However, the 13 per cent fall in profits in comparison with the previous year's figures was skewed by the company's switch to a calendar fiscal year during 2002.
The overall occupancy level across operations in its three markets was down by almost one per cent in 2003.
However, the hotel group said that research showed it had managed to out-perform its competitors in the Dublin, London and Washington markets.
For the first time in its history 55% of profits are coming from outside Ireland, which means reduced dependence now on the Irish market or the Irish economy, as only 45% of profits in the last year came out of Ireland. And that will obviously be a diminishing trend with the opening of properties in London and Croydon coming on stream, and with the aggressive policy of growing.
Jurys purchased their first hotel in London, in Kensington in 1993, and continued their expansion up until last year when they purchased the Doyle Group (London:JDH.L), which was 11 hotels, seven in Ireland, three in Washington, DC and one in London. Hotels and 10 Inns between Ireland, UK and US.
For the year gone out to 30 April, turnover was up 106% to €219 million, profit before tax was up 70% to €50 million. Earnings per share were up 36% to 73.8 cents, and dividend then was up 23% to 17 cent.
Put it this way, over the last 10 years the company has grown 10 times, now obviously that level of growth will not be sustained in that sense because as a company get bigger it's harder to achieve that. But there is no doubt that they have to grow much larger, to grow the brand, particularly the Inns brand in the UK and four star brands.
“Over the next three years we would hope - at the moment we have five Inns in the UK - to have 12 in the next three to four. And we would like to grow our hotel brand as well on the back of that within the UK. We'd like to feel that in three years' time we would have some presence in eastern Europe, and that we would have grown some of our property penetration within the US on the eastern seaboard. So that's our three- to four-year plan in its broadest sense. Very positively. I suppose, we said it ourselves, we've got the most positive outlook from any results reported we've got over the last 10 years in this current year, so it's been very strong. The shares are trading at the moment at about EUR8, they feel that a more proper level would be EUR10-EUR101/2. “
With 18 hotels and 12 inns, Jurys Doyle has a strong presence in Ireland, particularly in the Dublin market and also competes internationally in the UK and the USA. The group spans the five, four and three star markets and has developed a very successful budget brand; 'Jurys Inns'.
Recommendations
"By deploying high quality, high performance internet access into guest rooms and conference rooms we can help Jurys Doyle Hotels leverage the full power of the internet and attract the lucrative business traveller," said Interfusion's business development director, Steve MacNicholas.
Jurys Hotel Group recognises the importance of providing its customers, particularly business travellers, with the facilities they need to remain in touch and productive whilst away from the office. Forward-thinking and IT aware, Jurys jumped at the chance to differentiate itself from the competition by introducing services such as voicemail and second line extensions in the rooms.
It has chosen to work with Telecom Eireann Information Systems (TEIS) and invest in Nortel Networks’ voice and data communications products to make this happen.
The Dublin Headquarters houses Jurys Central Reservations Office which is staffed by eight call centre agents. Using Meridian’s ACD call centre software they can respond to 1,000 customer calls per day. Corporate customers, executive secretaries and holiday makers have been marketed with different phone numbers. These numbers determine the queue their call goes into, and who deals with their enquiry.
“A reliable telephony system is critical to the smooth running of any hotel business,” continues Murphy. “With 1,000 customer calls a day we can’t afford to be off-line. We have to make it easy for customers to do business with us. We are currently installing Meridian MAX further enhance the management of our call traffic.”
“The hotel industry is typically not very IT aware, but an increasing number of our business visitors are,” says Murphy. “We need to ensure that they have their own communications facilities available to them - 24 hours a day. We see this investment in technology as a key differentiator when encouraging business traveller to stay with us”.
“Internally, it’s up to us to push forward the vision of the need for centralised functions which integrate voice and data. Sales in particular need CTI functionality which simultaneously integrates information about the calling customer with details of their visiting patterns on a computer screen,” continues Murphy. “We are also just beginning to investigate the opportunities for our call centre agents to telework. We plan to work with TEIS and use Nortel Networks’ products to implement this in the not too
distant future . ”
In April 2000, the Group launched a new web-site offering the first on-line booking service by an Irish hotel group. The new site and booking service provides a strong new distribution channel to target the corporate, conference and leisure markets at home and abroad. The site will be strategically managed in conjunction with our Central Reservations Office to ensure that on-line bookings are effectively distributed throughout the entire Group. We recognise that e-commerce is, and will continue to play, an increasing role in the hotel business in the future. Therefore we are committed to investing in our processes to ensure we maximise the value of our fixed assets going forward. We indicated at our last Annual General Meeting the need to encourage many more of our staff to become shareholders in the Company and subsequently launched the Jurys Doyle Save As You Earn Scheme in March 2000. I am pleased to report that the reaction has been very positive.
I am confident that we have the resources, management and staff to continue the strategic development of the Group and look forward to the remainder of the year with enthusiasm.
Pat McCann
Chief Executive
28 July 2000
Saunders Hotel Group & Jurys Doyle Hotel Group Come Together On Police Headquarters Hotel Project
BOSTON, Aug. 31 / In a reaffirmation of the close ties that bind Boston with its sister city Dublin, Boston's Saunders Hotel Group (SHG) today announced that it has joined forces with Ireland's Jurys Doyle Hotel Group to develop and manage the police headquarters hotel in the Back Bay. The international alliance, which will bring more than 200 urgently needed hotel rooms to Boston and revitalize a landmark city building, is a result of the companies' common approach to hotel management and operations as well as a patriarchal friendship that has lasted several decades.
"This is a 'win-win' agreement for both of our companies and for the city of Boston," said Gary Saunders, Chairman of the Saunders Hotel Group, "It gives Jurys Doyle a strong entree to the Boston market, which has a deep Irish heritage, and it enables us to partner with a renowned organization to create a distinctive, world-class property which compliments and rounds out the Saunders Hotel Group's portfolio of Boston hotels."
Jeff Saunders, CEO of the Saunders Hotel Group called the partnership a "milestone." He added, “When complete, the police headquarters property will be a living monument to the friendship of SHG founder Roger Saunders and the late Vincent Doyle, one of the creators of Jurys Doyle Hotels." The two hotel group patriarchs were friends for many years and the similarities between the two companies operating philosophies, approaches to hotel development and management and their track records of success are similar. Saunders added that the agreement does not affect the ownership, operation or positioning of any of the Saunders Hotel Groups' other properties in Boston -- The Lenox, The Copley Square and the Comfort Inn & Suites Boston Airport.
Through the cooperative effort, the Jurys Doyle Hotel Group will provide funds for the historic renovation of the property through a long-term ground lease and will provide day-to-day operations management upon the property's completion and opening. The Saunders Hotel Group will purchase and develop the property from the city of Boston and will be the asset manager over the property.
Pat McCann, CEO of Jurys Doyle Hotel Group, welcomed the new partnership. He said, "Our cooperation on the former Boston Police Headquarters marks an important step in expanding Jurys Doyle's unique style and sensibility to gateway cities in the United States. Along with our three hotels in Washington, D.C., we are well on our way to establishing our brand in U.S. markets that are critical to our core European customer base."
Both parties, Jurys Doyle Hotel Group and Saunders Hotel Group, expressed the belief that the alliance will increase Irish, British and other European visitors to Boston as a result of the strength of the strong Jurys Doyle name and distribution system in Europe. In addition, each group mentioned that the Boston alliance may be just the first of many joint ventures between the Jurys Doyle Hotel Group and the Saunders Hotel Group. Jeff Saunders said, "We look forward to keeping our friends in Boston and Ireland updated on the evolving partnership between our two companies and on the development of the property."
The Saunders Hotel Group
The Boston-based Saunders Hotel Group is operated by a distinguished family with a rich tradition of leadership in the hospitality industry and an unparalleled reputation for delivering consistent, customized, unique guest experiences at each of its properties. The police headquarters project continues the Company's commitment to preserving the past and protecting the future, providing the highest standards of guest comfort, attention and excellence among Boston hotels.
The Jurys Doyle Hotel Group
Jurys Doyle Hotel Group plc is a rapidly growing publicly held international hotel operator headquartered in Dublin, Ireland and is Ireland's largest hotel company. Jurys has 33 properties, totaling more than 6,400 rooms with 4,000 employees. The Company offers business and leisure travelers a portfolio of 3, 4, and 5-star hotels and inns in Ireland, the United Kingdom and the United States.
First-half pre-tax profits at hotels group Jurys Doyle were marginally higher compared with the same period last year at ¤25.2m, as turnover dropped 6.5% to ¤123.7m.
Adjusted earnings per share were up 1.6% to 34.2 cent and an unchanged interim dividend of 8.14 cent has been declared.
Growing Presence
Doyle also brings to the group the 4-star, 186-room Clifton Ford Hotel in London and three hotels and 500 rooms in Washington, D.C.: the Doyle Washington, the Washington Courtyard and the Doyle Normandy Inn. Apart from marketing, Jurys previously has not been active in the United States. Now, Jurys full-time acquisitions director is looking with interest at such U.S. cities as Boston, Chicago, New York and Philadelphia.
Malone also hopes to double the group's size in Britain during the next five years, from its present nine hotels, by expansion into Birmingham, Leeds and Newcastle. And he sees opportunities in the Netherlands, Germany and Eastern Europe. He predicts strong prospects for tourism growth in Poland and Hungary, and the group would like "to put its toe in the water in Eastern Europe." However, nothing will happen immediately, Malone stresses. The next year will be spent on integration.
Malone sees no problems integrating publically held Jurys with privately owned Doyle. However, he would not comment on the suggestion that the enlarged company is an attractive takeover target. Such matters, he says, are decided by shareholders. And he says decisions about expansion will be based on simple principles. "We're not interested in putting flags on maps," he says. "We're interested in profit."
Contributed by Robert O'Connor
Merge Strategies
"It's an excellent strategic move for Jurys," says Enrique Curran, an analyst at NCB stockbrokers in Dublin. "They now have approximately 9% of the Irish hotel room stock and about 22% in Dublin. You're now looking at an enlarged company that has real scale." He says the combined Jurys Doyle group enjoys occupancy rates of about 80% and the ability to achieve consistent room-rate increases.
Over at Jurys, Managing Director Peter Malone is confident the increased size of the group, which will post annual revenues of about IP140 million (US$190 million), will make it more attractive to investors and help the share price. "Now with the euro and the European stocks," Malone says, "people are going to look at us and say, 'There's a good play on the Irish economy, a good play on good city centers, and a good play on America.'"
Jurys has a mix of 3-, 4- and 5-star hotels. With almost 1,500 rooms in Dublin alone, Doyle has such well-known luxury properties as the Berkeley Court, the Westbury and the Burlington. Malone says the new group will maintain its existing spread of properties, from 3- to 5-star, and he pledges to keep the Westbury as the company's leading 5-star-plus hotel. But he does not expect the Jurys Doyle Group to expand further in Ireland as real prospects lie abroad.
JURYS DOYLE GROUP has announced pre tax profits of just over €50m in its latest trading year. Turnover stood at just under €220 million in the year ended April 30 last, the first full year in which the merged Jurys Doyle Group was in operation.
The group has been trading up to expectations and ahead of last year during the first few weeks of its current financial year and another year of good growth is anticipated.
Earnings per share, the best measure of comparable year on year performance, rose by just over a quarter to just over 68 cents in 1999/2000. The rise comes at a time of continuing economic buoyancy in the group’s key markets and when the benefits of the merger synergies are beginning to seriously kick in. At a press briefing in the Westbury Hotel, chief executive Pat McCann announced plans to construct a 12 to 13 storey Jurys Inn with 240 bedrooms in the rapidly growing South London commercial centre of Croydon.
As for further expansion, the group will be targeting major commercial centres in Britain. It is also interested in opening further properties in the US Eastern Seaboard region between Washington DC and Boston. Expansion on the Continent of Europe is further down the list of priorities. The group will, however, be looking closely at the emerging economies such as Poland, the Czech Republic and Hungary, though it is less interested in countries such as Germany and France where the market is already well served by domestic and international hotel groups.
According to Mr McCann, the group has around €120 million available to spend on acquisitions. “The business is very cash generative and over the past ten years, we have completed two to three acquisitions a year.”
Some interesting information on the balance of power between Jurys and the family run Doyle Group has emerged. Last year, 56% of group revenue was earned in hotels and inns already owned by Jurys plc as against 44% attributable to Doyle properties. Margins in Jury properties stood at 34% as against 30.6% in former Doyle properties where occupancy rates were somewhat lower, which may be due to the fact that the Doyle Group was known to be for sale for some time. This may have had an impact on staff morale and on forward bookings.
Margins in the Doyle hotels should be raised to the current levels at the Jury properties within 18 months, it is predicted. In terms of geographical breakdown, 60% of revenues were earned in the Republic, 30% in the sterling area and 10% in the US. The sterling area accounted for 43% of group profits.
One of the main attractions of the Jury Doyle hotels is their prime locations across Ireland, the US and the UK. For example, the 5 star Doyle Westbury was developed in 1980 and is still one of Dublin's leading hotels and located just off Grafton Street, adjacent to St. Stephen's Green, there isn't a better hotel location in town. In London, the 4-star Clifton Ford Hotel is also in a prime location in the West End near the junction of Bond Street and Oxford Street.
In Washington, D.C. the company operates three hotels. The newly-opened Doyle Washington Hotel is close to the 3-star Washington Courtyard which is located on Connecticut Avenue. The 3-star Doyle Normandy Inn is also located nearby. All three hotels are located on Connecticut Avenue, close to just about everything in America's capital city.
Bibliography
International Business – The challenge of global competition
by Donald A. Ball & Wendell H. McCulloch, Jr.
Wall Street Journal Interview with Patrick McCann, Chief Executive of Jurys Doyle Hotel Group
Sorted And The City IN DUBLIN: Hotel group suffers setback
February 27, 2004 5:34am
Europe Intelligence Wire
Over 50m profit for Jurys Doyle Group
by Kyran Fitzgerald
Webliography
www.nortelnetworks.com/solutions/hospitality/ collateral/jurys_hotel_group.pdf
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