THE Dublin property developer, Paddy Kelly, has acquired a majority stake in the city's first all-suite hotel, Stephen's Hall, at Lower Leeson Street, Dublin 2. Mr Kelly and his three partners have paid in excess of £3 million for the hotel, which was developed in 1989 as part of the Earlsfort Centre.

Mr Kelly holds a 75 per cent stake in the company while two Aer Lingus pilots, Peter Redden, and Gerard McNulty, have 10 per cent each. The remaining 5 per cent is held by Jim Murphy, who has been general manager of the hotel since it opened.

Mr Kelly, who has considerable property interests in Ireland and the UK, was "invited" to take a majority holding in the hotel, which returned an operating profit of £430,000 last year. Mr Kelly and the three other investors will be able to avail of more than £2 million in capital allowances.

Mr Kelly says he views his involvement in Stephen's Hall as "a long-term family investment rather than a speculative move". It was a very profitable, well-run hotel in a superb location which would stand the test of time, he said.

The three-star hotel is constantly used by international entertainers and film crews visiting Ireland. The Cranberries are among the regular guests.

The 37 all-suite hotel was partly funded by a group of 39 Aer Lingus pilots under a BES scheme which gave them 52 per cent of the equity. Silvermines was the other main investor with a shareholding of 30 per cent. The pilots subsequently acquired the Silvermines equity holding. With the statutory five-year BES term expired, the group has now made an "orderly and profitable" exit, according to a statement.

The hotel opened in November, 1989, and incurred cumulative losses of £240,000 over the first three years because of a recession and the effects of the Gulf war on tourism.

There has been a significant upturn in business since then, beginning in 1994 when the hotel reported an operating profit of £316,000. Last year's returns were even better at £430,000 due in the main to an occupancy rate of over 90 per cent for much of the time.

Mr Murphy said there was an enormous demand for all-suite accommodation in the city and they were currently looking at a number of new projects, including some management contracts in the industry. Mr Murphy and Mr Reddin will head up the business as joint managing directors.