On holiday, Paul Dermody tells people he is an accountant. This prevents him being drawn into conversations about the hospitality industry and, anyway, when he began his career at what is now Greenalls Plc, he was an accountant.
How does an accountant get involved in the operational side of the hotel business? he is asked. "I don't need to," says the managing director of Greenalls Hotel & Leisure. "What I need is to get involved with good operators."
Dermody, however, gets annoyed on behalf of his general managers when they are referred to as operators. "I think the term ‘operator' is demeaning," he says. "A general manager doesn't just operate the place, they are businessmen running very big businesses." To illustrate this, he cites Mike Maloney, general manager of the Belfry at Wishaw in Warwickshire, who manages a business with a £24m turnover, 700 employees, three golf courses and 324 bedrooms.
Dermody allows that some of the De Vere hotels division's general managers will have strengths as traditional hotel operators, but argues that they must build a team on other people's strengths in sales and marketing, finance and accounting.
Dermody is in charge of De Vere hotels, which he describes as specialising in the golf and conference market; Village Leisure Hotels, which have health and fitness centres attached to them; and the recently announced Greens stand-alone health and fitness clubs.
De Vere consists of 16 hotels, the most recent acquisition, in May at a cost of £16.2m, being the 1,000-acre, 142-bedroom Slaley Hall in Northumberland. Village Leisure Hotels is due to open its 10th venue in Cardiff in August, and has 1,600 advance members for the fitness club, with an opening target of 2,000.
Greens takes the hotel out of the Village Leisure product and makes use of the expertise Greenalls now has in running fitness clubs for an average of 4,000 members. "We are the third-largest player in the health and fitness market, with 50,000 members," says Dermody, "and we have decided we can go down the stand-alone route without the beds."
The first Greens will open in Cambridge next spring, followed by one in Croydon, Surrey, later in the year. Sites in the North-east, South-east and Midlands are currently being negotiated and will cost between £4m and £7m to develop, with returns of 17% expected. In the next year, Dermody will spend more than £40m in capital investment across Greenalls' three sectors, buying, building and expanding the existing businesses.
The acquisition of Greens points to a much wider trend: revenue diversification. "This is the only way forward," Dermody insists. "Revenue per average room is great, but we must look at the overall revenue generation of a unit. At the Belfry, we can have people using our facilities who never see a bedroom."
Indeed, Maloney points out that it is theoretically possible for him to make more money in one day with every bedroom empty than with every bedroom full.
Part of this is down to the Belfry's renown as a world-class golf course - it will host the Ryder Cup competition again in 2001. This in turn attracts not only golfers but also the conference market.
"Golf is a facility which drives the business," says Dermody. "It is a response to the demand to satisfy the aspirations of the conference organiser." First they wanted leisure facilities, next they wanted golf, and now, Dermody believes, they want quad-biking and karting. By satisfying the conference organisers' demands for leisure facilities, De Vere found that the weekend leisure market followed, and to some extent the same is true of golf.
At the Belfry, 35% of the revenue is directly attributable to the golf courses - that is, from those playing golf. But, Dermody believes, the courses attract those who want to be in a golfing environment. "By its very nature," he says, "golf means countryside, open space, fresh air, relaxation - the Belfry would not be as successful without its golf."
A further example of the diversification strategy in operation is the expanding of the time-ownership schemes pioneered at Cameron House Hotel, Loch Lomond (Caterer, 30 May 1996, page 42). It has 50 lodges, which are sold by the week at a cost of about £12,000 for a week in perpetuity. Aside from this revenue, Dermody reckons each lodge is worth an extra £400-£500 a week in food and beverage revenue.
Slaley Hall already had six lodges and eight one-bedroom apartments for time ownership, as Dermody prefers to call it, but he believes that, with the De Vere name behind it, the lodges will emulate the success of Cameron House.
De Vere has just announced that the 136-bedroom Belton Woods in Grantham, Lincolnshire, will have a total of 40 new-build lodges, six of them by the end of this year. For the timeshare owner, the extra facilities on these sites - such as the restaurants, the health and fitness facilities and the golf courses at Slaley Hall and Belton Woods - give added benefit. Once again, it comes back to looking at the overall package and offering quality and value.
With economists already forecasting recession, Dermody knows that not being beholden to one market is a positive. His responsibility lies with the overall picture but that does not mean he tries to do it all himself. He believes in empowerment and in getting those who work for him to talk to each other through project teams. "The answers are out there and the skills base is out there," he says. "It is just using your people in teams across the divisions to come up with the best answer."
This trust in his employees to produce the answers is, he believes, his underlying strength. "Accountants are the worst for wanting to do everyone else's job," he says, "but I am a great believer in trust. If I can't trust people working with me, they shouldn't be here."
This confidence can also be his weakness, however, and he readily admits that in the past he has given people that extra 10% to make a go, or a failure, of things.
Dermody is hands-on and very nosy by his own admission, visiting anywhere he feels he can learn something. "There are no secrets in this business, so look around. I tell the GMs, the chefs, the sales people to go out and see what's happening in this wide, wicked world - don't reinvent the wheel," he laughs.
With this in mind, it is little surprise that even when Dermody goes on holiday - he diarises his holidays as soon as Greenalls' board meeting dates are set - he still finds it hard to unwind. "How the hell do you relax?" he asks. "First thing I did when I got back last time was send De Vere's operations director to see how the place worked. How can you not be working? You're watching all the time!"