Dalata eyes gradual openings but warns of three-year hotel recovery

The owner of the Clayton and Maldron hotel chains is hopeful of gradually reopening some of its properties, on a phased basis, later this year.

However, the Dalata Hotel Group has already factored in the probability of it generating virtually no further revenue for the rest of the year and sees it being at least three years before its business returns to the levels seen in 2019.

Speaking after the group’s agm – which was conducted remotely, with shareholders only allowed listen in by phone – chief executive Pat McCann said he sees next year as being one of rebuilding operations before “some sense of normality” returns in 2022. Even then, he said Dalata is unlikely to reach 2019 revenue levels – of around €430m – until after that.

While speculation is rising that the Government’s phased plan to reopen the economy could see scope for domestic travel and holidays by the late summer, Mr McCann said Dalata can only plan for any reopening based on what restrictions are lifted.

“Once travel restrictions get lifted that marks the trigger point for us,” he said.

Dalata is unlikely to open all of its closed hotels at one time and even then, certain elements of each hotel – particularly bars and gyms – will likely remain closed for longer.

The group is likely to only reach 25%-30% occupancy rates initially, Mr McCann said. However, he said the business still has thousands of bookings in its system which have not been cancelled. He said he expects a strong rebound from domestic holidaymakers and corporate travel when restrictions on those areas of the market are eventually lifted.

Dalata has closed 29 of its 44 hotels across Ireland and the UK. The 15 that remain open are housing HSE and NHS frontline staff as well as homeless people and asylum seekers.

A total of 3,500 staff have been laid off – either temporarily or permanently – and the situation will be reviewed when the Government’s Covid-19 wage subsidy scheme runs its course at the end of June.

Dalata said Covid-19 has had “a very significant” impact on its business, with first quarter earnings down around 26% to €17.7m. Mr McCann said the company remains in a strong financial position – with sufficient cash for “a very long time” – and remains in “pretty good shape overall”.

However, he said when the crisis clears Dalata will be seeking a number of initiatives from Government, including a cut in Vat for the hospitality sector. He said the tourism sector led Ireland’s recovery from the financial crisis and can do so from this crisis. Mr McCann also said the current crisis could present takeover opportunities for Dalata in the UK and mainland Europe.

Meanwhile, Cushman & Wakefield – which owns the commercial property arm of Sherry FitzGerald – has said that hotel development in Ireland will decline this year, due to the virus impact. Mr McCann said the Covid crisis could set back the development of new hotels in Ireland for up to five years.