Dalata expects record revenue across a number of its hotels in September, the company’s chief executive said, after it posted results showing a 19 per cent increase in profit for the first half of the year.
The State’s largest hotel group said profit before tax increased to €42.2 million in the first six months of the year on revenues of €201.9 million, which were up 12 per cent compared to the same period in 2018 but slightly behind analyst forecasts.
Chief executive Pat McCann told The Irish Times that room prices in its key Dublin market weren’t softening, with record revenues expected this month. Yet Dalata is unlikely to expand its portfolio here in the short term given its market share of about 20 per cent.
Instead, the company will continue to build out its UK portfolio in line with its stated aim to build up to 8,000 hotel rooms. That aim was helped by its announcement on Tuesday that it had acquired a site in Shoreditch, London, for £32.05 million (€35.17 million) that comes with planning approval for a new hotel. The site, which will be a Maldron hotel, will have between 130 and 140 rooms and is expected to open in early 2022. Dalata expects the total cost of development to be about £60 million.
Mr McCann noted that expansion in regional Ireland appears unlikely except in Galway. The rest of Ireland, he said, is "not sustainable for us". The regional Ireland hotels portfolio posted a strong performance in the first half, with revenue per available room up 0.3 per cent to €66.32 and occupancy of 71.8 per cent. Total revenue rose 7.5 per cent to €38.5 million driven by the additional rooms with the opening of Maldron Hotel South Mall in Cork in December 2018 and the extension of the company's Maldron Hotel Sandy Road in Galway. That part of the portfolio took a hit, Mr McCann said, as a result of the loss of Norwegian Air flights to Shannon which was a "big contract" for the company's Limerick hotel.
Dublin hotels
Performance across the company’s Dublin hotels was slower in the period, with occupancy up marginally to 85.5 per cent while revenue per available room (RevPAR) actually fell by 0.5 per cent in the period to €106.57. That was a better performance than the market in general, which recorded a 1.4 per cent fall in RevPAR, the company said.
“Dublin is probably a little bit softer on a number of months but quite strong on others,” Mr McCann said, noting that July was weaker than the previous year in the capital as a result of fewer events scheduled.
The company’s UK portfolio was again the bright spot, with RevPAR growth of 3.2 per cent and occupancy of 83.6 per cent. Total revenue rose to €39.9 million from €32.5 million the previous year. Its UK portfolio comprises eight Clayton hotels and three Maldron hotels.
“The outlook for the balance of the year looks very positive,” Mr McCann noted.
In addition to its London acquisition, the company said it had signed another extension on its lease of the Ballsbridge Hotel which now expires on December 31st 2021.
Goodbody analyst Gavin Kelleher said the results were "solid" although he said the broker would be taking a more cautious view on Dublin's RevPAR prospects "given management commentary on July and August trading".
The hotel group increased its shareholder dividend by 16.7 per cent to 3.5 cent per share.
