Dalata agrees €65m deal with German investor for Dublin hotel
Hotel group plans major ‘staycation’ advertising campaign once Covid-19 restrictions are lifted
Dalata chief executive Pat McCann. Photograph: Maxwell Photography.
The group is also planning a major advertising push to attract domestic holidaymakers later in the year, assuming that hotels are permitted to at least partially reopen with stringent safety and social distancing rules in place.
The price tag on the deal announced on Tuesday includes the purchase price €61.95 million and a rent-free period of one year.
The agreement will see the 187-bed canalside hotel let on a new fully repairing and insuring lease for a 35-year term, with a rent of just over €3 million per annum. The rent will be reviewed on a five-yearly basis.
Dalata will complete the final part of the hotel development, converting 38 Charlemont Street into additional bedrooms and a Red Bean Roastery Café.
The hotel was valued at €77.4 million in its accounts on December 31st 2019 on the basis of Dalata owning and operating the asset, and contributed €4.3 million to Dalata’s EBITDAR in its first full year of operation.
Company chief executive, Pat McCann, emphasised that the slightly lower sale price reflected the fact that it “isn’t giving away all of those earnings” and will still generate profits from the property long into the future after selling it.
The deal, which Mr McCann said was in train before the arrival of Covid-19, is expected to be completed by the end of April 2020.
“We actually assumed it mightn’t complete because of the situation with coronavirus, but both sides were anxious to do the deal in the end. It shows the strength of the relationship with Deka,” he said.
The sale price will help to bolster Dalata’s cash reserves at a time when the industry is in crisis due to the lockdown.
“We have €140 million or €150 million in cash. We’re in good shape even if this lasts well into next year,” said Mr McCann.
He said the group was unlikely to do any more sale and leaseback deals in the short term but it “may well in the long-term. If an opportunity arises, we will take the capital gain.”
Some 15 of its hotels are currently still in operation, mostly to accommodate essential health and transport workers. Mr McCann said social distancing measures in place for these guests included room service only for breakfast, with the meal delivered to outside the door in a disposable bag which is taken away afterwards.
Linen is also left outside the doors for guests, particularly health workers, to make their own beds. Mr McCann acknowledged that those measures were only “short-term” and may not feature in their current form with paying guests, if hotels are permitted to reopen whenever the lockdown is eased.
He said he anticipated an easing of restrictions for hotels possibly in September, and that Dalata would go after domestic business with a “wide ranging campaign based on the offer”.
“We will still have our corporates coming back to us. But it would be a waste of our time chasing international leisure business. Irish people will also be nervous of going abroad. Our total focus in 2020 will be on the domestic market.”