Dalata Hotels mulling European expansion over next 10 years

By Geoff Percival

The Dalata Hotel Group is considering expanding its Clayton and Maldron brands into mainland Europe over the next decade.

The company — currently embarking on a significant five-year expansion in the UK — is already assessing markets on the continent with a view to further geographic expansion once it completes its British growth plan.

Speaking on the back of a strong set of annual results for 2017, Dalata’s deputy chief executive Dermot Crowley said it will make more sense, in time, to look at growing in new countries rather than trying to expand into UK cities where it has little chance of long-term growth.

As it stands, Dalata will be busy over the next five years building up its UK business where it hopes to add 7,000 new rooms; 1,200 to be added this year. That would increase its room numbers to around 10,000 across Maldron and Clayton hotels in 20 UK cities.

Mr Crowley said Dalata is aiming to be the number one player — in its 20 target cities — in the three-to-four star market in the UK, ahead of the likes of Hilton and Marriott. “We think that is very achieveable,” he said.

Dalata yesterday reported a near 20% increase in yearly revenues to €348.5m, with pre-tax profit up by more than 75% to €77.3m and basic earnings per share almost doubling to 37.2c. Adjusted EBITDA came in at €104.9m, 23.3% up on the previous year and ahead of the company’s expectations. In the Dublin area, alone, Dalata’s RevPAR (revenue per available room) shot up 11% last year, outpacing the broader market nearly 4%.

On the back of the results, Dalata announced long-since mooted plans for a maiden dividend - amounting to 20%-30% of post-tax profits. An interim dividend will be declared with Dalata’s first-half figures in September. Mr Crowley said the group can afford — with the expected cash it will generate in the coming years — to continue investing in its UK division and reward shareholders.

The company’s shares — up by over 35% in the past year — jumped nearly 3% on the announcement.

Dalata is also due to open four hotels on the island of Ireland over the next 12 months — two in Dublin and one each in Cork and Belfast — and is open to opening more hotels here, despite its primary growth focus shifting to the UK.

It said it continues to “actively seek opportunities” to expand its portfolio in both Ireland and the UK.

Mr Crowley said Dalata has yet to see any negative effects from Brexit uncertainty, despite lower numbers of UK visitors to Ireland.

British visitors make up 15% of Dalata’s Irish customer numbers, with the remainder coming from mainland Europe, North America and a vast chunk counted as domestic visitors. Some inflationary pressure on costs — payroll and food — has been the only Brexit effect so far, he said.

Dalata also said trading levels since the turn of the year have been strong — both in Ireland and the UK —and slightly better-than-expected.

Meanwhile, Goodbody hailed what it called “a good release” from the group.

“The positives include the fact the group has started the year well, the commencement of a dividend payment this year, the pipeline appears on track and the solid balance sheet. The business is in very good shape,” said Gavin Kelleher.