No-frills formula nets two hoteliers €15m windfall

There are no biscuits or teapots in the rooms of hotel guests but the winning no-frills formula at Travelodge has resulted in a €15m windfall for two Dublin businessmen.

New accounts show hoteliers Richard O’Sullivan, from Rathmines, and Seamus McGowan, from Foxrock, shared €15m from the Irish franchise this year.

The two purchased the franchise along with its eight properties in 2004.

Today, the budget hotel business comprises of 12 hotels, with five in Dublin and the rest in Belfast, Derry, Galway, Waterford, Limerick and Cork.

The returns show that Mr O’Sullivan, a 47-year-old accountant, will receive the largest amount through his two thirds share of Smorgs Ltd. Mr McGowan is managing director of the business and holds the remaining one third share.

The hotel chain says on its website that in order to keep costs down, no teapot or biscuits are provided on the tea and coffee tray in hotel rooms.

Customers are told: “You can make a decent cup of tea by sticking the tea bag in the mug, so why incur the cost of the teapot? Most Travelodge hotels have vending machines, so if you’re feeling peckish, you can purchase a snack from one of these.”

The company also states that it doesn’t incur “the unnecessary cost” of providing irons and hairdryers in rooms and if guests require toiletries “Travelodge hotels sell a range of basic toiletries from vending machines in every hotel”.

The no-frills model results in competitive room rates and was yesterday advertising rooms from €29.

The figures for Smorgs (Ireland) Ltd show that the firm was back in the red last year, with post-tax profits of €557,445 following a loss of €2.2m in 2010.

The firm — which directly employs 125 people — achieved an operating profit of €20,549 after an operating loss of €1.6m in 2011 in spite of revenues dropping by 4%.

Remuneration for the two directors last year dropped from €441,086 to €225,740.

In the directors’ report, Mr McGowan and Mr O’Sullivan state that they “have implemented strict controls over cost of sales and overheads to ensure that the return to profitability is maintained”.

The report goes on: “In an effort to increase turnover and ultimately profitability of the company, the directors have acquired an additional Dublin city centre hotel since year end. Trade has been very encouraging with profitability for the first four months well ahead of expectations.”

“All of our Dublin properties have traded ahead of 2011.

“Provincial properties are still struggling with a lacklustre economy, but are all earning an operating profit and we believe will out perform 2011.”