Dalata buys four-star hotel in Birmingham for £31m

Hotel la Tour located in UK city centre to be rebranded as a Clayton hotel

The company behind the Clayton and Maldron hotel chains is buying a four-star property in the UK for almost €35 million.

Dublin-listed Dalata said on Friday that it has agreed to buy the company that holds a long lease on the Hotel la Tour in Birmingham.

Dalata is paying £31 million (€34.9m) for the business which it said earned €2.14 million before tax, interest and write offs in the 12 months to the end of March.

The hotel opened in 2012 and is located minutes walk from Birmingham's New Street and the Bull Ring shopping mall in the centre of the city. It is also close to the station for the proposed high-speed rail line connecting Birmingham and London, which is due to open in 2026.

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It has 174 bedrooms with the potential to add 44 more, a restaurant, bar and conference facilities. The Irish group will rebrand it as a Clayton hotel later this year.

Dalata is buying Hotel la Tour Birmingham Ltd which has a 150-year lease on the property. The Irish company described this as an effective freehold yesterday.

The hotel group is using its existing banking facilities to pay for the company. Analysts at Davy stockbrokers calculated that this would leave it with debts equivalent to 2.5 times its earnings, still within the ratio of three times that the company has set for itself.

Dermot Crowley, Dalata's deputy chief executive, said the deal represented an opportunity to run a newly-built hotel in one of Britain's biggest cities.

“The acquisition is consistent with our stated strategy of rolling out both our Maldron and Clayton hotel brands across the larger UK cities,” he said.

News of the deal had little impact on Dalata’s share price, which dipped 0.4 per cent to €4.95 in Dublin yesterday.

Dalata is the Republic's biggest hotel group. It owns or manages 37 three- and four-star properties with more than 7,500 rooms in Ireland and Britain. Last year it had sales of €290.5 million.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas