Dalata Hotels set for 15% UK room growth by 2019

The Dalata Hotel Group is expected to have increased its UK room capacity by 15% inside the next two-and-a-half years.

The group is the biggest hotel operator in Ireland via its Clayton and Maldron brands. It already has four hotels in Britain; in London, Manchester, Leeds and Cardiff.

However, initial plans to open seven more in an expansion drive starting later this year were delayed due to uncertainty arising from June’s Brexit vote.

At the publication of the group’s first-half results last week, management denied that its UK plans are now more long-term than short-to-medium-term and said it is keeping a close eye on the UK market and lease terms there.

The group is looking to expand regionally, around the UK by hoovering up hotels on a leasehold basis, rather than via an outright ownership model.

Management said it has seen no negative effect from the Brexit vote as yet and has good short-term visibility on bookings, on both sides of the Irish Sea.

It said that outside London its hotels had a very positive first seven months to 2016, while London had been impacted by increased supply and European terrorist attacks denting travel figures.

In a wide-reaching research report on the group, published yesterday, Davy Stockbrokers said it expects Dalata to add 15% to its UK room portfolio by 2019. Around 27% of Dalata’s total room stock is currently based in the UK.

“Revenue per available room growth in the UK has lagged Ireland in recent years and is likely to achieve growth of only 0% to 2% in 2016. We are forecasting a pick-up in revenue per available room growth for Dalata in the UK from 2017 to 2019,” said Davy’s leisure sector team of Robert Stokes and David Jennings.

They said the refurbished and expanded Clayton Hotel in Chiswick, west London, should be a key growth driver.

Dalata’s share price was up by nearly 1.3%, to €3.95, yesterday, but remains nearly 30% down on where it started the year. However, Davy sees around 26% upside potential. Yesterday it set a new 12-month price target of €5.05 for the stock.

Last week, Dalata said it hoped to pay a maiden dividend at the halfway point of next year.