Cardiff freehold expected to boost Dalata Hotel Group earnings

The Dalata Hotel Group has bought the building which houses its Clayton Hotel in Cardiff, in a move analysts estimate will add nearly €2m to group earnings next year.

Dalata yesterday announced it has spent around €27m on the freehold interest of the Clayton Hotel Cardiff, by means of acquiring current owner Rush Ltd.

The Irish hotel group — which runs both the Clayton and Maldron chains — has operated the 216-bedroom, four-star Clayton in Cardiff on a leasehold basis for a number of years.

Dalata currently holds a leasehold on the Welsh property until 2046, at an annual rent of just over £1.5m a year, which is subject to upward-only rent reviews at five-year intervals.

At current exchange rates, full ownership of the property will add around €1.7m to Dalata’s 2017 earnings before interest, tax, depreciation, and amortisation (ebitda), Davy Stockbrokers yesterday predicted in a research note on the company.

Dalata’s deputy chief executive, Dermot Crowley, said the Cardiff hotel has performed “very strongly” this year. He said the move is consistent with the group’s stated strategy of buying out the freehold interests of those leased properties with future unpredictable rent reviews.

“On completion, the acquisition will add around 1.8% to our 2017 forecast ebitda of €92m. We estimate Dalata now has around €15m left to spend,” said Davy analyst Robert Stokes.

Dalata now outright owns 24 of the hotels in its portfolio, runs seven on management agreements, and owns nine on a leasehold basis.

The purchase of the Cardiff freehold follows on from Dalata doing likewise with the Clarion Hotel in Sligo and the Tara Towers in Dublin in the past year.

Dalata recently signed an agreement to operate the former Burlington Hotel in Dublin on a leasehold basis, under the Clayton brand.

It also said, last month, that it tentatively plans to pay a maiden dividend — possibly based on its first-half 2017 results — to shareholders next year.