Bullish Dalata Hotels eyes UK expansion

Helen Crane

Kevin Street will be Dalata's 16 Dublin hotel

Source: LenDog/Creative Commons

Irish hotel group Dalata outlined plans for an aggressive UK expansion programme this week as it posted a 28.8% rise in revenue and 55% rise in pre-tax pro ts for the year to 31 December 2016.

Revenue rose to €290.6m (£247.6m) last year, while pre-tax profit leapt to €44.1m. The group’s portfolio also rose in value to €66.6m and earnings per share rose to 26.58 cents, compared with 24.76 cents in 2015.

“We are having detailed discussions with developers and landlords [in the UK] and we hope to ramp that up as the year goes on,” Dalata’s deputy chief executive Dermot Crowley told Property Week.

Dalata was largely looking to take on leases in the UK rather than acquiring properties, he added. “We are one of the few hotel groups that has a strong balance sheet to offer as a covenant,” he said.

“We have around €600m in the bank and we are willing to put that behind these leases.”

Brexit fuels UK expansion

The group said that the fall in the value of sterling following the EU referendum had made Ireland a more expensive destination for UK visitors and had in influenced its decision to focus its expansion plans on the UK.

Dalata, which is listed on both the Irish and London stock exchanges, currently owns or operates 41 hotels, most of which are in the Republic of Ireland.

It has eight UK hotels in London, Manchester, Leeds, Cardiff and Northern Ireland. It also has 1,200 rooms under construction across four hotels in Dublin, Belfast and Newcastle. Among Dalata’s target locations in the UK are Glasgow and Edinburgh, which would mark its entrance into the Scottish market.

Other areas of interest include Manchester, Birmingham, Bristol, Brighton and Milton Keynes, which Crowley described as “locations with a combination of leisure and corporate business”.

Last year, occupancy rates across Dalata’s hotels rose from 80.2% to 82.1% and the average room rate increased from €87 to €97.60. The group also outperformed the Dublin market in terms of revenue per room, recording growth of 19.9% in 2016 compared with average growth of 16.1%.

However, Dalata warned that significant fluctuations in the value of sterling could affect reported earnings and asset values in the coming year. The group’s UK subsidiaries report their results in sterling, which are then converted into euros.

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