Jury's Doyle earnings set to improve due to increase in Dublin room rates

HOTEL room rates in Dublin are set to rise this year improving the earnings outlook for the Jury's Doyle hotel group according to Davy Stockbrokers.

In a detailed analysis of the hotel sector Davy analyst Barry Dixon comes out strongly in favour of Jury's maintaining an e11 price target in the share price which has been heading rapidly in that direction in recent days.

Mr Dixon points out that room revenue rates are more important than occupancy levels and provide a direct impact on the bottom line.

"Dublin room rates declined on a year-on-year basis for most of 2003, although the rate of decline has abated and an increase of 2.4% was recorded in February. Relative to 2000, absolute room rates and occupancy levels have not declined by as much as in the London market.

"Therefore, it appears that the room rate environment is improving with both the London and Dublin markets showing increases. The question now is whether the current recovery will be sustained or not," he said.

Mr Dixon points out that in 2003, FTSE-100 earnings are estimated to have increased by 12.3%.

Focusing on Jury's Doyle Mr Dixon said they are assuming 4.5% growth in RevPAR on average across the group in 2004, 1.2% of which is from room rates increases.

Mr Dixon said the group has good organic growth potential and said: "The product strategy is attractive. Jury's Doyle has developed the very attractive Jury's Inn product, which is positioned at the upper end of the budget hotel market in Ireland and the UK."

Pointing out that the company operate 16 four star and five star hotels and 14 Inns with five new Inns currently under construction, he said the company is highly cash generative, which, combined with a strong balance sheet, provides adequate cash to fund the company's expansion.