Dalata eyes four more hotels in UK this year

The Dalata Hotel Group plans to speed up its expansion in the UK this year. It hopes to open up to four more hotels there before the end of 2017.

Dalata eyes four more hotels in UK this year

The group eased its UK expansion plans after last June’s Brexit vote.

However, it is now targeting openings in 8-10 British cities over the next five or six years. The move will be via a dual-brand expansion that incorporates the group’s Clayton and Maldron hotel brands.

Speaking on the back of a strong set of annual results, yesterday, Dalata’s deputy chief executive, Dermot Crowley, said management is eyeing openings in Glasgow, Edinburgh, Birmingham, Bristol, Brighton, Manchester, Milton Keynes, and the outskirts of London.

Dalata already has six Clayton Hotels in the UK in London, Cardiff, Leeds, Manchester, and Croydon, on an owned or leased basis.

In November, Dalata announced plans to open a four-star 226-bedroom hotel in Newcastle, which will mark the first Maldron Hotel in the UK when it opens in 2018. The model being used for that will form the blueprint for the group’s growth strategy in Britain.

The model involves a new build being sold by developers to investors and then leased on a long-term basis by Dalata. The group said it is encouraged by the reaction of developers and potential investors.

Dalata yesterday reported a 29% rise in group revenue, for 2016, to €290.6m; with pre-tax profits up 55% at €44.1m and adjusted diluted earnings per share rising from 24.76c to 26.58c. Adjusted earnings before interest, tax, depreciation, and amortisation, was up by 36% at €85.1m and 3% ahead of analyst expectations.

Revenue per available room rose by almost 15% to €80.20. In its existing UK hotels, Dalata outperformed the market in revenue per available room terms in Manchester, Cardiff, and Leeds. That performance was key to the decision to step up the UK expansion plans from this year, Mr Crowley said.

In Dublin, Clayton and Maldron hotels outperformed the market with revenue per available room growth of almost 20%, compared to 16% for the city as a whole.

The group’s Dublin hotels’ revenue was up by over €31m for the year. Dalata spent €151m expanding its portfolio last year, adding 1,600 rooms. Another 1,200 will come on stream, in Ireland, by mid-2018, with new hotel openings due in Dublin, Belfast, and Cork and some existing sites extended.

While most expansion will be in the UK, Dalata is still considering buying the freehold of a number of Irish-based hotels it runs on a managed basis.

Management said in yesterday’s results that trading has been marginally ahead of expectations in the first two months of 2017 and it is yet to see any negative effect from last year’s Brexit vote or from the weakening of sterling.

Revenue per available room growth in Dublin and regional Ireland, since the turn of the year has been in line with expectations but growth in the North, London and provincial UK properties has been stronger.

Management said it is still constantly reviewing the much-touted idea of paying a maiden dividend to shareholders, which had been expected sometime later this year. With its investment drive still in gear, any dividend is unlikely to be paid out until 2018. Dalata’s share price was marginally up in Dublin yesterday.

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