The hotel group finds business increasingly difficult as it ponders again the prospect of a takeover by Precinct, writes Arthur Beesley, Senior Business Correspondent
The renewed bid for Jurys Doyle from Precinct Investments underlines the hotel group's difficulties in Dublin and the patchy performance of the Irish tourism business in general.
As the holiday season begins in earnest this month, the Jurys board must weigh again the prospect of selling its prized portfolio to a group that would sooner build apartments on its prestigious eight-acre site in Ballsbridge than carry on the hotel business there. A similar fate might await the group's Montrose hotel in south Dublin.
If that aspect of the story reflects the property boom as much as conditions in the hotel market, the latest Precinct bid of €16.25 per share values the group at a little more than €1 billion.
Fully €1 ahead of the consortium's previous bid, the latest offer amounts to a premium of 33 per cent over Jurys' share price before takeover speculation began.
It could value the Ballsbridge site at €300 million, a factor that is unlikely to go unnoticed in the Jurys boardroom no matter what emotional attachment its directors have to the business.
In the face of emboldened competition from swanky rivals such as the Four Seasons, Merrion and Westin hotels, the group finds business increasingly difficult in a market in which a landmark hotel such as Jurys Ballsbridge seems distinctly behind the times.
Another factor is the strength of competition in the Dublin mid-market. The irony here for Jurys is that a glut of mid-priced rooms is one result of the very success of the Jurys Inn model it pioneered.
The inns are a form of few-frills hotel that brought hotel room prices down in the same way as Ryanair cut the cost of air travel. This successful model has spawned many imitators, a factor that puts increasing pressure on Jurys' mid-range offering.
In a tourism market dogged by tighter margins, shorter visits, reduced spending and high consumer prices, the group's woes are not all internal. Still, such conditions make a hard fight tougher.
And the difficulties do not end there for Jurys or any other group in the tourism industry. While there is still no sign of the National Conference Centre, prolonged dithering over the future of Dublin airport means congestion there will not end any time soon. The airport issue is all the more important as increasing numbers of tourists fly instead of travelling by boat.
Still, Minister for Tourism John O'Donoghue points to a €48 million marketing budget this year at Tourism Ireland and increased-capacity air routes into Ireland from the US, Britain and Europe. However, O'Donoghue readily accepts that the weakness of the dollar is a major concern. "That is our biggest challenge at the moment," he said.
If the big-spending American may be the customer of choice in Irish tourism, a 33 per cent appreciation in the euro between September 2002 and March this year is no help.
Sterling's strength vis-à-vis the euro is a boon to British visitors, although O'Donoghue points to challenges in that market too. "Many people said they could go to Ireland any time or that Ireland was not that different to them any more," he said, citing market research in Britain.
While Tourism Ireland has Britain as a major marketing target this season, none of that will be of any help to the Jurys directors as they mull the latest approach from Precinct. All eyes are on the Doyle and Beatty families, who own 30 per cent of Jurys Doyle between them and have four seats on its board.
To be fair to the group, the board had already initiated a review of the premium Dublin properties before developer Bryan Cullen made his move with Precinct to bid for Jurys in a consortium including solicitor David Coleman and JJ Murphy, a builder and hotelier.
Many parts of the Jurys business continue to perform well - with new inns coming on stream at Croke Park and Parnell Street, north Dublin - but the problems in Dublin 4 are easy to see.
Goodbody Stockbrokers analyst Gavin Kelleher draws a contrast between the Westbury, off Grafton Street, and the Jurys Ballsbridge, the Berkeley Court and the Towers Hotel in Ballsbridge. Pointing out that the car-parking in the Westbury is underground, Kelleher contrasts this with the space the group wastes in car-parking around the Ballsbridge hotels. "There's potential to unlock value from the site."
There are other issues. Jurys has conference facilities at the Burlington Hotel that compete with similar facilities it owns only down the road at the Berkeley Court.
In addition, NCB Stockbrokers analyst Shane Matthews said there could be as many as 2,000 excess hotel bedrooms in Dublin, a legacy of the frenetic building that followed generous tax reliefs for hotel development.
"Jurys has been good at keeping room occupancy high, but if you have over-supply of rooms you don't have any pricing power," said Matthews.
The other big factor in the tourism business in general is the problem with high prices in a high-cost economy.
"Rising costs have made Ireland relatively uncompetitive," Matthews said.
While Dublin seemed for years to be the venue of choice for stag parties and the like, he believes that market is now migrating to eastern Europe on price grounds.
Concerns about rising prices in the Irish economy were highlighted only in recent weeks by the Consumer Strategy Group, although O'Donoghue is keen to point out that forward prices in the market for next year are pitched at this year's rates.
"I worry greatly about the 'rip-off' tag because it can be extremely damaging. It's enormously important that we remain competitive."
If that point seems self-evident to all in tourism, it is unlikely that the Jurys board will be thinking about the bigger picture until it settles on a response to Precinct.
In the group's glory days as the brightest star in the Irish hotel business, selling out to a couple of builders would have seemed unimaginable. It doesn't seem that way now.
