• Cyril McAree

Dalata Hotel Group plc | Half Year Results & Announcement of Acquisition of a site in Shoreditch


Dalata Hotel Group plc (“Dalata” or “the Group”), the largest hotel operator in Ireland with a growing presence in the United Kingdom, has announced it's results for the six month period ended 30 June 2019. Key summary of results are:

STRONG OPERATING PERFORMANCE

• Strong revenue growth of 12.2% to €201.9 million

• Like for like2 revenue per available room1 (RevPAR) increased 0.7% to €87.62

• Adjusted EBITDA1 pre IFRS 16 increased by 18.1% to €60.3 million

• Basic EPS of 17.7 cent (Adjusted basic EPS1 pre IFRS 16 up 8.4% to 19.3 cent)

• Cash generated for investment, debt repayments and dividends1 of €45.1 million

STRONG BALANCE SHEET – LOWLY GEARED AND ASSET BACKED

• €1.3 billion of prime hotel assets1 located in large cities

• Further upward property revaluation of €46.3 million

• Net Debt to Adjusted EBITDA1 pre IFRS 16 of 2.8x (post IFRS 16: 4.3x)

• Debt and Lease Service Cover1 of 3.1x

DRIVING SHAREHOLDER VALUE

• Over 1,400 new rooms opened in the last 18 months which continue to perform very well and have been a significant driver of growth for H1 2019 and will be for the second half

• Exciting pipeline of circa 2,400 rooms in excellent locations to be delivered between 2020 and 2022

ANNOUNCED:

• The Board has proposed an interim dividend of 3.5 cent per share

• Acquisition of a site with planning permission for a new Maldron hotel in Shoreditch, London

Pat McCann, Dalata Group CEO, commented: “I am pleased to report another strong set of results with revenue growth of 12.2% to €201.9 million in the period. Excluding the impact of IFRS 16, Adjusted EBITDA1 increased 18.1% to €60.3 million and Adjusted basic EPS1 increased by 8.4% to 19.3 cent. We have demonstrated our excellent operating performance and ability to control costs through the growth of our EBITDAR margin1 from 40.0% to 40.4% despite opening six new hotels and four hotel extensions in the past 18 months. This is an example of the intensity and commitment I often speak of in Dalata where we continue to drive performance of our existing portfolio while building our future pipeline of hotels. Our hotels in all regions are performing well and I am particularly happy with the performance of our UK hotels given our exciting growth plans for the region.

Dalata has grown at considerable pace since our IPO in March 2014. We were a small Irish company with big goals and a lot of ambition at the time. Our results for the first six months of 2014 delivered revenue of €35 million, Group EBITDA of €2.4 million and hotel assets of €23.9 million. Five years on, the Group has been transformed, with revenue of €201.9 million and Group EBITDA of €74.2 million for the first six months of 2019. The value of our hotel assets now exceeds €1.3 billion and we are far from finished on our journey. It is extraordinary how fast we have grown in a little over five years and I am pleased with the sustainable and disciplined way in which we have delivered this growth. We have built a portfolio of young, well maintained assets in prime locations across Ireland and the UK. We have also built a great team of people who enable us to grow our portfolio while continuing to be excellent hotel operators.

Dalata remains very ambitious and will continue to grow in 2019 and beyond. Our pipeline of circa 2,400 rooms will open at various stages from 2020 to 2022. Our UK growth strategy continues at pace. The development of the six new hotels located in the centre of Bristol, Birmingham, Glasgow (x2) and Manchester (x2) is progressing well.

Today, we announced that we have acquired a fantastic site in Shoreditch, London for £32.05 million with planning approval for a new hotel. London’s first Maldron hotel will have between 130 to 140 rooms and is expected to open in early 2022. The total cost of developing the hotel, including the acquisition of the site, will be approximately £60 million. We have funded the site purchase using debt and will fund the development cost from operating cash flow. The strong performance of our Clayton Hotel City of London which opened in January 2019 reinforces our belief that there is great value in owning and operating a hotel in the centre of the city. Our existing hotel portfolio is generating very strong cash flows and this allows us to take advantage of such great opportunities while keeping our gearing at very comfortable levels.

We continue to invest in our people and our systems to support our growing portfolio. The new Dalata website was launched in August, complementing the Clayton and Maldron websites that went live in 2018 and 2017 respectively. The development of our people continues to be at the top of our agenda. Each of our six new hotels, opened over the last 18 months, are run by internally developed management teams and we are developing the next wave of managers who will go on to operate the hotels in our pipeline. We have 332 people on graduate programmes. We had over 1,100 applicants to our graduate programmes this year which demonstrates that Dalata is becoming the employer of choice in the hospitality industry.

Dalata is committed to remaining lowly geared. Having successfully agreed a new €525 million debt facility on improved terms and with greater flexibility in October 2018, we have since decided to extend this facility by a further year. Our debt package now matures in October 2024. Dalata’s strong balance sheet makes us an attractive partner for fixed income investors allowing us to secure superb leased hotels at relatively low yields. We continue to extract good value from our assets with Normalised Return on Invested Capital1 of 12.6% at 30 June 2019.

Our confidence in the prospects for the business is reflected in our interim dividend of 3.5 cent per share, an increase of 16.7% on the 2018 interim dividend.

Despite the challenges of a significant increase in the VAT rate in Ireland and the ongoing uncertainty surrounding the timing and nature of Brexit, 2019 to date, as a whole has been another very successful year. The outlook for the balance of the year looks very positive. We are currently looking at a number of exciting opportunities in the UK and Ireland and we expect to announce further additions before the end of the year.

We continue to grow our portfolio, develop our great people, increase our customer satisfaction and further grow our earnings. We are looking forward to the balance of 2019 with optimism and enthusiasm”.


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