Dalata’s stellar trading update underlines the distortion in the market due to State interventions

In addition to the obvious implications for the performance of the company, the remarkably upbeat trading statement on Wednesday from the Dalata hotel group suggests two further things.

The first is that the State’s decision to take over between one-fifth and one-quarter of all tourism beds in the State for refugees is having an enormously distortive effect on the market, and Dalata’s data is the most illuminating quantification of this phenomenon yet.

The group, which owns the Clayton and Maldron brands, said its like-for-like revenue per available room (revpar) was 21 per cent ahead of 2019 levels between September and November. The wider economy has recovered well from the pandemic, but not that well.

The influx of refugees from Ukraine and elsewhere, many of whom have nowhere else to go apart from hotel rooms commandeered by the State, is the critical factor in keeping room rates so buoyant by taking such a huge chunk of rooms off the commercial market.

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That it is the critical factor is made obvious in the disparity between revpar increases in Dublin, where fewer refugees are housed and where revenues per room were up 18 per cent, and in regional areas of the State where most refugees stay, and where revpar rose by a staggering 30 per cent on pre-pandemic levels.

If some of this State intervention in the market ends up being quickly rolled back, in the case of the war ending and the Ukrainian government asking for its citizens to return home to rebuild, then the hotel market could sway again.

The second thing that Dalata’s data suggests is that the hotel sector may have a difficult job convincing the Government to extend further supports for the sector, such as its lower VAT rate and some energy supports.

Aside from its galloping room rates, Dalata’s revenues are on course to breach €500 million for the first time ever. The company is also highly profitable.

Dalata is an exceptionally well-run company and it also has huge advantages of scale over smaller operators, most of whom will never be anywhere near as profitable. But it still doesn’t help the industry’s lobbying cause that the sector’s biggest and most prominent operator is coining it like never before.