Digital Strategy by Bookassist

The Paul Gallagher Interview

• Bookassist • Season 3 • Episode 1

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Paul Gallagher is a distinguished and well-known member of the Irish tourism and hospitality sector. He has been General Manager at Buswells Hotel in Central Dublin for the last 27 years. Paul is a past President of the Irish Hotels Federation and past Chair of the Irish Tourism Industry Confederation. He was Vice Chairperson of Original Irish Hotels and a non-executive director of the Convention Centre, Dublin. He is a non-executive Director of Tourism Ireland.

As Paul steps down from his GM role (December 2024), he talks to Bookassist Founder & Chairman Dr Des O'Mahony about his perspective on Buswells Hotel and its place in Dublin society, on how Buswells successfully transitioned to a strong online direct business, and he shares thoughts on the future of the tourism industry in Ireland.

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Des:

Paul, thanks for taking the time out to talk with us today. So, Buswells hotel, it's quite a unique property in Dublin. Can you tell us a little bit about the hotel? Its history, its place in Irish society...

Paul:

It's a fabulous hotel. It's a terrace of five houses, built in 1836, so they predate Guinness, predate plumbing and electricity as well for that matter. So, it is an old lady and she has challenges, but it's a wonderful hotel. Right across from the Irish parliament, so this hotel is affectionately referred to as the third house of the Oireachtas (Irish Government). So everything else outside of the world of politics happens in here . So this hotel would frequently be on the television and news. And obviously if there's a protest about people demanding something right now and that's when they want it, it'll be outside on the street. So we would know the heartbeat of the nation when it comes to the issues that they want resolved by government.

Des:

And what has Buswells meant to you in your time there?

Paul:

I'm here 27 years. I have a staff of 60 in the hotel, some are with me 25 and 26 years. And before that I would've had staff retire out of service here with 40 years service. So, you know, it's a - it is very much a hotel that has a fairly strong grounding in its staff and the customers. We are in service - and we live the tradition of the hotel and we pass that on to the people who take our places. So, and that has really been very much the , the sense of feeling in the hotel for a long, long time.

Des:

What would Buswells business mix be like, in general?

Paul:

You know it's a three star hotel, sixty seven bedrooms, independent hotel. We have to survive on our own. We don't have a mothership that's going to bail us out. We're predominantly a rooms-based business, so 65% of my turnover would be rooms and that means 35% or so is food and beverage and meeting rooms. It presents its challenges. 67 rooms are all quite small, so it's, you know, not big box hotel type of rooms, no air conditioning. However, once you accept a room is a certain size because we haven't mis-sold it to you and you close the door, everything works perfectly. So our customers are generally very happy. So on an annual basis we will sleep about 36,000 customers in about 21,000 rooms a year. So operating at about 80% occupancy, sporting events and concerts and that sort of thing drive sort of peak night compressions. So value for money then becomes a kind of consideration for people visiting Dublin It's been a successful hotel, it's always delivered a good cash-positive return . So for an owner it meant that we could always reinvest, which is really important. You know, we would do very strong EBITDA in this hotel. The team here would be very au fe with the financial performance of the hotel and we all participate in generating the budgets in the hotel. So we know our targets and pretty much every head of department will be on a KPI. So everybody has a part to play in the overall performance. So , so when we're busy, we know we're making money rather than we're just busy. There's lots of hotels out there, they're very busy, but maybe not making lots of money.

Des:

Buswells has focused very well on its online business. How did that come about?

Paul:

We made a decision about 15 or 16 years ago that we weren't going to allow the hotel to be yellow-labeled by a Booking.com or an Expedia. And so we turned off Expedia, turned down Booking.com and decided we would put our energy into our own website. So , and that's Buswells.ie which has Bookassist web engine at the backend. And we decided if we're going to be successful, we've got to put some money behind it . So, you know, if we were willing to pay a huge line in our P&L on commissions, why wouldn't we spend at least as much, or maybe less if we could get away with it, in our own promotion of our own website. So it was difficult at the start, it meant that we had to do different things here to survive. So obviously we had to get our own channel manager and we had to add on other little things that would create good content on the website, but also create prompts that might generate urgency. But we would look at other hotels in our comp set and see where they're placed in the market, both on their own sites and amongst the OTAs. So that's what we did.

Des:

And how has your online performance improved since that decision?

Paul:

So year one and two, you know, I think when I started using Bookassist, we were doing 240,000 Euros a year, you know, over a number of years grew to about 400,000. It kind of plateaued for a little bit because we were getting used to everything. We weren't properly resourcing our SEO campaigns, our meta and data, all that sort of stuff. And the organic searches. And once we kind of really got with it, and had two-way integration with good availability, we discovered that we got to about 1.2 million. So it jumped pretty quickly. So 2016/17 up to 1.4 million, you know , 1.5 or 1.6 million in 2018. 2019 was a little bit off, but that's because the VAT rate was increased and we had forward-sold probably 40% of our forward book and you can't then undo those contracts and go after VAT. So we , we absorbed some of it . I don't think I probably need to tell anybody about 2020 or '21 or '22 except to say that , uh, you know, keeping engaged with our customers who had already paid or pre-booked was key because we were trying to preserve cash so we didn't want to cancel everybody out and refund them. So trying to make them move their dates forward , uh, or give them a voucher in return for maybe a payment to keep that goodwill on the books. And we did that. So that was quite successful. And then as we entered 2023 , uh, we really did a lot of hard work with our booking engine to make sure we were in the right place. So this year I think , uh, when we look at our turnover, and 2024 is a pretty good year, I'd say we'll be in touching distance of probably 1.8 million euros up to about 1.9.

Des:

What part does online business play overall in your performance?

Paul:

So that means, you know, if you take my revenue for rooms, more than 65% of all of my revenue is my own booking engine. And so it represents about 75% of all my online business in total. We still do a little bit of business with booking.com, 4%, about 115,000 Euros. And that is because there are some months where I need them and there are some nights of the week I might need them. And I have some odd room types that I can't always sell myself. So we use them a little bit. Okay. And it's good to appear in the searches as well a little bit. So we do that. You know, overall it's been a hugely important success story for the hotel. I don't think there are many hotels out there, that are independent, would do that sort of revenue direct to hotel. Our overall cost of acquisition is 7%. And my return on investment on meta and so on with Bookassist is 33 to one. You know, for me that is just a tremendous performance. Where I do fall down is on mobile. A lot of my business is US and it's a generation that probably aren't going to use their mobile phones. I have only about a 30% uptake of my total reservations is on mobile. Whilst that might be lower than most hotels in Europe, it is because of my, my market segment there for North America.

Des:

So what would be your strategic approach , with the website, booking engine, etc

Paul:

My booking engine is my business partner. I never see it as sort of a , just a , just a service provider. I honestly think I challenged the team at Bookassist to do the job. And for years I used to set turnover targets for my booking engine by month. And they didn't like it at first, but they got used to the whole idea. It kept everybody real. And the information I exchange with Bookassist is, is quite revealing about my business. So I share my forward book with Bookassist. So they see my business on the book, they see which months are performing well, but also then we can see which months are lagging behind because it also shows my pace and pickup . I will share with Bookassist the 90 day forward star reports, on ad hoc basis, so they can see how the whole city's performing. And in return I ask Bookassist to tell me about how their portfolio of hotels is performing because if for some reason the 12th of August is just ridiculously weak in Dublin, is that typical of all the hotels? And if it is, why is that and what are we all doing about it and what could we all do together to make it better? So, you know, what initiatives, what sort of hooks can we throw out there to the audience? You know, is it late check in, late check out free drink on arrival , uh, discount rate , 10% off two nights, 15% off three, whatever it might be. So it is really important to challenge the guys in Bookassist to work hard because we're working hard too. And they do, which is just great.

Des:

Why do you think this has been so successful for Buswells compared to many hotels who wouldn't reach that level?

Paul:

I think longevity is probably one of the reasons, if I'm really honest. So , uh, I'm here a long time. My revenue manager's here a long time. So we haven't chopped and changed. Sometimes hotels when they get new revenue managers and new sales managers, one of the first things they like to do is strike out the old booking engine, strike in someone new. You know, for me this business is long game business, so the decisions I make today are going to affect me next year, the year after, the year after that, and so on. So the foundations of a good business is business partnerships that work and ones that challenge each other, but they're collaborative at the same time rather than we're pitted against each other.

Des:

So what do you see as the main challenges for hotels in Ireland today?

Paul:

Oh , I think some of the main issues are probably , you know, government-led cost increases are hurting hotels at the moment - VAT has become a sort of a budgetary football, you know, it's up , it's down . Things that make business unable to plan or be certain about the planning that they do is very poor for business generally. So , uh, you know, imposed cost increases drive down EBITDA. We've seen, you know, significant wage increases over the last number of years and we're going to have another one next year. Auto enrollment obviously is going to be a new cost to the system. Sick leave is now a paid leave. And you know, hotels have to adapt and we'd have to absorb all that and that's not the issue. But the cost pressure is becoming a concern because, you know, levels of reinvestment will fall if EBITDA is falling because then that's just the way it is. The challenge going forward will be how do you pass across the charge in a reasonable way that the consumer is ready to accept it. And that means do we need to up our service levels? Is it , is there a compromise that we have to produce even more service or touch points along this , the service journey, our customer journey, and then drive on price that way. But collectively, we all , if we all get very high in pricing, the knock-on effect will be maybe not this year, but lowering maybe demand across Europe into Ireland the year after and so on. Because, you know, we don't have the weather here and we accept that, but we've lots of things going for us and uh, the Irish are renowned for their welcome. But it it has to be built around a whole package that the consumer can afford. So getting here and transport, meals out, hotels, activities. And so on. So it's a , you know, it's quite a microcosm of lots of things and we're all pretty much, we have to coexist here. So there's a real tourism product that everybody has to rely in the food chain on it. So we all must drive good value for money for the consumer. And value for money is not always just about price. It's about experience and service and other touch points that deliver an experience that they go away and think " jeepers that was great ."

Des:

So is the, the increase in cost base in Ireland, is that in danger of damaging the tourism product.

Paul:

Ireland's cost base is 78% higher than the EU average. Irish energy costs are 14% higher than the EU average. This is not a cheap place to do business. It never has been by the way, but it's never been either a cheap destination to visit over many years. So I think there's a lot of discerning customers who want this experience and , and we see that right across the 'States at the moment. We have 17 gateways now with Aer Lingus, you know, we will probably have about three and a half or 4 million US visitors into here next year. You know, that is a huge amount of people - we punch way above our weight, disproportionate to the size of our country. It's built on the achievement of the whole industry. So I mean, they don't just come here because we're here. I mean, the whole industry in Ireland spent a lot of time developing relationships with tour operators visiting the marketplace in the US you know, and doing the real shoe leather stuff that makes it all click and work together. So we're very good at that. But we're certainly mindful other competitors are watching what we're doing. If they can find a way to steal a march on us, that's what they're going to do. So we , you know, we can never be too complacent about value and the way we are in the market or perceived in the market .

Des:

So if we look at the US, does Trump's return, you know, a likely stronger dollar, does that make Europe attractive for US tourism in the years ahead? Is it an opportunity?

Paul:

Certainly the industry in the States are saying that forward bookings from the States are very strong next year. So we , we shouldn't see any particular problem . Of course , the Ryder Cup is coming in a couple years after that. I think there will be a very good football game here next year - I think we'll have another Croke Park event next year. Uh , and I think it's always all to play for, and I know Tourism Ireland, at the moment, we're working very much around developing the Halloween piece because Halloween is celebrated more in the United States than Christmas and Ireland is the birthplace of Halloween. And I think we're sort of at baby steps on that. But that's a whole new possibility for us in the shoulder period, particularly where we all have plenty of room , and therefore there's even better value for visitors at that time of the year. So I would look forward to great confidence that we will continue to do well.

Des:

So we are here mid-December, the incoming Irish government after the election might not be much different from the last time. Uh , do you think that's a , a good thing or a bad thing for the hospitality sector?

Paul:

Well, clearly we're going to end up in a new minister for tourism. We might be in a new department. So I don't know. Over the last five years, the Fianna Fail / Fine Gael Coalition delivered very important supports for the industry. I mean, we forget very quickly that without the Covid supports during the , during Covid, none of us would've survived. So , you know, we can grumble about things we didn't get but over the five years we did pretty okay out of the government exchequer in terms of support. So , you know, we're well placed to continue to do well and be prepared for whatever downturns are coming. And you , you know, maybe there's one coming in Europe right now. There's a lot of problems in France. The political system's probably about to collapse , uh, German manufacturing's on the rack at the moment. And a lot of that's been driven by energy costs. And also, you know, I think Europe's in a bit of flux at the moment. And obviously the war in Ukraine and Russia and, you know, geo geopolitical things are probably always going to come into play. And it would seem the world's gone a wee bit crazy at the moment. So hopefully we'll get to a place that will sort of relax and calm down a bit. You know, we have a very responsible business. The industry knows what to do, and I think if we're allowed to get on and do it in a , in a sensible way without silly regulations or too many indirect costs and too many government imposed costs, we'll deliver.

Des:

Paul, thanks again very much for your time . Thank you .