Dalata eyes further City of London expansion
Hotel group says profit for 2018 rose 13 per cent to €87.3 million
Dalata, which runs the Clayton and Maldron hotel brands, has a pipeline of more than 2,190 rooms, which it plans to deliver between now and 2021.
Dalata Hotel Group is eyeing further expansion in London, its chief executive said on Tuesday after the company announced results that exceeded analysts’ expectations.
“Don’t be surprised if you see us doing more City of London deals,” Dalata chief Pat McCann said to The Irish Times, though he said no deals were currently in the pipeline.
The Republic’s largest hotel chain issued results for 2018 in which it said revenue rose 11.8 per cent to €393.7 million while profit before tax grew 13 per cent to €87.3 million. Davy stockbrokers said adjusted earnings of €119.6 million were 2 per cent ahead of expectations.
Across its 16 Dublin hotels, Dalata outperformed market growth with revenue per available room (RevPAR) rising by 8.8 per cent compared with market growth of 7.2 per cent. Occupancy also increased to 88.1 per cent.
Travel research group STR expects RevPAR to decline in Dublin this year. However, Mr McCann said that was not likely to happen at Dalata. “Dublin still has a long way to go and for Dalata obviously there’s upside still to be seen,” he said.
The company’s regional Ireland hotels didn’t perform quite as well as those in the capital. The 13 hotels in Cork, Galway, Limerick, Wexford, Portlaoise and Sligo produced revenues of €79.6 million but underperformed on growth in revenue per available rooms. Occupancy also dipped slightly on 2017 to 75.2 per cent.
Mr McCann noted that one of the group’s Galway hotels was being refurbished during the year.
Dalata’s UK portfolio of 10 hotels performed relatively well, although revenue per available room in London grew below the market rate.
Although Dalata recorded a subdued start to 2018, overall it had an “absolutely smashing performance” in the London market, Mr McCann said. The hotel group has made minor changes to its investment criteria to give it a “high level of protection” in the event of a no-deal Brexit, but Mr McCann added that other types of planning were unnecessary and “unrealistic”.
Dalata also said on Tuesday that it had acquired a site adjacent to its Clayton Hotel in Dublin’s Grand Canal Dock for €5.5 million. The site, occupied by Arena Kitchen Architecture and Starbucks, which fronts on to Cardiff Lane, will likely accommodate about 70 hotel rooms.
The group has a pipeline of more than 2,190 rooms, which Dalata plans to deliver between now and 2021.
The value of its properties rose by almost €100 million following a revaluation exercise. The owner of the Clayton and Maldron brands now holds hotel assets worth about €1.2 billion.
In October, Dalata agreed a €525 million debt facility that allows allows it extend its facilities and avail of an additional €175 million.
The company started paying a dividend to shareholders for the first time last year. This year, it said it intends to pay a total dividend of 10 cent per share, representing about 25 per cent of profit after tax.
Dalata is currently running a debt-to-earnings ratio of 2.3 times and increased its loans and borrowings to almost €302 million in the year. While it cited Brexit and other geopolitical troubles as risks, the hotel group said it was confident it would meet its target of announcing 1,200 new rooms this year.