Dalata Hotel Group planning maiden dividend next year

The Dalata Hotel Group is tentatively planning to pay its first dividend to shareholders next year.

The owner of the Clayton and Maldron brands listed on the secondary markets of the Irish and London stock exchanges two and a half years ago and upgraded to those markets’ main exchanges in June.

At its AGM in April, Dalata’s management suggested it would consider a maiden dividend based on 2017 financial performance.

However, speaking yesterday at the publication of a strong set of figures for the first half of 2016 group chief executive Pat McCann suggested a payment could be made earlier.

He said the matter has been discussed, and will be further, at board level and that “it is our ambition to start paying a dividend at some point; and that could well be in 2017”, Mr McCann said that, “all things being equal”, a mid-term/ interim dividend could be awarded to shareholders this time next year.

Dalata generated revenues of just over €130m in the first half of the year. That was up 33% on the same period last year. It saw adjusted earnings jump 50% to €35.3m.

It spent €73.4m on hotel acquisitions, with a vast chunk going towards new development sites which will deliver nearly 700 bedrooms by the end of 2018.

Since the end of June, Dalata has, as planned, acquired the Maldron hotels in Dublin’s Parnell Square and in Cork City centre, which it previously only operated. The group said it remains on the lookout for new build sites in Dublin as it looks to add a further 1,000 rooms to its portfolio in the capital by 2018.

Mr McCann said that while Dalata’s expansion plans for the UK have been delayed until there is more clarity over the effects of June’s Brexit vote, there is enough growth momentum from its Dublin and rest-of-Ireland operations to see the business continuing to progress for the next few years.

He said that no initial negative effects have been evident on either its in-bound business from the UK or its existing operations in Britain since June 23.

Mr McCann said the notion that the Dublin hotel market is uncompetitive is “simply not true”, with recent data showing the capital to be number one for occupancy rates across Europe and number 11 for room rates.

Management said it is also not the case that its UK expansion programme is now more of a long-term plan than a short- to medium-term option. Deputy chief executive Dermot Crowley insisted that “a really close eye” is being kept on the UK market and lease terms.

Regarding the takeover of the former Burlington Hotel site in Dublin — currently trading under the ‘DoubleTree by Hilton’ brand and being sold by private equity owner Blackstone — Dalata and an unnamed partner remain in talks and at due diligence level.

Mr McCann said that even if a deal is agreed, it would likely be close to the end of the year before it is announced.

Whatever happens with the former Burlington site, that kind of deal model — where Dalata buys the long-term lease and operator status, while a partner buys the actual property — is likely to represent the group’s acquisition habits.

Despite yesterday’s strong results, Dalata’s shares were down nearly 3.5% at €4.15.

While up 4% since the Brexit vote, the stock is still nearly 25% down on the start of the year.


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