One More Thing:On Tuesday, the first round of bidding for the Jurys Inn chain of budget hotels closes. A number of large private-equity groups are thought to be circling the operation, including Blackstone, Cinven, Permira (which is thought to have linked up with AIB Corporate Finance) and Doughty Hanson, the owner of TV3.
Trade players like Hilton and Marriott could also be in the running and there is every likelihood that some of the major property development players in the Irish market will express an interest.
With a €1 billion price tag, a new owner will have to work hard to get a payback. Talk of building a chain of 70 Inns is all very well but, at the current rate of growth, that would take more than a decade to conclude, a long timeframe in the world of private-equity groups.
About a dozen of the 21 existing properties are actually owned by the hotel chain, although most are already intensively developed. There could, however, be the potential for a sale-and-leaseback arrangement that could net a tidy sum.
On the down side, any new owner is likely to have to establish a centralised back-office operation to handle phone and internet bookings. This function is currently carried out by the Jurys Doyle group. This is where a trade buyer, which could strip out this cost base, might hold the whip hand.
Then there is the issue of management. Stephen McNally, who headed the Inns operation both here and in the UK and was highly regarded in the industry, has left the business. It is understood that Joe Quinn, another Jurys veteran, and the head of the four- and five-star hotels division within the group, has taken the reins. Quinn is expected to remain with the Inns business after a sale is completed.
There have been other defections, although these are played down by the company as just part of a normal restructuring of the business.
The price tag is roughly 15 times the net earnings of €65 million that Jurys Inn is believed to have achieved in 2006. It's a tasty multiple. Some analysts familiar with the business have suggested that a multiple of 12 or 13 times would be more sensible. This would value the business at about €800 million.
Bernie Gallagher and her husband John drive a hard bargain. The squeezed about €650 million out of Seán Dunne and Bernard McNamara when selling their hotels in Ballsbridge and the Burlington. Securing a €1 billion sale of the Inns would represent their finest hour.
