Shares in Dalata Hotel Group rose on Wednesday as Davy raised its earnings forecast for the company on the back of rising hotel room rates and the development plans.
"Dalata has 925 new rooms due to open by the end of 2018 - this equates to almost 20 per cent additional capacity for a hotel that is achieving occupancy above 80 per cent," said Davy analysts David Jennings and Robert Stokes in a report.
Meanwhile, the analysts have raised their 2016 and 2017 earnings before interest, tax, depreciation and amortisation estimates for Dalata by 3 per cent to €83.3 million and €92.2 million, respectively, as they have grown more optimistic about the company’s revenues per available room (RevPar).
They now see RevPar for Dalata’s rooms in Dublin surging by 23 per cent this year, compared to 17 per cent previously, albeit slowing to 7.5 per cent in 2017.
“We believe these forecasts are relatively conservative given the supply/demand imbalance that is likely to persist in Dublin beyond 2018,” the analysts said. Dalata’s shares rose 1.3 per cent on Wednesday to €3.95.